KARACHI:
The Pakistan Stock Exchange (PSX) witnessed a tumultuous 365 days in 2021 as on the one hand it was classified among the best Asian bourses but on the other hand, downgraded from emerging markets to frontier markets by Morgan Stanley Capital International (MSCI).
Share prices of the top 100 companies listed at the PSX improved by a net 2% during 2021, pushing the benchmark KSE-100 index to 44,596.07 points at the close of trading on the last day of the year.
The bourse closed the year on a lacklustre note despite securing the title of second-best performing market in Asia in late January 2021.
It registered record-high volumes of 2.5 billion shares (including futures trading) in a single day in May compared to the daily average of 474 million shares recorded during the calendar year 2021.
On the flip side, the market showed the worst performance in 21 months on December 2, 2021, when the benchmark index plunged 2,135 points or 4.7%.
It came after the country’s trade deficit soared to a record high of $5 billion in November and yields on T-bills jumped suddenly, signalling an aggressive hike in the benchmark interest rate, which later proved to be true.
The market began the year on January 1 with the benchmark index at 43,755 points. It hit the year’s low at 42,780 points in March because of a spike in Covid-19 infections.
It recorded the year’s high of 48,726 points in June on the day the government presented an incentive-laden budget for the current fiscal year. The market reached that level after a gap of four years, which was last seen in June 2017.
“The market took off to a good start on a V-shaped (quick) recovery in the national economy,” remarked Arif Habib Limited (AHL) Head of Research Tahir Abbas while talking to The Express Tribune.
Read PSX likely to reach 50,000 by end-2022
The third wave of the Covid-19 pandemic in the country and concerns over the nationwide lockdown and impact on the economy did not let the market flourish after the initial good performance in late January.
The full reopening of the economy after lockdowns, increased inflow of workers’ remittances and optimism about the incentive-laden budget to support the Covid-hit economy took the market back to a four-year high in June.
The bourse, however, failed to sustain the level after global commodity prices more than doubled, pushing up the country’s imports significantly, which reached a record high of $8 billion in November.
The historic surge in imports from June 2021 onwards started consuming the country’s foreign exchange reserves. As a result, the demand for the dollar soared in the inter-bank market to pay for rising imports.
The development again sparked depreciation of the rupee against the greenback, causing inflation reading to shoot up to a 21-month high of 11.5% in November and pulling the market down by 4.7% (or 2,135 points)…
Read More: Muddled year for stock market