KSE-100 adds 1445 points, positive momentum likely next week

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PSX weekly review

Zubair Yaqoob

Karachi

Trading in the green continued this week as the index continued its bullish momentum as the banking sector led the charge this week. This week saw Moody’s changing its outlook on Pakistan from “Negative” to “Stable” on account of improving external account position of the country on the back of the government’s corrective measures. This was followed by up-gradation of outlook to “stable” for the Big 5 banks, spurring buying activity in the banking sector. Trade deficit data came this week as well which once again saw an improvement, declining 36% YoY during Nov’19. Consolidation of the country’s reserves continued, as SBP reserves touched an 8-month high at USD 9.1bn. The KSE-100 Index settled at 40,732pts (up 1445 pts WoW). Sector-wise positive contributions came from Commercial banks (645pts), Oil & Gas Marketing (131pts), and Power Generation & Distribution (97pts) iv) E&P (84pts), and Insurance (79pts).
Scrip-wise positive contributions were led by HBL (155pts), MCB (144pts), UBL (87pts), BAFL (78pts) and HUBC (75pts). Foreign buying was witnessed this week clocking-in at USD 1.1mn compared to a net sell of USD 8.1mn last week. Buying was witnessed in Fertilizer (USD 8.4mn) and OMCs (USD 2.2mn). On the domestic front, major selling was reported by Banks / DFIs (USD 22.3mn) and Other Organization (USD 3.3mn). Average Volumes settled at 465mn shares (up by 34% WoW) while average value traded clocked-in at USD 105mn (up by 31% WoW). Other major news, Foreign exchange: SBP reserves hit eight-month high at $9.11b, Pakistan submits compliance report to FATF, Moody’s upgrades Pakistan’s outlook to ‘stable’ from ‘negative’, and Pak exports up by 9.6pc in Nov, imports cut by 17.53 pc. The market should continue its positive momentum next week on the back of continuous improvement in the macroeconomic situation of the country. Furthermore, foreign interest in the equity as well as debt markets posits healthy signs for overall investment climate going forward. The KSE-100 index is currently trading at a PER of 7.1x (2020) compared to Asia Pac regional average of 13.4x and while offering DY of ~7.9% versus ~2.6% offered by the region.