Pakistan Stock Exchange loses the Midas touch in July-Sept

Published October 1, 2021
A sign of the Pakistan Stock Exchange is seen on its building in Karachi in 2016. — Reuters
A sign of the Pakistan Stock Exchange is seen on its building in Karachi in 2016. — Reuters

KARACHI: With its benchmark index losing 12 per cent value in dollar terms, the Pakistan Stock Exchange (PSX) remained the third worst-performing equities market internationally in the July-Sept quarter.

According to a research note issued by Topline Secu­rities on Thursday, the quarterly decline follows five consecutive quarters of gains. The KSE-100 index had surged on average 12pc every quarter since April 2020.

“Almost all the losses during the (July-Sept) quarter were witnessed in the last two weeks… the KSE-100 index dropped 2,371 points (5pc) in last 13 trading sessions,” said Atif Zafar, director of research at Topline Securities.

Only Brazil and Hong Kong markets performed worse than Pakistan’s in the last quarter, with their declines clocking in at 19pc and 15pc, respectively, during the quarter under review.

The drop in its value brought down the benchmark index’s gains since the beginning of 2021 to just 3pc. Its recovery from its low of March 25, 2020 is down to 65pc only. Its market capitalisation is down 54pc in dollar terms from its peak of $99.6 billion in 2017 to $45.7bn.

Mr Zafar attributed the poor performance of the sto­ck market to the concerns ari­s­ing out of a higher-than-exp­ected current account deficit caused by increasing domestic demand and rising international commodity pri­ces.

The same phenomenon was reflected in the rupee-dollar parity, which worsened by 8pc in the latest three-month period.

Global index provider MS­CI also decided to downgrade Pakistan in the last quarter from emerging market to frontier market, which affected investors’ sentiments.

The average traded volume in the ready market decreased 18pc year-on-year and 38pc quarter-on-quarter in July-Sept.

The average traded value dropped 21pc on an annual basis and 32pc on a quarterly basis to Rs14bn per day in the same period.

Published in Dawn, October 1st, 2021

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