What’s up on the PSX?
The stock market performance By Saad Tanvir
T
he outgoing week witnessed a bearish tread in the local bourse primarily subject to the announcement on Wednesday of the Consumer Price Index (CPI) for May, declaring consumer prices growth by 13.8% MoM. This drove market sentiment downwards. As per the IMF’s conditions, the government has committed itself to removing subsidies on fuel prices. Amidst the economic turmoil, food prices have witnessed a 17.3% increase while the government has increased fuel prices twices in the past 10 days.. Apart from this, we witnessed a 55-75 BPS increase in yields from the T-bills auction held on Wednesday. This took yields to as high as 15.5% for 12 month securities. This can be used to build expectations regarding the next Monetary Policy Statement by the Statebank where a 50 to 100 basis point increase is anticipated. To further add to the fire, we witnessed a downgrade of Pakistan’s credit outlook by Moody’s Investor Services from ‘stable’ to ‘negative’ in its latest credit assessment on Thursday, June 02,2022. After Moody’s credit rating review on June 20, 2018, this was the first time that Pakistan was subject to such a drastic demotion in its outlook. While the credit rating remained at ‘B3,’ which itself is a junk rating, the downgrade in outlook
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was primarily pertaining to the new regime’s inability to revive the International Monetary Fund’s bailout package and the nation’s weak institutional capacity. In a statement, Moody’s clarified that the decline in risk outlook was essentially subject to Pakistan’s “is driven by Pakistan’s heightened external vulnerability risk and uncertainty around the sovereign’s ability to secure additional external financing to meet its needs”. Market experts anticipate that this alteration is likely to cause an impact on the banking sector in the upcoming week. Pakistan seeks to unlock external financing from the international market including Saudi, Dubai and China by first unlocking the IMF’s 7th tranche of $1 billion and complying to its conditions formulated in the next budget. Market sentiments with relation to uncertainty, political instability and heightened risk drove the PSX last week. Despite these challenges, the PKR showcased a stark recovery against the greenback and appreciated by 1.25% during the week to close at PKR 197.6/USD. On the flip side, the index moved from 43,040 to 41,315 points going as high as 43,078 points on Tuesday pertaining to the government’s first step towards removal of petrol subsidies. FX reserves have declined to $15.7 Billion as of last week-end, where reserves with SBP stood at $9.7 Billion mainly on account of high external debt servicing and rising import bill. This showcased a decline of $366 million of reserves held by the SBP WoW.
Moreover, heightened global oil prices are putting a major dent on the government’s fiscal space given the fact that the government is still providing a subsidy of Rs9 per liter on petrol, where the prevailing free market price is Rs218 per liter. Economists have recommended that the government let the markets decide on petroleum prices in order to curb the financial budget and enhance Pakistan’s credibility.
Cordoba Logistics and ventures signs agreement with foodpanda to provide motorcycles to its riders
I
n a brisk filing on the PSX, Cordoba Logistics and Ventures Limited announced on Thursday that it has signed a Memorandum of Understanding with R-Sc Internet Service (Private) Limited (also known as Foodpanda Pakistan), for the provision of motorcycles to Foodpanda’s riders. Foodpanda Pakistan, a subsidiary of Delivery Hero, which is a global leader in food delivery services involved in the delivery of fresh cooked food as well as grocery.
Mari petroleum discovers gas at Bannu west - North Waziristan
M
ari Petroleum Company Limited (MPCL) notified on Wednesday that it had successfully managed
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