Business

SBP’s unexpected interest rate hike takes toll on PSX, plunges over 850 points

Published

2 years ago

Farwa

“Market wasn’t expecting rate hike, that’s why it reacted,” analyst says.
Benchmark KSE-100 index fell below 42,000-barrier during intra-day.
Analyst says interest rates at 16% is negative for corporate profitability.

KARACHI: The State Bank of Pakistan‘s unexpected increase in the interest rate shook investors’ confidence on the first day of the week, as the stock market took a hit with the benchmark KSE-100 index losing more than 850 points on Monday.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index had opened at 42,936.73, however, after losing 865.39 points, or -2.02% the index closed the session at 42,071.34 points.

Investors were concerned over the challenges faced by the beleaguered economy as cash-strapped Pakistan awaits funds from bilateral and multilateral partners.

The index remained on a downward trajectory, falling below the psychological barrier of 42,000 touching an intra-day low of 41,963.94 points.

In the morning, trading activity began on a negative note and the market fell steadily till midday when it touched its lowest mark for the day. Later, slight buying helped the bourse recoup some losses.

Benchmark KSE-100 index intra-day trading curve. — PSX data portal

Analyst Samiullah Tariq laid blame on SBP’s decision to increase the interest rate as a key factor for the drop in the KSE-100 index.

“[The] market wasn’t expecting a rate hike. That’s why it was reacting,” the head of research at Pakistan-Kuwait Investment Company told Geo.tv.

Capital market expert Saad Ali also blamed the “surprise interest rate hike” for the drop, adding that investors may be expecting more hikes given the inflation outlook.

“Interest rates at 16% or higher is significantly negative for growth and corporate profitability,” Ali told Geo.tv.

At the time the decision was announced by SBP, the markets had closed, which is why the KSE-100 index today went in the red at the opening.

Shares of 350 companies were traded during the session. At the close of trading, 47 scrips closed in the green, 294 in the red, and nine remained unchanged.

Overall trading volumes declined to 244.35 million shares compared with Friday’s tally of 177.29 million. The value of shares traded during the day was Rs6.97 billion.

K-Electric was the volume leader with 29.01 million shares traded, losing Rs0.17 to close at Rs2.60. It was followed by WorldCall Telecom with 22.51 million shares traded, gaining Rs0.06 to close at Rs1.36 and Dewan Farooqui Motors with 13.78 million shares gaining Rs0.06 to close at Rs11.87.

SBP hikes interest rate to 16% to curtail inflation

On Friday, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) Friday raised the key policy rate by 100 basis points to 16% — the highest since 1999.

The central bank, in a statement, issued after the meeting said that the decision reflects the MPC’s view that inflationary pressures have proven to be stronger and more persistent than expected.

“This decision is aimed at ensuring that elevated inflation does not become entrenched and that risks to financial stability are contained, thus paving the way for higher growth on a more sustainable basis,” the MPC said.

The SBP noted that amid the ongoing economic slowdown, inflation is increasingly being driven by persistent global and domestic supply shocks that are raising costs.

Business

China Contributes 43 New Foreign Firms to the 6% Growth in SECP Registrations

Published

23 hours ago

Farwa

The Securities and Exchange Commission of Pakistan has registered 2,617 new firms this year, a 6% increase from 2023, with assistance from the Special Investment Facilitation Council. This increases the overall number of businesses that are registered to 231,111.

Non-profits, trade associations, and public unlisted firms make up 4% of these, while private limited corporations make up 55% and single-member companies 41%. It is noteworthy that 99.8% of the registrations were done online, demonstrating SECP’s attempts to digitise.

Real estate has 237 new businesses, services has 306, and trade has 377 new businesses. These are the main sectors exhibiting growth. While the healthcare and textile industries each had 49 new businesses, the education sector saw 101.

China contributed the most, adding 43 new companies, out of the 61 new companies that were registered as a result of foreign investment.

These recently registered businesses are anticipated to decrease imports, increase domestic production, and contribute to closing the trade deficit.

Business

PSX reaches an all-time high as the KSE-100 Index surpasses 86,000 points.

Published

23 hours ago

Farwa

The Pakistan Stock Exchange (PSX) has achieved a significant milestone, as the benchmark KSE-100 Index has attained an unprecedented peak.

On Tuesday at midday, the index ascended by 788 points, attaining a record high of 86,846 points. Following the ratification of the constitutional amendments, the stock market has increased by 1500 points over a span of two days.

Earlier today, the KSE-100 Index increased by 683 points, attaining a value of 86,741 points, before concluding at this new apex.

The bullish trend was apparent from the commencement of the trading session, with the index rising an additional 555 points to reach 86,612 points throughout the day. The reinstatement of the 86,500-point threshold signifies robust market performance.

Business

In three months, Pakistan’s IT exports increased by 33.54 percent.

Published

23 hours ago

Farwa

During the first three months of FY 2024-25 (July to September), Pakistan’s IT export remittances hit US$ 876 million, a notable 33.54 percent rise from US$ 656 million during the same period previous year (FY 2023-24).

In a statement, Minister of State for IT and Telecommunication Shaza Fatima Khawaja stated that the amount of money sent home by the export of ICT services was US$ 292 million in September 2024, a 41.7% increase from US$ 206 million in the same month the previous year.

She stated that efforts to make it easier for businesses to conduct business in the nation are the reason why IT exports are rising and that actions are being taken to increase them.

In response to the Prime Minister’s directions, Shaza Fatima stated that the Ministry of IT and Telecommunication, the Pakistan Software Export Board, and the IT industry are dedicated to boosting IT exports with the full assistance of the Special Investment Facilitation Council (SIFC).

A trade surplus of US$ 764 million was recorded by the IT & ITeS sector in the first three months of FY 2024–25, accounting for 87.21 percent of all ICT export remittances.

Over the same period last year, this surplus represents a 36.67 percent gain over US$ 559 million. The services industry as a whole, however, experienced a trade deficit of US$ 699 million during this period.

The largest of all service sectors, ICT export remittances from July to September 2024, were US$ 656 million, followed by “other business services” at US$ 374 million.