Stocks post largest gain in 50 sessions on UAE support

Stocks on Monday posted their largest one-day gain in two-and-half-months, cheering reports that United Arab Emirates (UAE) government has agreed to extend a support package worth $3 billion to help Pakistan prop up its tottering economy, dealers said.

Topline Securities in its daily market review said reports quoting Information Minister Fawad Chaudhry as saying that a $3.2 billion facility of oil-on-deferred-payment was also in the pipeline, somewhat acted as a trigger.

“Moreover, Fitch Solutions’ forecast that State Bank of Pakistan is likely to keep the interest rates unchanged for the remainder of this fiscal year also gave sentiments a boost,” the brokerage added.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 2.70 percent or 1014.91 points to close at 38,562.40 points. KSE-30 shares index, however, lost 3.49 percent or 614.66 points to end at 18,209.23 points level.

Of 345 active scrips, 233 moved up, 90 retreated, and 22 remained unchanged. The ready market volumes stood at 157.103 billion shares, as compared with the turnover of 64.429 million shares in the previous session.

Hamad Aslam, director research at Elixir Securities, said the exuberance was led by positive developments on financing of the external account deficit after conclusion of a successful visit by the crown prince of UAE. “This further helped develop market consensus that current account deficit may significantly ease going forward and we expect the deficit to clock in at $11.6 billion and $7.7 billion in FY19 and FY20, respectively (from a high of USD19.0bn in FY18),” Aslam said.

Analyst Ahsan Mehanti from Arif Habib Corporations said stocks closed sharply higher led by oil, banking, and auto scrips on strong earnings outlook. “Surging global crude oil price and investor speculations ahead of yearend earnings’ announcements due later this week led to a record close at the apex bourse,” Mehanti added.

It was a stellar session that saw sizeable deals in scrips across-the-board, especially in oil, cement, steel, banking, and auto sectors. The visit of the UAE crown prince’s sent positive vibes across the market, raising hopes for financial assistance and investment in a number of sectors especially installation of a refinery in Pakistan. This development shows foreign government repose lot of faith in Prime Minister Imran Khan’s vision to put the country’s economy on track and reduce poverty.

Another factor behind the surge was the upcoming mini-budget which according to punters is expected to bring some relief for the capital market. The government is likely to reduce tax rate on buying and selling of shares by half to 0.1 percent. This step, if approved, will improve daily volume and attract new flow of investment. The highest gainers were Mari Petroleum, up Rs43.60 to close at Rs1344.45/share, and Siemens Pakistan, up Rs22.79 to finish at Rs824.99/share.

Companies that booked highest losses were Al-Ghazi Tractors, down Rs27.85 to close at Rs532.15/share, and Sheezan International down Rs23.75 to close at Rs451.25/share. K-Electric Limited recorded the highest volumes with a turnover of 22.848 billion shares. The scrip gained Rs0.47 to close at Rs6.29/share. The lowest volumes were witnessed in Kohinoor Industries, recording a turnover of 4.582 million shares, and losing Rs1 to end at Rs4.98/share.