Pakistan Stock Exchange went through a roller coaster ride in 2019 but ended on a high note with a positive return during this year, following two consecutive years of losses.
The KSE-100 index closed 2019 with a positive return of 9.95%. The market has gained 42 percent after touching a five year low of 28,764 points on August 16, 2019. The market posted a positive return after posting an 8% loss in 2018 and 15% in the previous year.
The index closed 0.37 percent lower at 40,737 points during the last day of the year. The market capitalization of the PSX stood at Rs. 7.81 trillion (US$ 50 billion) in 2019 as compared with Rs. 7.69 (trillion) US$ 55 billion in 2018 according to the data available.
Overall, the average trading volumes during 2019 settled at 159 million, down by 14% year on year, while average traded value clocked in at $39 million.
There was a long delay by the Pakistani government in the decision on approaching the International Monetary Fund (IMF) to acquire a fresh loan of $6 billion to improve the country’s capacity to make international payments on two counts – imports and debt, free fall of the rupee against the dollar and further increase in the benchmark interest rate badly dented business confidence.
Now the confidence has started building up as the economic indicators have started stabilizing. Major reason that brought up the market was stabilization in Dollar-Rupee parity. The Pakistani rupee has also stabilized now at $155 versus the US dollar after hitting an all-time low of 165 during June 2019. With improving external accounts, the Pak Rupee has started gaining strength.
There’s also a rise in tax collections due to the documentation drive in addition to improving the current account has afforded the government to shift its focus back towards growth.
According to different analysts, the market attracted handsome inflows in Treasury Bills last year. The bond yield was improved from 13.86% to 11%. Overall the reserves were also up 50% and the current account deficit was also improved 73%.
According to different brokerage houses, the KSE-100 can reach 50,000-55000 points by the end of 2020, offering an upside of around 35% from current levels. The last high of the KSE-100 was 52,861 on May 25, 2017.