Zubair Yaqoob
Karachi
Market commenced on a negative note this week, with investors resorting to profit taking. With a massive fall in exports by 54% YoY in last month followed by a fall in cement dispatches by 24% YoY in Apr’20 amid lockdown weak sentiment prevailed. Furthermore, IMF’s prediction regarding total foreign reserves depletion by USD 1.9bn in the coming 15 months added fuel to this decline. Moreover, 12-month T Bill cut off yield climbed up by 28bps. Meanwhile, Federal Govt.’s decision to ease off lockdown from Saturday and onwards was not received well given alarming jump in COVID-19 cases on day-on-day basis. Whereas, announcement of reduction in RLNG prices for the month of May’20 cushioned the dip.
The KSE-100 index settled at 33,268 points, shedding 884 points (down by 2.5%) WoW. Sector-wise negative contributions came from Commercial Banks (231pts), Cement (211pts), Power Generation & Distribution (156pts), Fertilizer (148pts) and Oil & Gas Exploration Companies (99pts). Meanwhile, sector-wise positive contribution came from Oil and Gas Marketing Companies (76pts), Food & Personal Care Products (34pts) and Technology & Communication (21pts). Scrip-wise negative contributions were led by HUBC (126pts), LUCK (102pts), HBL (82pts), FFC (76pts) and MCB (74pts).
Foreign selling continued this week clocking-in at USD 17.8mn compared to a net sell of USD 11.6mn last week. Selling was witnessed in Exploration & Production (USD 7.1mn) and Commercial Banks (USD 5.1mn).
On the domestic front, major buying was reported by Individuals (USD 20.3mn) and Companies (USD 5.7mn). Average Volumes settled at 190mn shares (up by 7% WoW) while average value traded clocked-in at USD 46mn (down by 5% WoW). Other major news: IMC announces interest-free support package, Govt moves to take over Rs800bn power sector circular debt, Pakistan seeks $1.87 bn debt relief from G20 countries, PTCL fights against Covid-19 with Rs1.9bn relief package, and CPEC projects may be delayed for 3 months.
Analysts expect the market to remain range bound in the coming week. With standard operating procedures in place, lockdown will be easing off next week, business community and economy will get a sigh of relief. Whereas, given foreign reserves clocking-in at USD 18.8bn, up by USD 292mn WoW, Pak Rupee is expected to remain stable against the greenback (which is a major positive for foreign investment. The KSE-100 index is currently trading at a PER of 7.0x (2020) compared to Asia Pac regional average of 10.2x and while offering DY of ~8.4% versus ~3.1% offered by the region.
