Ongoing political volatility and a vulnerable economic situation took their toll on the performance of the Pakistan Stock Exchange (PSX), which saw only three Initial Public Offerings (IPOs) during 2022.
As per a report published by brokerage house Topline Securities on Wednesday, Pakistani equities market saw just three IPOs in 2022 with a total amount raised of Rs1.3 billion.
“This is the lowest amount raised in nine years where IPOs raised Rs0.8bn in 2013,” said the brokerage house, which also shared that the number of IPOs were also the lowest after 2019 when Pakistan saw just 1 IPO at PSX.
“This is in total contrast to last year when PSX saw eight offerings with a total amount raised to the tune of Rs20 billion.
“We attribute this to market underperformance and political and economic instability,” said Topline Securities.
Out of the three listings at PSX, Adamjee Life Assurance (ALIFE) and Global REIT (GRR) were on the main board whereas Supernet (GEMSPNL) was on the GEM board.
ALIFE, a subsidiary of Adamjee Insurance (AICL), offered 25 million shares at a strike price of Rs28. The company managed to raise Rs700 million in March, 2022.
GEMSPNL, a subsidiary of Telecard Limited, which is engaged in providing information and communication technology services, offered 21.1 million shares at strike price of Rs22.5, raising Rs475 million in April, 2022.
Meanwhile, Globe Residency REIT, a closed end development REIT, offered 14 million shares to investors at fixed price of Rs10/unit, raising Rs140 million.
The report pointed out that the decline in IPOs during the ongoing year was reflected globally as well, citing Ernst & Young (E&Y), which saw a total of 992 IPOs in 2022 that raised $146 billion by the end of 3Q2022, a decline of over 57% YoY.
“This is attributed to rising macro challenges, market uncertainty, and falling global equity prices,” it said.
On the other hand, the PSX witnessed buybacks from six companies in 2022 including Engro Corporation, Bank Alfalah Limited, Lucky Cement Limited, Maple Leaf Cement Factory Limited, NetSol Technologies Limited and JDW Sugar Mills Limited.
“These buybacks indicate price valuations are low,” Sana Tawfik, an analyst at Arif Habib Limited (AHL), told Business Recorder.
“This could result in a liquidity influx, which would give investors some confidence,” she said, adding that other companies are expected to follow this trend soon as well.
Earlier, Topline said that Pakistan’s market performance in 2023 will continue to remain dull, mainly due to Pakistan’s external debt repayment crisis and increased political noise ahead of elections.