- The KSE-100 index slipped to the intraday low of 109,858.88.
- The decrease reflects the impact of portfolio adjustments at the end of the year.
- Rupee weakness and foreign capital outflows contributed to downtrend: analyst.
The capital market faced persistent downtrends on Thursday as profit-taking and year-end selling hit investor confidence. Despite support from improving macroeconomic indicators, stricter tax changes and broader economic uncertainties contributed to a cautious market stance.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index initially climbed to an intraday high of 112,480.6 but later slipped to a low of 109,858.88 before close at 110,423.32. This is a sharp decline of 1,991.48 points, or -1.77%, from the previous close, reflecting the impact of year-end portfolio adjustments, keeping the market under pressure.
Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities, said Geo.tv that the downward trend can be attributed to political uncertainty, concerns over the cautious easing of State Bank policy and uncertainty over the results of slippages on tax collection targets presented by the International Monetary Fund.
“Futures rollover pressure, rupee weakness and foreign capital outflows played a catalytic role in the bearish activity,” Mehanti added.
The market closed in the red on Tuesday, falling to an intraday low of 112,294.42 before closing at 112,414.8, marking a decline of 1,509.61 points or -1.33% from the previous close of 113,924.41.
The stock market was closed on Wednesday due to a public holiday.
Pakistan’s exports for the first five months of the financial year 2024-25 increased by 12.57 per cent to $13.691 billion, compared to $12.162 billion in the same period last year. However, November exports fell 5.97 percent to $2.804 billion from $2.982 billion in October.
Shipments to the European Union (EU) increased 14% to $4.8 billion, matching total exports to the entire Asian region. Exports to the United States, Pakistan’s top export destination, increased 14 percent to $2.4 billion. Conversely, exports to China fell 14%, while shipments to the UAE and Afghanistan jumped 35% and 42%, respectively.
Pakistan’s credit default swap (CDS) spreads tightened by 88% to 1,493 basis points, signaling a reduction in credit risk. Foreign exchange reserves reached $12 billion in December 2024, a significant increase from $2.9 billion in February 2023, supported by the recent 200 basis point reduction in the State Bank’s policy rate of Pakistan (SBP), from 15% to 13%.
The current account surplus in November reached an unprecedented $729 million, compared to a deficit of $148 million in November 2023. This led to a five-month surplus of $944 million during the fiscal year 2024-25, contrasting sharply with a deficit of $1.67 billion. at the same time last year.
Foreign direct investment (FDI) in the first five months of the 2024-25 financial year increased 31% year-on-year to $1.124 billion, including $219 million recorded in November. Major investors included China, Hong Kong and the United Kingdom, focusing on the energy and financial sectors.
The proposed Income Tax Laws (Amendment) Bill, 2024, seeks to impose stricter restrictions on non-filers, barring them from purchasing vehicles above 800 cc, acquiring high-value properties or d carry out significant financial transactions. These measures have raised concerns about reduced liquidity and consumer spending, contributing to cautious markets.
Although improving macroeconomic fundamentals offer some support, trading activity reflects a balance of profit-taking and optimism about Pakistan’s economic recovery.