The Pakistan Stock Exchange (PSX) began a bullish run in 2021 as it emerged in January as the region’s 2nd best performing market and 7th best performing market in the world.
During the month of January, we have historically seen good returns, and this month was no different. KSE-100 returns (6.0 percent) have outperformed January’s last 10-Yr average returns (4.1 percent). The return for the month based on USD settled at 5.8 percent. The index’s 7MFY21 returns settled at 34.8 percent (USDbased: 41.4 percent), Arif Habib Limited reported in its latest report.
The report was of the opinion that the latest implementation of forward guidance on its monetary policy by the State Bank of Pakistan (SBP) provided investors and the business community with much-needed clarification and helped to evaporate any confusion about the interest rate outlook, which helped uplift local stock market sentiment.
The report stated that the rally was mainly driven by confidence in the overall investment climate during the outgoing month, fueled by the continued robust economic momentum across the region.
In the meantime, the government’s attempts to tackle supply-side problems have succeeded in taming down inflation, which clocked in at 7.97% during Dec’20 (Nov’20: 8.35%).
The report claimed that this month’s announcement of the circular debt clearance plan lured bulls in the power sector. “The plan includes the first instalment (40 percent) to be paid in February (33 percent cash, 33 percent Sukuk and 33 percent floater PIBs), while the remainder with the same structure is expected to be paid in six months,” it said.
During the outgoing month, the technology sector also experienced remarkable gains on the back of the whole sector’s re-rating.
