PSX up 10 percent in CY19 in terms of PKR

Pakistan Stock Exchange witnessed a positive trend as the KSE-100 Index recorded an increase of 10 percent during calendar year 2019 in PKR terms.

Analysts said that the year 2019 remained a tale of two halves; the first half of 2019 recorded a decline of around 9 percent, followed by the second half of 2019 gains of around 20 percent.

The KSE-100 Index recorded a bottom of 28,764 on August 16, 2019 (year-to-date decline of 22 percent). The overall market capitalization closed the year at Rs 7,812 billion ($50.4 billion) as compared to last year's closing of Rs 7,693 billion ($55.4 billion).

The average volumes dipped to its lowest value since 2016 to 159 million shares per day. During the year 2019, the bourse witnessed only 1 IPO, that of Interloop Limited (ILP).

The year started with concerns over macro-economic stability, as the central bank continued with its restrictive policies into 2019 with devaluation of PKR by another 19 percent (PKR/USD touching 164 in June-2019) and a further increase in Policy Rate by 3.25 percent (to 13.25 percent - last rate hike in July-2019).

The investor sentiments started to improve from October as the central bank hinted that most of policy actions to address macro imbalances have been carried out, Syed Atif Zafar, an analyst at Topline Securities said.

The Current Account turned in a surplus in October-2019, PKR/USD has appreciated by 6 percent and secondary market yields for 6-M and 10-Yr papers have declined by 60bps and 290bps, respectively from their highs in 2019.

He said local equities scored lower than gold and PIBs during the year. Gold proved to be the best investment for local investors in 2019, with a return of 31 percent in PKR terms as PKR depreciation augmented returns for the investors.

The outgoing decade was a memorable for Pak equities. The 2010s proved to be a favorable decade for Pakistan equities, with a 10-year.

CAGR of 16 percent during the decade (average return: 18 percent). In US$ terms as well, the KSE-100 posted a CAGR of 9 percent. In comparison, the MSCI Developed Markets (DM), MSCI World, MSCI Frontier Market (FM) and MSCI Emerging Market (EM) all recorded lower CAGRs of 9 percent, 7 percent, 1 percent and 1 percent, respectively during the period.

Pak equities also outperformed other asset classes in Pakistan, with investments in real estate estimated to have increased at a CAGR of 11 percent during the decade, followed by investments in gold (plus 10 percent). The 6M T-bills and US$ were key underperformers, with returns of 9 percent and 6 percent, respectively.

The performance of Pak equities during this period was largely driven by anticipation of an economic boom on the back of over $50 billion investments under the China Pakistan Economic Corridor (CPEC). While political uncertainty remains a norm, consistency in the democratic process during the decade played a pivotal role in outperformance of Pak equities.