100 Index benchmark gains 1.1pc amid upcoming MSCI’s inclusion

Weekly Review

Observer Report

Karachi

Stocks underwent a drastic turn midweek as the upcoming MSCI classification dominated market sentiment with the KSE-100 Index adding a further 550 points or +1.1 per cent to end the week at 49,851 on Friday.
After a long weekend, the index started off on a bearish note, shedding 1.4 per cent in the first two days.
However, the feel good factor returned in the final two trading sessions where the market gained 2.6 per cent.
The positivity can be attributed to increased locals’ participation in anticipation of foreign inflows as the date of MSCI review, where Pakistan will reclassified as an emerging market, comes closer.
It looked like local politics hit the back burner this week as investors at the PSX were more concerned with lapping up key MSCI-EM names ahead of the review on May 15, leading up-to the actual upgrade on June 1, 2017.
Rally was primarily fuelled by financials (3.7 per cent) that alone added 532 points to the KSE-100 index where significantly higher than expected inflation readings for April’2017 re-ignited hopes of an early interest rate lift-off.
MSCI-painted stocks led the surge with HBL up +7.4 per cent and UBL up +5.0 per cent, while MCB up +5.6 per cent contributing a cumulative 439 points to the index. Lucky Cement (+6.3 per cent) and Engro (+5.11 per cent) also came back in limelight.
Oils, -52 points, were the major drag to the index with Mari Petroleum and Pakistan Oilfields declining by 3.8/2.6 per cent, respectively, on the back of weakness in international oil prices.
Foreigners remained net sellers during the week with a net FIPI outflow of $19.2 million. However, the selloff was largely absorbed by local individuals who reported a total buy of $27.8 million. Trading activity, however, remained lackluster with average volume traded decreasing by 26.4 per cent week-on-week while average value traded also decreased by 19.9 per cent week-on-week.
Individuals (+$27.8 million) were the biggest buyers during the week as against selling of $10.7 million last week; most of the selling was concentrated in cement ($5 million), power ($2.8 million) and banks ($1.8 million), while foreigners bought $2.9mn of E&P’s.
Winners of the Week
Faysal Bank: Faysal Bank Limited provides commercial, consumer and investment banking services.
Feroze1888: Feroze 1888 Mills Ltd manufactures and sells a wide range of cotton towels and fabrics.
Crescent Steel: Crescent Steel & Allied Products Limited manufactures steel-lined pipes and multi-layer pipe coatings, which are used for water, oil and gas transmission. The company also has a cotton division that manufactures cotton yarn.
Losers of the Week
Standard Chartered Bank: Standard Chartered Bank Pakistan Limited is an international bank that provides consumer and wholesale banking.
Indus Dyeing: Indus Dyeing and Manufacturing Company Ltd manufactures and sells yarn.
Pakistan Tobacco Company: Pakistan Tobacco Company Limited manufactures and sells cigarettes.

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