KARACHI: Pakistani stocks managed to eke out a positive return of 10pc in 2019, after investors were faced with negative returns for two consecutive previous years: (minus 8pc in 2018 and minus 15pc for 2017).

The returns in dollar terms, however, still clocked in at negative 1.4pc during the outgoing year.

The tide turned in the last quarter when the KSE-100 index recorded stellar gains of 8,656 points or 27pc; which included the highest three-month rise achieved since 3QCY09.

Up until Aug 16, it was a nightmare for investors in stocks who were deep in losses as the index had tanked to five-year low of 28,765, posting a slump of 22pc since December 2018 and a plunge of 31pc on yearly basis.

But the index rebounded from Aug 16 as bulls re-entered the oversold market and tossing up the shares across the board.

Between August and December, the equities displayed a spectacular rally which saw the market gain an eye-popping 42pc.

Key reasons listed by Arif Habib Ltd for the turnaround included stability of the exchange rate parity; inflow of $1,428 million in treasury bills; decline in Pakistan Investment Bonds yield by 286 basis points to 11pc — a sharp drop from its high of 13.86pc in July; Increase in foreign exchange reserves by 50pc to $10.9 billion and reduction of $3bn in short-term liabilities of the State Bank.

Moreover, foreigners turned net buyers of $58m worth shares after four consecutive years of outflows aggregating to $1.68bn. The International Monetary Fund also cleared the first review of Pakistan’s Extended Fund Facility.

Above all, there was astounding improvement of 73pc in 5MFY20 current account deficit, which was taken to mean that the economy was back on the track.

Published in Dawn, January 1st, 2020