During the week trading commenced on positive note attributable to Asia Pacific Group’s report on money laundering in which Pakistan was found partially compliant on majority of the issues which improved investors’ confidence.
On the other hand, Prime Minister Imran Khan’s successful visit to China in which they expressed satisfaction on CPEC progress further improved overall sentiment. Moreover, news of increase in cement prices in the Northern Region as per PBS was the major driver for the Cement sector throughout the week.
Decline in money market yields and inversion of the yield curve continued to attract investors back to equities. As a result, the benchmark KSE-100 index closed above the 34K mark at 34,476pts, increased by 1,442pts or 4.37% WoW. Contribution to the upside was led by i) Commercial Banks (+492pts) amid expectation of healthier financial result, ii) Oil and Gas Exploration Companies (+270pts) due to attractive valuation, iii) Fertilizer (+146pts), iv) Pharmaceuticals (+90pts), and v) Cement (+87pts).Scrip wise major gainers were HBL (+153pts), MARI (+116pts), UBL (+104pts), POL (+83pts), and HUBC (+76pts).
Whereas, scrip wise major losers were ISL (-11pts), PMPK (-11pts), and EFUG (-8pts). Foreign offloaded stocks worth of USD 4.15mn compared to a net sell of USD 4.7mn last week. Major selling was witnessed in Commercial Banks (USD 4.56mn) and Exploration & Production (USD 1.73mn). On the local front, buying was reported by Companies (USD 3.91mn) followed by other organizations (USD 3.59mn). That said, average daily volumes for the outgoing week were massively up by 28% to 284mn shares likewise value traded increased by 42% to USD 56.9mn.
Other major news: SBP reserves increase $16m to $7.7b, Pakistan bonds evoke Egypt’s success tale, Remittances drop 1.4% to $5.5bln in Jul-Sep, ‘Stabilization efforts bearing fruit: SBP, and Pakistan yet to receive foreign aid worth $21.6b. Analysts expect market to remain positive on the back of improving external account position, country witnessing foreign net inflows in T-bills and lower inflationary reading expected in October’19.
On the other hand, government is focusing to manage twin deficits and to meet IMF’s second quarterly revenue and tax collection targets. However, FATF review is scheduled on 13-18th October to discuss Pakistan’s progress to control terror financing and corrective measures. Any favorable or unfavorable outcome could pose upside or downside risks to market performance.