KARACHI: The FTSE Russell’s downgrade of Pakistan to frontier market status triggered mid-session selling pressure on Thursday despite an initial bullish start. The benchmark index closed slightly higher, adding minimal gains to the previous day’s record closing.

Ahsan Mehanti of Arif Habib Corporation said stocks closed higher after the Ministry of Finance announced that the country had met all conditions to reach a Staff-Level Agreement with the International Monetary Fund for a new loan programme this month.

Speculations about strong corporate payouts from the state-owned enterprises and discussions regarding their privatisation also contributed to the third consecutive record closing.

However, he said the market experienced selling pressure after the FTSE Russell reclassified Pakis­tan as a frontier market.

“Further to the ‘FTSE Classification of Equity Markets — FTSE Equity Country Classification Interim Announcement March 2024’ that was published on March 27, 2024,” FTSE Russell announced on Wednesday that based on data as of the close on June 28, 2024, Pakistan has failed to meet the minimum securities count requirement for retaining secondary emerging market status, as there are less than two eligible Pakistan constituents of the FTSE Emerging Index as of the assessment date.

As per the FTSE Equity Country Classification framework, Pakistan will be reclassified from secondary emerging to frontier market status. This change will take effect from Sept 23, 2024, in conjunction with the FTSE Global Equity Index Series and the FTSE Frontier Index Series September 2024 index reviews.

Topline Securities noted that the key contributors to the market’s performance were the cement, banks, food and exploration sectors, led by companies like Lucky Cement, Faysal Bank, Meezan Bank, National Foods Ltd and Pakistan Oilfield, collectively added 147 points to the index.

As a result, the benchmark index hit an intraday record high of 80,888.86 points and a low of 80,134.89. However, the index closed at an all-time high of 80,282.80 after gaining 49.13 points or 0.06pc on a day-on-day basis.

However, the overall trading volume fell 7.41pc to 496.78 million shares. The traded value also dipped 14.97pc to Rs199.32bn on a day-on-day basis.

Stocks contributing significantly to the traded volume included The Bank of Punjab (29.27m shares), PIA Holding Company (26.70m shares), Pak Elektron (26.51m shares), Hascol Petroleum (26.03m shares) and Agritech Ltd (19.03m shares).

Foreign investors remained net buyers as they purchased shares worth $2.17m.

Published in Dawn, July 5th, 2024