KARACHI: Despite massive foreign selling due to FTSE rebalancing outflow, Pakistan Stock Exchange is expected to witness positive trend with expectations that the market to reach 106,000 level by June 2025, providing return of 24 percent, analysts said.

Based on the September 2024 holding analysis, the FTSE benchmarked fund, Vanguard, has sold approximately $82.5 million worth of stocks by September 2024 out of total $165 million using current market price. “We believe that approximately $60 million worth of stocks are sold in first two weeks of October 2024, taking total selling to $135-145 million,” Shankar Talreja an analyst at Topline Securities said.

In a research report, he said FTSE Russell announced on July 03, 2024 reclassification of Pakistan from Secondary Emerging to Frontier Market status with effect from September 23, 2024 as Pakistan failed to meet the criteria of stock count. FTSE benchmarked fund held $160-165 million of position in Pakistan stocks as of April/May 2024.

The Fund was fully sold in Systems Limited (1.8 million shares) by September followed by OGDC with 96 percent of position sold off by September 2024 with quantity of 25 million shares (total 26.3 million shares). Furthermore, the Fund has also sold 84 percent of its holding in EFERT with quantity of 18.4 million shares (total 21.8 million shares).

The Fund has sold only 11 percent of the position in PSO by September 2024 with 11.4 million shares still in hand out of total 12.8 million shares. The second and third remaining position is in PPL and FFC with 28 percent of the sold in both stocks. The remaining quantity of PPL and FFC is 17.8 million shares and 18.2 million shares out of total holding of 25.0 million and 25.3 million shares, respectively.

“Our traders believe that, approximately $55-60 million worth of stocks are sold in first 14 days of October 2024”, he said adding that from October 01 to October 14, 2024 the foreigners have sold $88 million of stocks (gross), which also includes selling in non FTSE stocks like COLG, valuing around $18 million.

“We believe, out of COLG adjusted selling of $70 million, majority (roughly 85-90 percent or $60 million) consists of Vanguard. That said, in our view, Vanguard is now left with $20-30 million of stocks. The few leftover names in our view are most likely FFC, TRG, ENGRO, MTL, and PSO, based on the NCCPL FIPI data analysis.

We believe, selling of Vanguard is well absorbed by local Mutual Funds with net buying of $86.2 million from September 2024 to date followed by Companies with net inflows of $25.3 million,” Talreja said.

“We expect market to reach 106,000 by June 2025, providing return of 24”, he added.

Copyright Business Recorder, 2024