At Pakistan Stock Exchange (PSX) Investor climate in the outgoing week regained some confidence while volumes continued to remain dull. Improvement on the external front (CAD portrayed a significant decline of 72% YoY/59% MoM during Feb’19, while contracting 23% YoY during 8MFY19), visit of Malaysian PM Mahatir Mohamad and improving ties with the US all contributed towards stimulating positivity in the investors’ sentiments.
The benchmark KSE-100 index closed at 38,532 points, registering an increase of 225 points during the week (+0.6% WoW).
Sector-wise positive contributions came from Commercial Banks (+278 pts), Oil and Gas Exploration Companies (+194 pts), and Fertilizer (+75 pts).
Whereas, sectors that contributed negatively include Power Generation & Distribution (-126 pts), Oil & Gas Marketing Companies (-39 pts) and Pharmaceuticals (-30 pts).
Scrip-wise major positive contributions came from PPL (+115 pts), MCB (+91 pts), HBL (+77 pts), POL (+57 pts), and OGDC (+51 pts). Major laggards included HUBC (-122 pts), SEARL (-30 pts) and MARI (-29 pts).
Analysts at Arif Habib Limited said that the foreign buying witnessed in the week settled at USD 3.1mn compared to a net sell of USD 15.6mn last week.
Buying was witnessed in Commercial Banks (USD 2.9mn) and Exploration & Production (USD 1.7mn). On the domestic front, major selling was reported by Insurance Companies (USD 4.8mn) and Other Organizations (USD 2.7mn).
Average volumes during the week settled at 84mn shares (down by 10% WoW) whereas average value traded arrived at USD 28mn (up by 6.6% WoW).
Other major news: Pakistan to receive loan worth $2.1bn from China by Monday: finance ministry, Govt reshuffles SNGPL’s top management on overbilling inquiry, Imran Khan-led govt to reimburse inflated gas bills amounting Rs2.5b, Economy to slow further in ‘calibrated moderation’, says SBP governor, and Pakistan closer to reaching accord with IMF: Asad.
Analysts expect the market to display a mixed trend next week showing a range-bound behavior. Concerns of an expected hike in the upcoming monetary policy statement may keep investors on the back seat. However, valuations across the index have opened up to an enticing level which can provide numerous entry options. The KSE-100 index is currently trading at a PER of 7.5x (2019) compared to Asia Pac regional average of 12.7x and while offering DY of ~7.5% versus ~2.7% offered by the region.