ZUBAIR YAQOOB KARACHI The market commenced on a negative note echoing last week’s negative sentiment amid uncertainty regarding performance review talks between Govt. and IMF team. Furthermore, concerns over rising inflation (14.6%) and 12-month Tbill yield (39 basis points up during the auction this week) tagged with dampened sentiment from international markets due to coronavirus took the index below 40,000 points. Bulls returned later in the week after IMF and Govt. agreed not to introduce a mini-budget. The market closed at 40,243 points, up by 100 points WoW. Sector-wise positive contributions came from Commercial Banks (123pts), Cement (63pts), Power Generation & Distribution (55pts), Tobacco (24pts), and Insurance (- 12pts). Scrip-wise positive contributions were led by HBL (92pts), HUBC (83pts), LUCK (45pts), MCB (39pts) and PAKT (24pts). Foreign selling continued this week clocking-in at USD 11.2mn compared to a net sell of USD 14.2mn last week. Selling was witnessed in Commercial Banks (USD 3.6mn) and Exploration & Production (USD 3.1mn). On the domestic front, major buying was reported by Insurance Companies (USD 8.8mn) and Other Organizations (USD 5.6mn). Average Volumes remained stable at 168mn shares while average value traded clocked-in at USD 40mn (down by 11% WoW). Other major news: OGDCL all set to start commercial production from Dhok Hussain Gas Field, OGRA revised prices of RLNG for SSGC, SNGPL notified, Remittances grow to $13.3bln in July-January, and IMF asks Pakistan to cut reliance on China. Analysts expect the market to remain range-bound given political uncertainty followed by continuing concerns over coronavirus. Turkish President Erdogan aimed to improve trade ties between both the countries. Furthermore, with foreign exchange reserves climbing up to USD 18.7bn, up by 91mn WoW, Pak Rupee is expected to remain stable against greenback – major positive for foreign investment in equities. The KSE-100 index is currently trading at a PER of 6.9x (2020) compared to Asia Pac regional average of 12.2x and while offering DY of ~ 6.8% versus ~2.8% offered by the region
