AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Pakistani stocks are thriving even as the country’s economic crisis escalates. The benchmark Karachi Stock Exchange (KSE 100) index has risen by over 60% in the past 12 months, beating India’s Nifty 50 index, which is up by 20% in the same period.
The index has been in a strong rally since January last year when it bottomed at PKR 38,145. It then accelerated in June when Pakistan reached an agreement with the IMF on funding. It peaked at an all-time high of PKR 67,000 in December last year.
KSE 100 vs Nifty 50
Still, the real return of Pakistan stocks has not been all that good. For one, data published this week showed that inflation rose 29.66% from a year earlier and there are signs that the trend will continue.
At the same time, the Pakistani rupee has been in a downtrend for a while. It dropped by 20% against the US dollar despite seeing some impressive gains in the final quarter of the year.
Therefore, by excluding the strong inflation and depreciating currency, the KSE 100 index rose by about 10% during the year in real terms. This calculation does not include the 22% interest rate by the central bank.
The next key catalyst for the index will happen on January 11th when the IMF will hold a meeting. In it, the agency is considering offering another $700 million to help the country supercharge its recovery. Additional IMF funds will help the country in the immediate period.
On the other hand, there is a risk that the central bank could hike interest rates this year since inflation is still stubbornly high. Most importantly, the KSE 100 index is exposed to political risks as an election takes place on February 8th. In most cases, emerging market stocks tend to underperform ahead of an election.
Looking at its constituents, K-Power was the best-performing stock in the past 12 months as it jumped by over 149%. The other top-performing stocks in the index were Pioneer Cement, Pakistan Telecommunication, Fauji Fertilizer, and Kohinoor Textile. These stocks jumped by over 100%.The other potential Pakistani company to watch will be Secure Logistics, which is considering going public this year. According to Bloomberg, the company is considering raising $2.3 million in an IPO.
The post Pakistan’s KSE 100 index is surging but beware of these risks appeared first on Invezz
