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KARACHI: Pakistan Stock Exchange's (PSX) KSE-100 Index closed marginally up 1.5 percent in FY20, to reach 34,422. In USD terms, the KSE-100 value fell by 3 percent during the fiscal year.

In the last 10-years, Pakistan's market (KSE-100 index) has posted an average gain of 19 percent in PKR terms and 13 percent in USD terms.

The market capitalization of the bourse closed at Rs 6.5 trillion ($39 billion), down 5 percent and 10 percent, respectively. As a result, PSX's market capitalization to GDP has fallen to 15 percent.

The MSCI Pakistan Index is down 17 percent in a year versus a decline of 5 percent in MSCI EM Index and 14 percent in MSCI FM. Pakistan, however, fared better than 16 countries in the MSCI EM Index, while underperformed compared to 9 other countries in the same space.

Dissecting the market performance during the year, the KSE-100 had gained 20 percent during the first half of FY20, where overall optimism was high over a potential economic recovery, Syed Atif Zafar, an analyst at Topline Securities said.

The government had entered into an IMF programme in July-2019, and had also been successful in containing the fiscal and current account deficits, he added.

He said that the emergence of Covid-19 pandemic rocked the PSX like other financial markets, as the KSE-100 declined by 28 percent during the third quarter of FY20. The first two cases in Pakistan were reported on February 26, 2020.

The market has recovered since as the government has looked to ease lockdowns, with the KSE-100 Index increasing by 18 percent during the fourth quarter of FY20. The Pakistan's central bank monetary easing (reduction in policy rate by 625bps to 7.0 percent during March-June 2020) has also lent support to the market.

The overall activity at the bourse remained thin, though average traded volumes increased by 26 percent to 196 million shares per day in the financial year FY20. It still remained 10 percent lower compared to its preceding 5-year average of 219 million shares per day.

The average traded value declined by 2 percent in FY20 to $46 million/day, while also remained 51 percent lower compared to its preceding 5-year average of $94 million/day.

The average traded value in ready market clocked in at Rs 7.2 billion, up 13 percent and in futures market at Rs 3.3 billion, up 19 percent.

Foreigners for a fifth year in a row remained net sellers, with a net outflow of $277 million in the outgoing fiscal year.

Individuals and Insurance were top local net buyers during the year as falling interest rates generated greater interest in equities. Banks and Mutual Funds were also sellers amongst the locals.

Amongst the sectors, Pharmaceuticals and Cements were key outperformers during the fiscal year, where their respective market capitalization was up by 55 percent and 42 percent.

Oil and Gas Exploration, Banks and Power Generation were key laggards with market capitalization down 14 percent, 19 percent and 21 percent respectively.

Pharmaceuticals remained in the limelight as healthcare and medical services garnered investors' interest in the wake of Covid-19 outbreak.

The Cement sector performed well as the government's focus shifted towards construction activities to ease economic conditions of the daily wagers, for which the government also announced a construction package.

Power because of IPPs Commission Report, Oil and Gas Exploration owing to fall in international oil prices and Banks because of aggressive easing by the Central Bank, underperformed the overall market.

Copyright Business Recorder, 2020