The Pakistan Stock Exchange (PSX) remained the third worst-performing stocks market in the world in the July-September quarter, with its benchmark index losing 12% in dollar terms.
According to a research report released on Thursday by Topline Securities, the quarterly drop comes after five quarters of gains. Since April 2020, the KSE-100 index has increased by an average of 12 per cent per quarter.
“Almost all the losses during the (July-Sept) quarter were witnessed in the last two weeks … the KSE-100 index dropped 2,371 points (5pc) in last 13 trading sessions,” said Atif Zafar, director of research at Topline Securities.
The Correspondent.pk reached out to Director Research at Topline Securities Atif Zafar for further comments on the recent PSX trends. Zafar stated two reasons behind the downfall of PSX. Zafar linked the stock market’s dismal performance to concerns over a larger-than-expected current account deficit, which he ascribed to growing local demand and international commodity prices.
Zafar stated that another factor is the draft bill introduced by US senators seeking sanctions against Pakistan. The 57-page draft bill called ‘‘Afghanistan Counterterrorism, Oversight, and Accountability Act of 2021’’, which made several references to Pakistan.
Only Brazil’s and Hong Kong’s stock markets underperformed Pakistan’s in the previous quarter, with losses of 19% and 15%, respectively, during the period under consideration.
The decrease in its value reduced the benchmark index’s gains since the start of 2021 to only 3 per cent. It has barely recovered 65 per cent of its value from its bottom on March 25, 2020. In monetary terms, its market capitalization has dropped 54 per cent from $99.6 billion in 2017 to $45.7 billion.
The rupee-dollar parity, which has deteriorated by 8% in the last three months, reflects the same trend.
In the previous quarter, global index provider MSCI downgraded Pakistan from emerging market to frontier market, affecting investor sentiment.
In July-September, the average traded volume in the ready market fell 18 per cent year-over-year and 38 per cent quarter over quarter.
At the same time, the average traded value fell by 21% on an annual basis and 32% on a quarterly basis to Rs14 billion each day.
