Karachi—KSE-100 Index gained handsomely with a recovery of 434 points to make a start of the first day of June in green at 36,496 levels here today. In fact, positive momentum seen in past two months extended in May 2016 and lifted the index by 6% to a new all-time high of 36,723. However, news flow on budget triggered an expected volatility in the last few sessions and snapped monthly return to 3.9%. Two key highlights in May2016 were Foreign Institutional Portfolio Investment turned positive (US$3.6mn) following eight months of incessant outflow, and a surprise reduction in policy rate by the central bank (by 25bp to 5.75%).
While volumes have picked up by 15% MoM, most of the increase is primarily attributed to higher retail participation in stock outside main board. Telecom (+8.2 MoM), IPPs (+5.7% MoM) and E&Ps (+5.5%MoM) have once again led the show while banks paired most of gains post surprise rate cut. With positive monthly return, Pakistan managed to maintain its position as best performing market among Asian EMs. According to market analysts, June 2016 seems to be a happening month as major events are clustered around small time period. Beyond market focus on policy measures relating to sector, current sentiment is also closely tied up to potential changes in tax treatment for capital gains (including bonus), dividend and share trading for filers and non-tax filers.