The benchmark KSE-100 closed at 40,887pts, down by 225pts or 0.55% WoW. Week trading commenced on a positive note and the market gained over 502pts on Monday as China came to Pakistan’s rescue and agreed to provide a loan of USD 2.5bn to support depleting foreign exchange reserves.
Whereas other news flows regarding GIDC settlement and issuance of directives by SBP for overseas investors to invest in Pakistan Banao Certificate also fueled investor’s sentiment.
However, down gradation of Pakistan’s long term credit rating from B to B- by S&P coupled with pressure on international oil prices dented investors sentiments.
Contribution to the downside was led by Commercial Banks (-185pts) due to selling from mutual funds and insurance companies, Oil and Gas Exploration Companies (-83pts) due to decline in international oil price, Oil and Gas Marketing Companies (-52pts), Tobacco (-33pts), and Chemicals (-25pts).
Scrip wise major losers were HBL (-79pts), UBL (-47pts), DAWH (-41pts), PPL (-41pts) and OGDC (-36pts). While, sectors that contributed positively to the index were Cement (+106pts) amid correction in international coal price by 4% WoW to USD 86/ton, Automobile Assembler (+28pts) and Pharmaceuticals (+20pts).
Foreign buying continued this week clocking-in at USD 12.2mn compared to a net buy of USD 12.3mn last week.
Major buying was witnessed in Commercial Banks (USD 4.7mn) and Fertilizer (USD 2.7mn). On the local front, selling was reported by Mutual funds USD 22.6mn followed by other organizations (USD 1.1mn). That said, average daily volumes for the outgoing week were up by 10% to 192mn shares likewise value traded jumped by 26% to USD 62mn.
Other major news China comes to Pakistan’s rescue with USD 2.5b loan, SBP issues directives for investment in Pakistan Banao Certificates, Pakistan signs USD 10bn gas pipeline agreement with Russia, GIDC reduction to provide industries PKR 50bn relief, Sehat Insaf Card: Free health facility for 80mn people, and Forex reserves rise to USD 14.89bn.
Analysts at Arif Habib Limited expects the market to remain range bound given no material event expected in upcoming week, however, visit of Saudi crown prince expected on 16th Feb’19 may uncover investment for construction of an oil refinery in Pakistan and other ventures.
In addition, the Prime Minister of Pakistan is visiting UAE on 10th Feb’19 to attend World Government Summit where he will encourage foreigners to invest in different sectors in Pakistan. The KSE-100 is currently trading at a PER of 7.9x (2019) compared to Asia Pac regional average of 12.0x while offering a dividend yield of ~7.0% versus ~2.6% offered by the region.