ISLAMABAD: The market will continue to be erratic for the next six months, especially for new investors, due to the likelihood of the general elections and political tension, said Muhammad Shakeel, manager of Progressive Investment Management (Pvt) Limited, a securities broker.
In an exclusive conversation with WealthPK, he advised new investors to exercise caution when investing in the stock market. “The market is heavily influenced by the economic conditions of the country. Hopefully, the market will be in good shape the next year, which may also be the election year,” he added.
WealthPK: What factors a new investor must have in his mind before entering the market?
A: A new investor making his entry to the market must keep in mind several factors, including the fact that the market is greatly impacted by political conditions, the fluctuating oil prices in the world market, rising interest rates, dwindling remittances, currency volatility and geopolitical environment.
WealthPK: Will you be able to pay your stockholders the face value and the accumulated interest when the bond matures?
A: The company is in a fix as to how it will be able to make payments to holders of its bonds that are going to mature by the end of the year as the firm must pay the bond’s owner the bond’s face value plus any accumulated interest on the maturity date. However, the company hopes the economic situation will improve as the prime minister is anticipated to make his first trip to China in November, where he will seek rescheduling of the Chinese loans. The market will be positively impacted if the loans are rescheduled, but if the rescheduling does not happen, Pakistan will have a crunch time, which may cause further deterioration in rupee-dollar parity, thus affecting the market sentiment.
WealthPK: Will the market sentiment improve in the months to come?
A: The increasingly unpredictable economic landscape has created uncertainty in the market. But the sentiment will certainly improve as finance minister Ishaq Dar has ruled out the likelihood of Pakistan defaulting on foreign debt repayments, and the country is also likely to have the December bond maturity date extended. Good vibes are also coming from the International Monetary Fund that it may ease some of the conditionalities of its loan programme for Pakistan.
WealthPK: What do you think if investors should retain or sell their stocks in the prevailing situation?
A: While some investors believe that investing in the stock market will give them good benefits, others think they would lose their money. Investments in the equity market can fetch excellent returns if the investor knows when to make an investment.
Amid the current economic conditions, an investor is advised to adopt a buy-low and sell-high strategy. Some investors believe in a buy-and-hold investing strategy.
WealthPK: How do remittances impact the market and the country’s economy?
A: Remittances significantly contribute to economic growth through causing an uptick in consumption, savings and investments. Millions of Pakistanis abroad send remittances, helping their country’s economy. Remittances are also a great source of foreign exchange for a country like Pakistan, which has to spend a lot of foreign exchange on imports of food and oil products. Remittances are also source of foreign direct investment in the country. However, due to rising interest rates by central banks the world over to tame inflation, the expatriate Pakistanis are preferring to keep their money in their host countries, thus squeezing on foreign exchange inflows to Pakistan. Our economy should be in a stable state to keep attracting FDI and remittances.
Performance in FY21
During the fiscal year 2020-21, the company generated operating revenue of Rs11.73 million over Rs4 million in 2019-20, registering a massive increase of 193%.
The company’s operating profit for FY21 stood at Rs6.85 million, which was up a whopping 537% from a loss of Rs1.56 million in FY20.
Profit-before-tax for FY21 stood at Rs7 million compared to a loss of Rs1 million in FY20, showing a decrease in the loss by a huge 763%.
Similarly, profit-after-tax for FY21 was Rs5.95 million as compared to a loss of Rs1.26 million in FY20, showing a decrease in the loss by 569%.
Earnings Per Share
The earnings per share (EPS) remained in the negative territory from 2017 to 2020, reflecting the company’s dwindling profits. However, the EPS showed a positive sign as it jumped to Rs1.29 in 2021.
Progressive Investment Management (Pvt) Limited was incorporated on July 31, 1994. It started its business as a corporate member of the Islamabad Stock Exchange.
The management team is well-experienced having more than 20 years of experience in trading and handling the stock exchange business. The firm holds Trading Right Entitlement Certificate of the Pakistan Stock Exchange duly approved by the Securities and Exchange Commission of Pakistan.
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