LAHORE - The benchmark KSE 100-index of Pakistan Stock Exchange climbed 3.6 percent or 1,448 points to 42,004 points during the outgoing week, building on the momentum gained from the previous two weeks.

Volumes (up 7 percent) and average value traded (up 26 percent) also continued to trend upwards during the week. To put things in perspective, the market has cumulatively gained 15 percent since October 16, 2018, as news flows pertaining to the Saudi loan package lifted investor sentiment and provided clarity regarding the balance of payments situation. As per latest news, the Prime Minister is in Beijing at the moment, where further positive developments are anticipated in lieu of BoP support and other potential favourable concessions. Moreover, talks with IMF are scheduled for next week. On sector-wise development, global crude oil prices declined by 6 percent WoW, leading to 2 percent WoW decline in the E&P sector. Moreover, cements and automobiles continued their recent rally, up 10 percent WoW and 5 percent WoW respectively owing to their preceding overcorrection. Pharmaceuticals also outperformed the benchmark index with gains of 11 percent WoW on anticipation of a higher CPI reading this month, which was announced at the end of the week, given that medicine price increases have been linked to the CPI. Meanwhile, CPI for the month of Oct-2018 stood at 7 percent YoY, as announced on Friday, compared to 5.12 percent YoY in the preceding month of Sep-2018, indicating a rising inflationary trend. In anticipation of a potential interest rate hike later this month, given higher inflationary readings, banks also rallied on this news, ending 4 percent WoW higher.

Experts said that Pakistan Stock Exchange surged 3.6 percent during outgoing week with average volumes of 322m shares (64 weeks high) as investors’ awaited for Prime Minister Imran Khan’s visit to China and hoping it would yield the same results as the Saudi Arabia trip, which helped the index to add 12 percent in 8 consecutive sessions. The KSE-100 closed the week on a 9-week high at 42,004, while this was also the first time since April 2018 that all five sessions of the week closed on a positive note.

Commercial banks and cement sectors drove the market upwards during the week, adding 812pts cumulatively, while on the other hand E&Ps chipped away 174pts.

During the week, foreigners were net sellers of $12.6m vs $17.2m in the previous week. Mutual Funds joined foreigners with a net selling of $10.8m, while individuals remained positive with net buying of $20.6m.

According to experts, Pakistan’s annual inflation rate jumped to 7 percent in October, the highest in four years, from 5.12 percent a month earlier, due to a steep rise in gas prices and multiple devaluations of the rupee.

In a notice to the exchange, BYCO Petroleum Pak Ltd (BYCO) announced that the Balochistan Environmental Protection Agency (BEPA) visited BYCO’s Single Point Mooring and Zero Point on 31st October, 2018 and has advised the company to resume its sea fueling operations with immediate effect as of 31 October, 2018. This came after they established that absolutely no leakage or loss of containment occurred from any of BYCO’s facilities, including its Single Point Mooring and associated pipeline.

Pakistan’s official foreign exchange reserves fell 0.6 percent to nearly five-year low of $7.777 billion, the central bank’s data showed on Thursday, as the Prime Minister Imran Khan departed to China to top up the depleting external account after Saudi bailout commitment last week. The State Bank of Pakistan (SBP) said its foreign exchange reserves declined $48 million as of 26 October from $7.825 billion a week earlier. The SBP’s forex reserves were teetering around six billion dollars by the end of fiscal year of 2012/13, but they recovered to US$9.097 billion till the following year-end on IMF’s loan.

As per experts, China is expected to announce a $6 billion financial package for Pakistan during Prime Minister Imran Khan visit. The package includes $1.5 billion in grant, $1.5 billion in loans and an additional $3 billion in CPEC package.