Pakistan Stock Market Loosing the Shine

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Pakistan Stock Market Loosing the Shine

The KSE-100 index opened on a negative note and remained bearish throughout the last trading session closing in red with a traded volume of 71.67 million shares.

The KSE-100 closed at 32,309 with a loss of 672 points. During the intraday, the benchmark index touched a low of 758 points. The volumes of KSE-100 were also on the lower side as 87 million shares changed hand.

KSE-100 Index trades just above the support level of 32,000, the lowest level since 2016 as market price in the ongoing macro challenges.

Risks

The Imposition of new taxes on dividends in the budget and expected crackdown on Benami accounts is believed to restrict flows from equities. The risk aversion strategy of investors in the current scenario has negatively impacted the equity market with capital outflows increasing. The market capitalization has decreased by 21% and KSE-100 has lost 8,200 points in the last one year period. Moreover, Market witnessed trading of 23 million shares on 12th July which was the lowest in the last 7 years.

Outlook

Benchmark KSE-100 is trading at a forward Price-Earnings multiple of 5.81x, which is the cheapest among regional countries multiple. Some Fresh inflows are expected as Rupee has already depreciated by 24% in FY19 and projections of the better future economic outlook. Moreover, the revival of the Pak-US relationship can act as a positive trigger for the economy.

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