The outgoing year was the most stressful for stock market investors in Pakistan. According to a report issued by JS Global on Pakistan Stock Exchange's (PSX) performance of the year 2017, the benchmark KSE-100 index plunged by 15 percent (US dollar terms 20 percent) to close at 40,471.
The KSE-100 index is down 24 percent from its intra-day peak of 53,127 recorded on May 25, 2017 and it is the worst year in terms of returns since 2008 (KSE-100 index was down 58 percent). The value of the local bourse closed at $78 billion, down 15 percent from last year's closing. Interestingly, the value is just 12 percent higher compared to 2007 closing as compared to an increase of 188 percent in KSE-100 index during this period.
The average daily volumes also suffered as a result with average daily turnover declining to 236 million shares per day (declined 16 percent YoY), however average traded value marginally improved to $115 million per day (up 3 percent YoY). Amongst the key sectors, Cements, Power Generation and Commercial Banks were the major laggards while Oil and Gas Exploration, Textile Composites and Automobile Assemblers were outperformers in the market.
The JS report said that the decline at the PSX started with expected MSCI-related inflows not materializing on MSCI rebalancing day, ie May 31, 2017 (net outflow of $82 million). All this while, political turmoil due to the disqualification of then Prime Minister Nawaz Sharif and post disqualification-related events along with concerns over economy - particularly on the external account - continued to eat into investors' sentiments.
According to Topline report Pakistan's Benchmark KSE-100 index slumped from being one of the best performing markets in 2016 to 2017's worst performing market in the world. The market generated below average returns in the outgoing calendar year 2017.
Total return KSE-100 Index lost 15 percent (20 percent in US$) in 2017 compared to last 10-year average return of 24 percent (19 percent in US$ terms) and last 20 year average of 27 percent (22 percent in US$ terms). This is the worst year for Pak Equities since 2008 when market crashed 58 percent due to price floor.
After strong performance over the past 5 years (2012-16) with KSE-100 returning 33 percent annually, 2017 turned out to be a tale of two halves. The first half saw a bull run as upgrade to MSCI Emerging Markets (EM) garnered risk-off euphoric sentiments, which rallied the market up to a peak of 52,876 points on May 24, 2017, registering 11 percent growth in first five months (Jan-May 24 2017).
According to Topline foreigners remained net sellers in 2017 for the third consecutive year. They bought shares worth $4.4 billion and sold $4.9 billion resulting in net outflow of $488 million according to NCCPL data. This remained higher than 2016 net outflow of $339 million and has taken three year outflow to $1.1 billion.
Pakistan Equity markets witnessed three Initial Public Offerings (IPOs) during 2017 (excluding Modarabas) raising Rs 8.5 billion, compared to three IPOs during 2016, which raised Rs 4.2 billion. Due to deteriorating investment climate & some regulatory setbacks, three IPOs amounting to Rs 11 billion were delayed.
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