Local equity bourse continued to be in the doldrums for another week primarily on the back of despondent economic conditions in the country. The Pak Rupee once again continued its downslide against the USD, depreciating ~2% WoW to close at PKR 160.05/USD.
Moreover, gas tariff hike of upto 191% was approved by the ECC which will aggravate inflationary pressure in the economy, lending credence to concerns of further monetary tightening by the SBP (AHL expects a 100 bps rate hike in the July MPS). The KSE100 index closed at 33,902 pts, shedding off 1,223 pts WoW (-3.5%).
In the bourse, negative sector-wise contributions came from i) Commercial Banks (306 pts), Oil & Gas Exploration Companies (279 pts), Fertilizer (197 pts), Cement (126 pts), and Oil & Gas Marketing Companies (81 pts).
Scrip-wise negative contributions came from HBL (142 pts), PPL (132 pts), FFC (80 pts), OGDC (75 pts) and LUCK (70 pts).
Whereas, positive scrip-wise contributions came from NATF (26 pts), FATIMA (19 pts), and HGFA (13 pts).
Foreign buying was witnessed this week clocking-in at USD 7.9mn compared to a net sell of USD 5.7mn last week.
Buying was witnessed in Cement (USD 4.5mn) and Commercial Banks (USD 3.6mn). On the domestic front, major selling was reported by Mutual Funds (USD 14.7mn) and Individuals (USD 4.7mn).
Average Volumes settled at 147mn shares (up by 17.4% WoW) while value traded clocked-in at USD 29mn (up by 5.7% WoW).
Other major news: Fitch says IMF bailout deal to weigh on Pakistan’s growth, ECC approves up to 191pc hike in gas prices, May exports down 1.72 percent YoY, Pakistan to get $3bn in deposits, direct investments from Qatar, and borrowing from SBP doubles to Rs2.7tr.
Analysts expect the market may rebound next week. However, formal approval by the IMF of the bailout package for Pakistan may provide some relief to investors.
Clarity is likely to emerge over the main features of the program which may appease major concerns of investors.
The KSE-100 index is currently trading at a PER of 6.8x (2019) compared to Asia Pac regional average of 14.7x and while offering DY of ~8.5% versus ~2.3% offered by the region.