Latest news with #WaqasGhaniKukaswadia
Express Tribune
01-07-2025
- Business
- Express Tribune
PSX tops Asian markets with 60% return
Listen to article Pakistan's equity market closed FY25 as the top-performing market in Asia, delivering a 60% return and significantly outperforming all major regional peers. This strong performance was driven by macroeconomic stability, structural reforms, and improved investor sentiment, despite global and domestic challenges. Analysts from JS Global and AKD Securities cited a robust recovery in confidence, high trading activity, and strong sectoral performance as key drivers. Waqas Ghani Kukaswadia, Head of Research at JS Global, said the rally reflected a turnaround in investor sentiment due to better economic indicators and policy continuity. According to data from JS Global, Pakistan Stock Exchange (PSX), and Bloomberg, Pakistan's performance outshone China (16%), Vietnam and Korea (10% each), and India (6%), while the Philippines, Indonesia, Taiwan, Malaysia, and Thailand posted negative returns. Thailand declined the most, by 16%. Despite the rally, Pakistan's equity market remains undervalued. It trades at a price-to-earnings (P/E) multiple of just 6.3 times, far below regional averages. India trades at 23.1 times, Taiwan at 16.5, Malaysia at 14.1, and China at 13.4. The Philippines and Indonesia also trade at higher multiples — 10.2 and 10.9, respectively. Analysts believe this valuation gap highlights strong upside potential, particularly for long-term investors seeking undervalued emerging market exposure. Muhammad Awais Ashraf of AKD Securities credited the KSE-100 Index's momentum to aggressive monetary easing, tight fiscal policy, and a strong external account. These factors made equities the top asset class for a second straight year. The KSE-100 rose by 60.1% in local currency and 57.1% in USD terms, driven largely by capital appreciation. The rupee depreciated by 1.9% in FY25, after appreciating 2.7% in FY24. Rising import demand and limited external financing impacted the currency, despite a current account surplus. Investor participation surged in FY25. Trading volumes rose 43.6% year-on-year to a record 823 million shares. The value traded jumped 82.6% to Rs38.1 billion. The rally was broad-based, led by the Main Board. The Pharmaceutical sector posted the highest return of 99%, followed by Cement (93%), Oil Marketing Companies (88%), and Fertilisers (78%). Banks contributed the most to index gains with 15,160 points, followed by Fertilisers (8,292 points), E&Ps (6,845), and Cement (5,596). The only sector to negatively impact the index was Automobile Parts & Accessories, which pulled it down by 90 points. However, FY25 also brought challenges. Pakistan's reclassification by FTSE to Frontier Market status in September 2024 led to foreign outflows. Foreign investors sold $304.3 million worth of equities, ending a two-year buying streak. The banking sector saw the largest outflow of $108.7 million, followed by fertilisers ($66.9 million), E&Ps ($65.8 million), food ($42.3 million), and power ($21.3 million). In contrast, the technology sector saw net inflows of $21.8 million, with cement, textiles, and OMCs also attracting some inflows. Domestically, mutual funds became net buyers for the first time in three years, purchasing $232.9 million in equities. Companies and individual investors were also active, buying $94.5 million and $68 million, respectively. NBFCs and smaller institutions made marginal purchases. However, banks, insurance firms, and brokers reduced their equity exposure by $55.1 million, $21.2 million, and $17.6 million, respectively. Looking ahead, analysts remain optimistic about the PSX. Kukaswadia said the re-rating story is intact, supported by macro stability, lower interest rates, and improving sentiment. Ashraf added that continued monetary easing, structural reforms, and fiscal discipline will keep equities in focus. Falling fixed-income yields make equities even more attractive. Pakistan's forward P/E stands at just 5.6 times. Ashraf highlighted sectors like energy, banking, and fertilisers as key beneficiaries. AKD's top stock picks for FY26 include OGDC, PPL, MCB, MEBL, HBL, FFC, ENGROH, PSO, FCCL, INDU, ILP, and SYS.
Express Tribune
28-06-2025
- Business
- Express Tribune
Short-term inflation eases on lower food prices
Listen to article The Sensitive Price Indicator (SPI) for the week ended June 26, 2025 recorded a year-on-year (YoY) decrease of 1.52% and a week-on-week (WoW) decline of 0.18%, driven largely by falling prices of key food items including eggs, chicken, bananas, onions and potatoes, according to data released by the Pakistan Bureau of Statistics (PBS). The SPI declined 0.18% compared to the previous week, primarily driven by a sharp drop in prices of essential food items such as eggs (-12.27%), chicken (-10.75%), bananas (-2.75%), onions (-1.46%) and potatoes (-1.27%). However, upward pressure was observed in electricity charges for Q1 (+6.88%), garlic (+5.15%), liquefied petroleum gas (LPG, +1.24%) and sugar (+0.88%), among others. Out of 51 monitored items, prices of 12 items (23.5%) increased, 14 items (27.5%) decreased and 25 items (49%) remained unchanged. On a year-on-year basis, the SPI showed a 1.52% decrease, with major drops in onions (-62.28%), tomatoes (-40.70%) and electricity charges (-37.62%). Meanwhile, notable annual increases were seen in ladies' sandals (+55.62%), sugar (+27.35%) and powdered milk (+25.97%). The SPI tracks prices of 51 essential commodities from 50 markets across 17 cities, providing a weekly snapshot of inflationary trends in Pakistan. The combined SPI stood at 309.80 points compared to 310.35 points a week earlier and 314.57 in the corresponding week of last year, according to data compiled by Arif Habib Limited. All income groups experienced a decline in the weekly inflation. The lowest income group (Q1) saw a marginal drop of 0.06%, while the highest income group (Q5) recorded a decrease of 0.25%. On a yearly basis, Q2 experienced the largest decline of 3.31%, followed by Q1 at 2.36% and Q3 at 1.80%. The least affected was Q5, with a year-on-year decline of just 0.33%. The historical yearly trend indicates that inflation remained in negative territory for most of March and April, hit a brief positive spike in mid-May and turned negative again through June, reflecting the return to disinflationary pressure. Following a 3.5% year-on-year reading in May 2025, the monthly Consumer Price Index (CPI) is expected to stand at 3.1% in June 2025, noted Waqas Ghani Kukaswadia, Research Head at JS Global. "The base effect is now fading, signalling the return to normalised price trends." This would take the FY25 average to 4.6%, down from the FY24 average of 23.9%. Food inflation for June 2025 is expected to rise 2.8% on a year-on-year basis, which was 0.97% last year, owing to the dissipation of base effect. Nevertheless, price decreases in certain food items are likely to lead to a month-on-month decline in food inflation. Housing, gas and electricity category is projected to post a 4% year-on-year decline in June 2025, primarily due to reduction in electricity tariffs. Core inflation is expected to clock in around 8.5% year-on-year in June. Core inflation, which excludes food and energy items, has remained around 9-10% for the past many months. Urban core inflation was registered at 7.3% in May, while rural core inflation was reported at 8.8%.
Express Tribune
27-06-2025
- Business
- Express Tribune
SBP reserves drop by $2.7b
The central bank said in its latest weekly update on Thursday that the country's foreign exchange reserves, held by the SBP, decreased $66 million to $8.15 billion in the week ended January 5, 2024 due to debt repayments. photo: file Listen to article Pakistan's foreign exchange reserves held by the State Bank of Pakistan (SBP) fell sharply by $2.66 billion during the week ended June 20, 2025, bringing the total to $9.06 billion. "This marks the second-largest weekly decline since data was available, ie, 2011," noted Arif Habib Limited (AHL). The steepest fall on record was the $2.91 billion drop seen in March 2022. The decline was driven primarily by external debt repayments by the government of Pakistan, with a major portion attributed to the repayment of commercial loans, the State Bank said. However, the pressure on reserves is expected to ease in the coming days. During the current week, the SBP has received $3.1 billion in fresh commercial borrowing and over $500 million from multilateral sources. These inflows are expected to be reflected in reserves data for the week ending June 27, 2025, the central bank added. As of June 20, 2025, Pakistan's total liquid foreign currency reserves stood at $14.4 billion, comprising $9.06 billion held by the SBP and $5.33 billion held by commercial banks. JS Global Head of Research Waqas Ghani Kukaswadia stated that the drop in reserves is likely due to a payment rollover and the corresponding inflows should appear in next week's figures. The situation highlights the sensitivity of Pakistan's reserves to debt repayments, even as incoming inflows are expected to stabilise the outlook in the short term. Moreover, as of May 2025, Pakistan's Roshan Digital Account (RDA) gross inflows reached $10.381 billion. Of the total funds received, $1.787 billion has been repatriated by account holders while $6.648 billion has been utilised within the country. Consequently, the net liability stood at $1.947 billion, representing the portion of funds available for potential repatriation, according to AHL. Furthermore, the Pakistani rupee saw a slight uptick against the US dollar on Thursday, appreciating by 0.02% in the inter-bank market. By the end of trading, the local currency closed at 283.67, marking a modest gain of five paisa compared to Wednesday's close at 283.72. Globally, the US dollar weakened, hitting multi-year lows against both the euro and the Swiss franc. The decline was driven by growing concerns over the future independence of the US Federal Reserve. Meanwhile, gold prices in Pakistan rose, though international bullion rates saw a slight decline, influenced by reduced geopolitical tensions in the Middle East and ongoing uncertainty surrounding the US Fed's rate outlook. In the domestic market, the price of gold increased by Rs1,335 per tola, reaching Rs356,000.
Express Tribune
24-06-2025
- Business
- Express Tribune
PSX surges 5.58% as market rallies after Iran-Israel ceasefire
Listen to article The Pakistan Stock Exchange (PSX) posted a sharp rally on Tuesday, with the benchmark KSE-100 Index soaring 5470.16 points, or 4.71%% to 121,637.63 points during intra-day trading, reflecting heightened investor optimism following US President Donald Trump's announcement of the ceasefire between Iran and Israel. The current index gained 6,479.11 points over the previous close of 116,167.47, marking one of the largest single-day gains in recent trading. Source: PSX The market reached an intraday high of 122,725.21 and a low of 120,369.53. Trading volume stood at 236.9 million shares, with a total value of Rs20.6 billion, indicating strong buying interest across sectors. The upward movement reflects renewed investor confidence amid easing geopolitical tensions and hopes of regional stability. Waqas Ghani Kukaswadia, Head of Research at JS Global remarked that widespread buying activity was witnessed across all sectors, driving a strong rally. Trading was halted for an hour due to the sharp upward movement. The market is up by 5.65%, he added. Read: Stocks slump in panic selling Earlier on Monday, PSX saw a steep sell-off, driven by escalating geopolitical tensions following the US attack on Iran. The benchmark KSE-100 Index plunged by 3,856 points (3.21%) to close at 116,167, after hitting an intra-day low of 115,887. This marks one of the sharpest single-day losses in recent months. According to Ahsan Mehanti of Arif Habib Corp, stocks slumped amid a sell-off in global equities due to the escalation in Middle East tensions. Supply disruptions driven by expected retaliation to the US attack on Iran contributed to a weak export outlook and high inflation worries, which played a major role in selling activity at the PSX, he said. Investor sentiment was dampened by rising geopolitical tensions, especially the intensifying conflict between Israel and Iran, which led to heightened uncertainty and widespread risk aversion. The nervousness triggered broad-based panic selling, observed Topline in a market review. Topline added that major index-heavy stocks, including Engro Holdings, Pakistan Petroleum, Lucky Cement, OGDC and Mari Petroleum, were among the top laggards, dragging the index down by 1,054 points. In its commentary, Arif Habib Limited (AHL) stated that the week started with strong selling following the escalation in the Middle East over the weekend. Only five shares rose while 93 fell, with Engro Holdings (-5.02%), Pakistan Petroleum (-6.3%) and Lucky Cement (-4.02%) being the biggest drags. JS Global analyst Mubashir Anis Naviwala remarked that the PSX suffered heavy losses amid a sharp sell-off, opening with a steep 2,000-point gap down amid panic selling. The index failed to recover throughout the session, touching the low of 115,887 and eventually closing with a massive loss of 3,856 points at 116,167. Total traded volume stood at 595 million shares, with top activity in WorldCall Telecom, Sui Southern Gas Company, Pervez Ahmed Consultancy, K-Electric and Kohinoor Spinning Mills, he noted. The sharp decline reflected heightened fears driven by uncertainty and external pressures. "We advise investors to remain cautious, focusing on risk management and selective accumulation," the analyst added. Overall trading volumes increased to 595 million shares compared with Friday's tally of 421.6 million. The value of shares traded was Rs23.5 billion. Shares of 468 companies were traded. Of these, 56 stocks closed higher, 386 fell and 26 remained unchanged. WorldCall Telecom was the volume leader with trading in 53.3 million shares, falling Rs0.10 to close at Rs1.35. It was followed by Sui Southern Gas Company with 36 million shares, losing Rs4.2 to close at Rs38.8 and Pervez Ahmed Consultancy with 24 million shares, dropping Rs0.12 to close at Rs2.72. Foreign investors bought shares worth Rs162 million, the National Clearing Company reported.
Express Tribune
11-06-2025
- Business
- Express Tribune
Status quo maintained on equity taxes
Listen to article The Federal Budget FY26 has been largely welcomed by market participants, particularly equity investors, as it avoids raising capital gains or dividend taxes while introducing policies favouring equities over fixed income. While some sectors stand to benefit, others face selective pressures, resulting in a broadly balanced economic impact. For the Pakistan Stock Exchange (PSX), the budget brought relief as the Capital Gains Tax (CGT) on equities remains unchanged at 15%, dispelling fears of a potential hike, said Ali Najib, Deputy Head of Research at AHL. The government also raised the tax on interest income to 20% (from 15%), though National Savings Schemes (NSS) are exempt. This shift is seen as favourable for equities, encouraging investors to move from fixed income to stocks and mutual funds. Waqas Ghani Kukaswadia, Research Head at JS Global, noted that income from loans will now be taxed at 25%, further discouraging debt-oriented funds. Additionally, a 7% excise duty on commercial construction has been removed, and federal stamp duty on real estate transfers has been reduced from 4% to 1%, likely encouraging real estate transactions and indirectly supporting the construction sector. On the banking front, the impact is neutral. The government proposed raising the withholding tax (WHT) on cash withdrawals from 0.6% to 1% for non-filers, while profit on debt will attract a 20% tax. A 5% tax on foreign digital payments has also been introduced, seen as revenue-enhancing without significantly disrupting banking operations. Construction and real estate sectors benefit from multiple relief measures. WHT on property transactions has been reduced significantly – from 4% to 2.5% for higher-value transactions, and from 3.5% to 2% and 3% to 1.5% for others. A tax credit for affordable housing and a Rs5 billion housing subsidy are expected to spur demand, benefiting cement and steel industries. Stamp duty on real estate transfers has been reduced federally from 4% to 1%, with provinces likely to follow. The removal of excise duty on commercial construction projects further incentivises builders and developers. In real estate rentals, a 4% tax on rental income has been introduced, balanced by the abolishment of the Federal Excise Duty (FED) on plot transfers. Overall, these changes are seen as neutral to positive for the sector. The auto sector faces negative adjustments. The concessional 18% GST slab for hybrid vehicles now applies to all cars previously enjoying a lower rate, while incentives for small cars have been withdrawn, potentially raising prices for lower-end vehicles. An EV policy for two- and three-wheelers has been proposed to reduce emissions, alongside a new carbon tax on auto fuels. Over the next five years, additional customs duty and regulatory duty on imported vehicles will be gradually removed, increasing competitive pressure on local automakers. The budget proposes a gradual removal of tax exemptions for the FATA/PATA regions to reduce market distortions and create a level playing field for manufacturers elsewhere, with sales tax exemptions to be phased out by FY29. For the cement sector, the Rs5 billion housing subsidy and tax credits for affordable housing are expected to spur demand. The power sector impact is neutral, though the removal of the cap on the 10% Distribution Surcharge may slightly raise industrial tariffas. In oil and gas, a Rs2.5/litre carbon levy was introduced, with neutral impact on Oil Marketing Companies. Tech sector tax exemptions for SEZ/STZ zones are capped until 2035. Other steps include super tax relief, higher e-commerce WHT, and support for PIA's privatisation.
