Weakness of the Pak Rupee against USD, unchanged Fitch’s rating and ongoing debate over the Federal Budget FY20 in the Parliament kept the domestic bourse in-check this week. Given lack of triggers and profit taking in large caps, the KSE-100 index closed down by 448pts (1.26% WoW) to 35,125.
Negative sector-wise contributions came from Commercial Banks (181 pts), Fertilizer (88pts), Cement (49pts), Oil & Gas Marketing Companies (42pts), and Pharmaceuticals (29pts).
Whereas, sectors that contributed positively include Power Generation & Distribution (38pts) and E&P (31pts).
Scrip-wise negative contributions came from FFC (62pts), BAHL (43pts), PPL (38pts), LUCK (31pts) and KAPCO (31pts).
Whereas, positive scrip-wise contributions came from HUBC (83pts), OGDC (54pts), and POL (37pts).
Foreign selling was continued this week clocking-in at USD 5.7mn compared to a net sell of USD 4.9mn last week.
Selling was witnessed in Exploration & Production (USD 4.5mn) and Cement (USD 1.4mn).
On the domestic front, major buying was reported by Individuals (USD 7.9mn) and Banks / DFIs (USD 3.7mn).
Average Volumes settled at 125mn shares (down by 8.5% WoW) while value traded clocked-in at USD 27mn (down by 21% WoW).
Other major news: SBP governor says prior actions taken to secure IMF loan, FDI plunges 49% in July-May, CAD shrinks 29% in 11 months, Revival of zero-rating not feasible, PM tells textile barons, and Govt to float Rs200b Sukuk next week for slashing circular debt.
With the State Bank Governor echoing the incumbent governments existing stance of fulfilling IMF’s prior actions, we view the upcoming Board agreement expected in Jul’19 to be a major trigger for the market as it would set in motion a period of economic recovery.
The KSE-100 index is currently trading at a PER of 7.0x (2019) compared to Asia Pac regional average of 14.6x and while offering DY of ~8.2% versus ~2.3% offered by the region.