Jul-2022: KSE100’s worst US$-based returns in 28 months

Karachi, August 01, 2022: After two consecutive negative closes, July-2022 began with selective bottom fishing and nascent optimism on macros.

Investor confidence however took a step back after provincial elections in Punjab, which triggered political noise and concerns over its impact on macros.

Pak rupee reported its worst month since May 1972, losing 14% in Jul-22. This also reflected in KSE-100 as the index declined 5% from its high of the month, taking MoM return to -3%.

In US$ terms, KSE100 receded 17% (lowest since Mar-20). Cumulative returns for 7MCY22 clocked in at negative 10% (lowest since 2019 and 33% in US$ (lowest since 2008).

In addition, PSX market cap declined to Aug-2009 levels to US$28bn.

Pakistan Stock Exchange Market

Bears dominated for the third consecutive month as KSE-100 lost 3.3% MoM to close at 40,150 level. After making a high of 42,500 in the early half of the month, KSE-100 took a rejection from 50-DMA on daily chart and went as low as 39,541.

Investor’s participation stood dull reflecting a decline of 31% MoM in the market volumes.

During the month, the index dropped the critical support level of 200-DMA and 55-EMA on weekly and monthly chart, making the trend even more bearish.

Current macros and developments direct towards a slowdown in economic activity, leading to cherry picking in the equity markets. Decline in demand is likely to continue in sectors such as Cement, Steel, Autos over lesser availability of imported raw material, rise in product prices amid cost pressures and slowdown in economic activity. On the other hand, the depreciating PKR against the US$ bodes well for export-oriented sectors, in addition to dollar-based revenue generating sectors such as E&Ps.

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