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Top Five News that will affect Pakistan Stock market this Week

Pakistan Stock Exchange (PSX) is showing continued growth for last few years. It has showed record-breaking performance due to political and economic stability. Moreover, PSX received an overwhelming response for Expression of Interest (EOI) for acquiring stake not only from the local but also from the foreign investors.

The stock market is nothing without speculation! News, gossips, and other hunch do affect the stock exchange position. Let us discuss top five news items affecting the Pakistan stock market this week

Political Scenario

For the last five months or so, the political situation in South Asia is not getting normal due to political ailment between two rival countries namely India and Pakistan.

Secondly, Prime Minister Nawaz Sharif family is still facing corruption allegations highlighted in Panama papers. According to a recent report, Pakistan Supreme Court is still awaiting answer from Sharif family on their offshore companies. The hearing was adjourned till Friday; December 9.The recent political scenario will create a lot of ambiguity for the foreign investors to invest in stock market for a long run.

Increase in Oil Prices

Good News for the crude oil investors!

After 16 months of wait, the crude oil prices hit $55 a barrel. Thanks to the OPEC landmark, deal to cut the production of the oil and it will give speculators a chance to bet on the higher prices.  The oil prices fell to $30 a barrel due to oversupply of oil from major production houses like Saudi Arabia, Iraq, and Iran.

This news will boost the Pakistan market as well and investors will again start showing some interest in major oil companies like PSO, Shell, Byco Petroleum, and Attock Petroleum.

 

Cotton Prices

The cotton industry is showing quite stable performance in the last couple of years due to improvements in power and gas sector of Pakistan. However, this year, cotton production was below the target. According to a statement by Cotton Crop Assessment Committee, Pakistan is expected to produce 10.542 million bales this year as compared to Budgeted production that was 14.5 million bales. The reason for the shortfall was insect pests, market pattern, and high temperature.  Other than that, Punjab sowed 20pc less area due to lower prices last year. All these factors will put a negative effect on industrial investment.

Supply and demand factor will increase overall profitability of the cotton industry. Increase in profitability will attract the investors to invest in shares of major cotton manufactures like Nishat, Sapphire, and Kohinoor industries.

Foreign Investment

Despite of cross border tension, Developing countries like Korea and Italy are showing interest to enhance bilateral trade and investment in Pakistan. Italian Deputy Minister for Economic Development Ivanv Scalfarotto announced that Italian communication and construction companies are quite interested to take part in China Pakistan Economic Corridor. The volume of bilateral trade will jump to $1.8 billion next year, told by Rana Muhammad Afzal Khan.

Increase in the bilateral trade will increase the confidence of the local as well as the foreign investors to invest in the  stock market.

 

Shanghai Electric will acquire K-Electric

Big news for the investors in the energy sector!

The country’s largest and only vertically integrated power utility will be acquired by the Shanghai Electric. Abrajj Group owns 66.4 % shares and the management control of K-electric and Shanghai Electric is a state- owned enterprise in China. The deal was closed at $1.77 Billion that will bring foreign investment as well as a lot of speculation in the stock market!

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About Emaad Qureshi