KDollar inflow statement propels KSE-100 Index by 489 points

The Pakistan Stock Exchange experienced a late surge on Wednesday afternoon after the central bank governor said that the dollar inflow would start next week – pushing the benchmark KSE-100 Index up by 448.88, or 1.17 percent.

It comes after a bloodbath Tuesday when the benchmark KSE-100 Index shed 1,378.54 points, or 3.47 percent, as a result of institutional selling with the country also facing a tough set of IMF conditions and political uncertainty.

By the time of closing, the KSE-100 Index was recorded at 38,791.09 against the previous day’s level of 38,342.21 – thus ending a three-day streak during which the market shed 2,461.68 points.

According to Ali Nadeem, who is Head of Sales at the First National Equities Limited (FNEL), Wednesday’s gains were a product of the central bank governor’s statement as the market desperately needs some direction with a stable national exchequer.

On Wednesday, the overall market volume stood at 153.04 million shares as a total of 311 stocks were on offer with 184 of these registering an increase and 108 declining while 19 remained unchanged.

There was an increase in market capitalisation which touched Rs6.13 trillion (Rs6,169,730,141,206) against the previous level of Rs6.13 trillion  (Rs6,134,384,355,763) after Wednesday’s session saw a trading value of Rs6.17 billion (Rs6,169,730,141,206).

As far as the KSE-100 Index is concerned, its volume was recorded at 81.03 million shares after the trading of 91 stocks. During the process, the share prices of 59 made gains, 28 was down and four did not see any change.

The top five volume leaders on the KSE-100 Index were K-Electric 13.15 million, TRG 10.19 million, Pakistan Petroleum 6.11 million, Oil and Gas Development Company 5.72 million, and Sui Northern 4.77 million.  

When it comes to the advancers, the share price of Habib Bank Growth Fund was up by 8.84 percent, TRG 7.72 percent, Mughal Iron and Steel 6.56 percent, K-Electric 5.80 percent, and Fatima Fertilizer 5.48 percent.

When comes to those witnessing a decline in their share prices, the worst performers included Pakistan Services Limited 7.50 percent, Nestle 5.13 percent, Air Link Communication 3.92 percent, First Habib Modaraba 3.42 percent, and Colgate-Palmolive 2.92 percent.

What did the SBP governor say?

Jameel Ahmad said the country was likely to start receiving dollar inflows from next week – a statement that propelled the Pakistan Stock Exchange’s benchmark KSE-100 Index by 448.88 points.

“We are expecting to witness inflows from next week onwards, which would reduce pressure on our foreign exchange reserves,” Jameel said in his address to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

He also shared another good news, saying that the inflows will strengthen the foreign exchange reserves — which now stand at their lowest level since February 2014 — paving the way for the removal of restrictions on imports.

Pakistan banned the import of all non-essential luxury goods in May to avert a balance of payments crisis and stabilise the economy. However, following severe criticism from stakeholders the authorities concerned removed restrictions on the import of some goods to facilitate the industries.

The low level of reserves was the reason behind the SBP placing restrictions earlier last year, much to the dismay of several importers and businesses in Pakistan that cited these curbs behind shutting down or scaling back operations.

Addressing the grievances of the business community regarding difficulties faced in opening Letters of Credit (LCs), the governor said it takes time to verify submissions. “Currently, the central bank cleared around 33,000 LCs (letters of credit) with special consideration for raw material imports used in goods which are exported,” he said.

The commercial banks also requested the regulator to prioritise LCs needed for the import of food items, medicines, and oil, he added.

Punishment for those manipulating exchange rate

Shedding light on the involvement of commercial banks in exchange rate manipulation, Jameel announced that an investigation into the episode had been completed, assuring the industry players that strict action will be taken.

“Rest assured all commercial banks involved in manipulating the exchange rate will be held accountable,” he said, adding that the report would be released on January 23 — the same date when the central bank is expected to announce the monetary policy rate.

In response to a question regarding a possible rate hike, the SBP chief refrained from commenting.

No plan in place

The industrialists highlighted several issues being faced by them due to which their businesses were suffering, as former FPCCI president Mian Nasser Hyatt warned the central bank chief that if supply chain hurdles weren’t removed the country will witness high levels of unemployment and sky-high prices of essential food items.

Lambasting the central bank and finance ministry for not having a proper plan in place, he predicted that if a similar situation persists then the price of pulses will shoot to Rs1,000 per kg.

Saleem Bikiya lamented that out of a total strength of 950 employees, only 350 could be retained while the rest were laid off due to the ongoing financial crunch, as called for taking urgent steps so that businesses could survive.

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