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Stocks lose 123 points under bearish spell
Summary

The stock market remained under the geopolitical tension along with the regrouping of the opposition against the government. The event of virtually addressing of Prime Minister Imran Khan and Chinese President to the Communist Party of China (CPC) and World Political Parties Summit to mark 100 years of CPC on Tuesday gave new dimension to the international relationship simmering tensions with the US. Furthermore on Monday, Prime Minister Imran Khan on launching of development projects said the future belonged to Gwadar since it would emerge as the ‘focal point of development ensuring prosperity of the entire country’. The investors were worried with the ongoing negotiations with IMF and later exit from the FATF (Financial Action Task Force). Also the abrupt withdrawal of US forces from Afghanistan raised security concerns for the bordering nations.

The positivity in the market was also witnessed. Chinese Foreign Ministry spokesman encouraging comments on Gwadar port; raising through PIBs auction Rs.146 billion, Pakistan selling $1 billion on Tuesday in a reopening of existing three-tranche bonds launched in March, a deal that raised $2.5 billion and first international bond sale since late 2017. The foreign exchange reserves rises to $24.415 billion. As such there was 805-point rally on the only bullish day on Wednesday while in all other four days the market remained bearish.

Overall activity on the bourse remained damp during the week as average traded volume declined by 22% to 486 million shares per day. The market capitalization decline by Rs.1 billion to close at Rs.8.316 billion. The market shed 122.73 points to close at 47,563.45.

Monday: KSE-100 index 47,429.12 change -257.06 volume 495m.

Tuesday: KSE-100 index 47,346.16 change -82.96 volume 541 m.

Wednesday: KSE-100 index 47,247.92 change -98,24 volume 412m.

Thursday: KSE-100 index 48,053.17 change +805.25 volume 475m.

Friday: KSE-100 index 47,563.45 change -489.72 volume 506m.

Participants /Activity

Foreigners were net seller $5.18m during the week; companies were buyer by $4.13m, Banks were seller $0.87m; Mutual fund buyer $3.90m; individuals net buyer $2.18m and insurance were seller $2.78m.

Volume leaders during the were: WTL 187m; TPL Corp 117m; Hascol Pet 106 m; Byco Petroleum 100m; Fauji Foods 41m; K-Electric 29m; Pace (Pak) Ltd 27m; TRG Pak 27m; PIA C (A) 25m; Treet Corp 21m; Ghani Clio 19m; Pervez Ahmed 18m and Unity Foods 17m.

Abdul Razak Dawood

Advisor for Commerce, Textile, Industry and Production, and Investment of Pakistan

Triggers
  • The foreign exchange reserves of SBP swelled by $1.112 billion to $17.231 billion during the week ended on July 2. The country’s overall reserves rose by $1.117 billion to $24.415 billion. During the week, the SBP received $1 billion loan from China and $440m from the World Bank. The holding of Commercial Bank was $7.183 billion.
  • According to tweet of Abdul Razak Dawood (Advisor for Commerce, Textile, Industry and Production and Investment) exports to China increased by 34 percent to $2,33 billion during the fiscal year 2020-21 as compared to $1.74 billion exports in previous year.
  • South Korean tech giant Samsung has been in talks with three investors for setting up a mobile manufacturing unit in Pakistan.
  • Banks profits up 43 percent in CY20 despite Covid, according to SBP.
  • Federal Minister for Energy Hammad Azhar said that at 24,284 mega watts the highest demand and supply of electricity in the history of Pakistan had been achieved on Wednesday.
  • Government lays focus on auto sector to create jobs. The government will increase local vehicles production by 300,000 units by the end of the on-going year, Federal Minister for Industries and Production Khusro Bakhtiar said on Wednesday.
Conclusion

Most mutual funds under perform PSX in FY21. A majority of equity-based conventional and Islamic mutual funds under performed their respective benchmark in 2021, data from the Mutual Funds Association of Pakistan ( MUFAP ) shows. Only 9 of the 27 conventional equity funds posted a return of more than 37.6 percent, which is the rate by which the benchmark 100-share index grew in the last fiscal year. The three funds posted growth rates just below the benchmark.

The best-performing equity fund was Golden Arrow Stock Fund by AKD Investment Management, which grew by 116.6 percent in 365 days through July2. It was followed by AKD Opportunity Fund, with 99.1 percent over the same period. The third-best was Faysal Stock Fund, which posted an increase of 79.4 percent in 365 days through July 1.

As for Islamic equity funds, the top performer was AKD Islamic Stock Fund with 63.3 percent growth in 365 days through July 2. It was followed by Atlas Islamic Fund (36.6 percent) and AWT Islamic Stock Fund (34.9 percent), with data validity dates of June 30 and June 28 respectively.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research& Training (Pvt) Ltd, Karachi
Dated: July 10, 2021

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