Zubair Yaqoob
Karachi
KSE-100 index posted a return of 9.9% YoY during CY19 while USD-based return clocked-in at -1.4%. First positive return after two years of consecutive negative returns. Barring the last couple of months, CY19 was nothing short of a horror story for the equity market with a dominating bearish trend. During the year, the KSE-100 index crashed to a 5-Yr low of 28,765pts on 16th Aug’19, which was a 22% contraction since Dec’18 and a 31% decline on a YoY basis. Stringent conditions attached with the USD 6bn IMF bailout package such as 40% higher FBR tax revenue target, currency depreciation, cap on sovereign guarantees, electricity and gas tariff hikes were the sources of pessimism during the outgoing year. Meanwhile, tension on the border with India following the air combat in Feb’19 had its own adverse effects on the overall sentiment. Albeit, the domestic equity bourse showed a sharp inflection post its low in Aug’19. Till date, since its low the market has shown a remarkable rebound of 42%, and in effect turning the CY return positive. Undoubtedly, dirt cheap valuations across the index and over-selling were pivotal factors for the impressive market performance but we see the economy entering into stabilization mode as a more sustainable and important reason.
