Stocks Increases 958 points on Saudi investment prospects

Investors responded favourably to the possibility of Saudi capital coming into Pakistan’s mineral and energy sectors, driving the benchmark index of stock prices to surpass the psychological threshold of 48,000 points on Monday.

The CEO of Topline Securities Ltd, Mohammed Sohail, stated that the Pakistan Mineral Summit, which is slated to take place on August 1, as well as the anticipated investment from Saudi Arabia and the United Arab Emirates, helped to increase investor confidence.

As a result, the KSE-100 index rose 957.60 points or 2.03 percent from the previous session to settle at 48,034.60 points.

Arif Habib Ltd. records show that the KSE-100 index had the highest return (measured in points) in July. The benchmark surged beyond the 48,000 barrier, a milestone it reached after two years, by gaining 6,582 points, or 15.9 percent, month over month.

The protest started at the end of June when the nation and the International Monetary Fund (IMF) came to a staff-level agreement for a $3 billion Stand-By Arrangement.

“Better than expected IMF loan, timely compliance with IMF conditions, expected foreign investment from the Gulf countries, and clarity on the upcoming elections have revived interest in Pakistan equities,” claimed Topline Securities in a strategy paper published on Monday.

Amreen Soorani, Head of Research at JS Global, advised investors that the index levels alone “do not portray the whole picture” in a different research note published over the weekend. In November 2021, when the index level was similarly 47,000 points, she compared the stock market now to that of that month.

Since the KSE-100 is a total-return index, it includes dividends declared by the member businesses. As a result, she explained, the 47,000-point level of today does not indicate that stock values have increased to levels seen in November 2021.

In reality, the market capitalization of the KSE-100 index, which represents the total value of shares, is currently 17 percent lower than it was in November 2021.

Based on the average price-to-earnings multiple, which compares a company’s current share price to its per-share earnings, the similarity is even more glaring. The average multiple is currently hanging at 3x versus 5.5x in November 2021 due to steady business profitability growth that isn’t being reflected in stock prices, she said.

Even in the event of simple mean reversion, the PSX offers significant potential. However, macro- and political-clarity remained crucial for the market to reach new highs, both in terms of symbolic index levels and stock valuations, according to the analyst.

491.8 million shares were traded in total, an 8 percent rise from the previous Monday. On a daily basis, the transacted value stayed constant at Rs17.8 billion.

WorldCall Telecom Ltd. (49.3 million shares), K-Electric Ltd. (39.4 million shares), Cnergyico PK Ltd. (32.4 million shares), Pakistan Petroleum Ltd. (24.1 million shares), and Oil and Gas Development Company Ltd. (22.4 million shares) were among the stocks that made up a sizeable portion of the traded volume.

Unilever Pakistan Foods Ltd. ($1,050), Nestle Pakistan Ltd. ($60), Mari Petroleum Company Ltd. ($43.43), Al-Abbas Sugar Mills Ltd. ($37), and Colgate-Palmolive Pakistan Ltd. ($32.69) were the companies with the largest rises in their share prices in absolute terms.

Sanofi-Aventis Pakistan Ltd ($30.40), Pakistan Services Ltd ($24.79), Pakistan Tobacco Company ($16.19), Abbott Laboratories Ltd ($14.79), and Bata Pakistan Ltd ($9.99) were the companies with the largest absolute losses in share prices.

Foreign investors bought shares worth $3.26 million, making them net purchasers.

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