By Zaryoon Saboor Khan
The “blessings” on Pakistan by President Trump in the form of the trade deal and oil exploration were expected to reflect in the performance of Pakistan Stock Exchange this week. With the result season in its full swing, the timing of the deal could not have been much better. As the first day of the week closed, the bullish trend continued as the KSE100 Index closed at an astonishing all time high of 142,052 points, a 0.72 percent increase from the previous closing.
The impacts of Pakistan’s rising prominence in the global arena which saw USA slashing the tariffs for Pakistani exports from 29 percent to 19 percent was also reflected on the performance of the KMIALL which closed at 87,831 points seeing an increase of 531 points in the day.
The impact of this tariff cut will come as a sigh of relief for the textile sector, which as of the fiscal year 2024, contributed approximately $5billion amounting to a whopping 92 percent of the total exports by Pakistan to the United States.
Simultaneously, the monetary policy played a reinforcing role in the continued trust of investors in the Pakistan Stock Market. The market expectations were defied by the decision of the State Bank of Pakistan in a move which saw the financial powerhouse of the country opting to maintain the policy rate at 11 percent.
This move suggested confidence in the central bank’s inflation management framework despite inflation rising from 3.2 percent in June to 4.1 percent in July. The State Bank’s neutral stance is an encouraging sign for the financial sector increasing confidence for long-term positioning in equities.
The bullish trend in the market is expected to continue in the coming week with the company results pouring in. The recent positive results from companies like Engro Fertilizers and Fauji Fertilizers which announced cash dividends of Rs.4.25 per share and Rs. 12 per share respectively will increase investor confidence and encourage new investors to enter the market.
The Oil and Gas Development Company Limited (OGDCL) received its first interest payment of Rs. 7.725 billion from Power Holdings (Private) Limited (PHL) pursuant of the Government of Pakistan (GOP) approved mechanism. This receipt of the initial payment is a reflection of the progress under the GOP’s initiative to address circular debt in the energy sector.
Moreover, the cement, banking and pharmaceutical sectors are closely watched by the long term investors as the macroeconomic indicators and financial results suggest long term profits for them.
Moving ahead, the analysts expect the bullish momentum to continue in the market provided the macroeconomic and geopolitical stability prevails the testing times.
With the impacts of the “blessings” of President Trump to unfold in the coming weeks and months, institutional interest is likely to deepen in export-oriented and energy-liked sectors which could see a major shift in the holding positions of many funds and investors alike.
