Karachi stock exchange-100 index started the week at 51750 points and ended the week at 52636 points.Following are the most important factors affecting the Pakistan stock market
Will Jadhav be executed?
An Indian spy Jadhav will be executed to the death sentence as ordered by the Pakistan Court. But, India put that case to ICJ. According to the most recent news, ICJ has said,” Pakistan should take all possible steps to stop execution until the final decision of the court”. It is another final between Pakistan and India. Some analysts are predicting India has won against Pakistan.
However, there are some things you need to know about the case. The first and important thing is, ICJ didn’t give a decision on the death penalty. Secondly, the final decision is yet to come. Finally, the ICJ stops the execution because of the provisional measures as requested by India. A provisional measure is a term used by ICJ. It is an immediate protection for an individual if his rights are at imminent risk. It gives time to both parties to bring a further proceeding to the case.
Moving on, this conspiracy will affect the confidence of the investors in next week.
State bank interest rate policy unchanged
The policy remained unchanged at 5.75pc. SBP took this decision due to stable inflation and gathering pace of economic activity.
How will it benefit the stock market? The low interest rate will encourage the private sector to undertake bank loan for the capacity expansion. The unchanged policy will also not affect the finance cost of some of the major sectors like textile industry and cement sector. Ultimately it will result in net profit and healthy rate of return to the shareholders.
But don’t forget the other side of the picture. The banks have to keep their interest rate low for loans especially. It will affect the earning of the banking sector as well.
Pakistan State oil debt recovery
When you talk about summers you talk about load shading. What are the main reasons of load shading? It is poor debt payment to the Pakistan State oil. The most recent new is, PSO is managed to get Rs 5bn against Rs 295bn from the government.
This difference between the debt piles is evident. If the government can’t pay in time, it will also affect the profitability of PSO and shareholders. The biggest oil company in Pakistan has demanded to release Rs105 bn to improve the cash flows and make immediate payments to the oil suppliers.
Power companies have to pay Rs 257 billion to PSO. PIA and Sui Northern Gas Pipeline are also main creditors with Rs 9.6 billion and Rs 11.9 billion respectively.
MSCI upgrade Pakistan to emerging market
The market closed at negative note at Friday but the good news is MSCI has upgraded the Pakistan stock market status. The reclassification status is emerging market (EM) from the frontier market(FM). It will be effective from June 1, 2017. The reclassification has been built due to the inflow of funds from global investors. Currently, the emerging market investible pool is $ 1.5 -1.7 trillion.
Most of the fund managers are expecting inflow of $300-500 million in Pakistan equity market through EM index funds. Pakistan expected weight in the MSCI EM index will be .1pc. Six companies that have classified to the main indexes are PSO, UBL, HBL, Lucky cement, OGDC , MCB and Engro corporation. The investors of these six companies will be feeling even safer. Another 27 companies have qualified to the MSCI EM small cap index.
Hyundai, Join Hands with Al –Haj group
Al –haj group which is one of the leading business entities in the country; AEPL largely covers exploration, production and infrastructure activities in the oil and gas exploration. Now this group teams up with Hyundai for the purpose of introducing top of the line heavy commercial. Under the subsidy of Al-Haj Hyundai, heavy duty truck, luxury buses and medium light duty trucks will be introduced.
This investment will bring upgrade standard of Local commercial product segments with advanced technology. Hyunda which is a South Korean company will bring foreign investment in Pakistan.