Taking stock of 2020.

The year that is to close on Dec 31 was one of sharp volatility for the Pakistan stock market.

Over the calendar year 2020, the benchmark index climbed to 43,417 points on Dec 24, from 40,735 points on Jan 1, recording nominal gains of 2,682 points or 6.58 per cent. The year started out on a positive tone, but Covid-19 came in February. Business, industries and markets were devastated and the index started to tumble, settling deep down the dungeon at 27,229 points on March 25.

As the country started to come to grips with the situation and the pandemic caused much less damage to the economy than was feared, the stock market started to recover. The index catapulted by a staggering 16,188 points in the nine-month period from March 25 to Dec 24, providing a mouth-watering return of 59pc. Without the massive pullback from the March lows, the year would have joined the two gloomy years of negative stock returns: minus 15pc in 2017 and minus 8pc in 2018. In 2019, the equity return was 10pc.

The Economic Survey for 2019-20 released on June 11 had also painted a bleak picture of the stock market. The survey blamed Covid-19, stating that between Feb 26 (when the first Covid-19 case surfaced in the country) and the end of March, Rs1.58 trillion was wiped off market capitalisation. The main equity index managed to bounce back post-March, the survey stated.

Four Initial Public Offerings (IPOs) were witnessed in 2020 which together raised Rs8.4 billion. These included IPOs of Organic Meat Company, Agha Steel Industries, TPL Trakker and Engro Polymer preference shares. A senior market participant commented that Pakistan needed 'sustainable economic growth and political stability for big IPOs'. The IPOs during the year were nonetheless highest in five years. In 2019, the bourse had seen just one IPO of Rs5bn. Besides the primary market, companies also asked shareholders for cash in rights issues: 14 rights offerings were made that mobilised Rs27bn.

In 2020 (until Dec 24), foreign investors sold Pakistani stocks worth $525 million. Local investors mopped up liquidity with the highest buying by insurance companies amounting to $224m, followed by individuals who put their faith and money in equities in the sum of $212m. A veteran broker said that after an initial euphoria over Pakistan's retention in the Emerging Market (EM) Index by New-York based MSCI Inc, which belied concerns of a downgrade to the Frontier Market (FM) Index, foreigners stepped back...