Karachi, September 09, 2022 (PPI-OT): Market turned bearish over initial assessment of flood losses

Pakistan equities closed the week on a negative note at 41,948, down 361pts. Damage assessment of floods and recent round of Rupee devaluation (4% WoW) led to profit taking this week. The week started with initial assessment of damages which suggested losses between US$10bn to US$18bn with 80% of cotton crop in Sindh and 25% of the total country’s cotton crop wiped off. It is estimated that Pakistan would need to import around 2.5mn bales of cotton to meet the country’s demand. Average volumes witnessed a decline (34%) with 138mn shares traded during the week.

Key underperformers were Autos (-3%), Power (-3%), and Refinery (-2%) while Textile Weaving (3%), Tobacco (2%), and OMC (1%) outperformed the benchmark. During the week, Brent oil prices declined by 3.6% to US$90.88/bbl over fears of a global recession. On the news front, Qatar declined the deposit plea made by Pakistan, subsequent to which an investment proposal was floated. Moreover, Pakistan may get an additional loan worth US$2.57bn from IMF. Furthermore, FATF team concluded their on-site visit and a decision is expected by Oct-22 while SBP reserves for the week ending Sep 2, 2022 increased to US$8.8bn on back of inflows from the IMF.