Pakistan equities expected to remain in consolidation phase next week

Author: Staff Report

KARACHI: The KSE-100 Index closed 182 points or 0.4 percent week-on-week (WoW) lower at 43,627 points, where index fell 867 points in first four trading days on continued foreign selling with recovery of 6 85 points in the last trading day.

Investors witnessed a roller coaster like ride during the week with the benchmark KSE-100 index ultimately closing 0.4 percent WoW lower at 43,627.

A plethora of macroeconomic and political news along with ongoing corporate results season contributed towards swinging sentiments at the bourse, said JS Research’s analyst Faizan Ahmed.

An analyst at Elixir Securities’ Research Department said the market is expected to remain in consolidation phase in the upcoming days owing to pressures from possible categorization of Pakistan in global terrorist watch list by Financial Action Task Force (FATF). The week long sessions start from coming Sunday – and is likely to remain the major sentiment driver over the coming week, he added.

Cements remained under pressure during the week falling 3.9 percent WoW owing to concerns over pricing pressures and dismal earnings posted by Maple Leaf Cement (MLCF).

Interest in heavyweight Banks and E&Ps somewhat helped withstand market decline but overall weak sentiments prevailed amid persistent political noise (US move to put Pakistan on terror watch list for example) and concerns over external debt sustainability (recent debt figures suggest whopping increase of $5.8 billion in foreign debt over the past six months).

Commercial banks were up 2.6 percent WoW led by anticipation of interest rate lift-off on increase in inflationary expectations. More importantly, the stocks shrugged off recent pension case decision against the major banks as it is projected to have minimal impact on earnings, contrary to earlier fears of much larger impact. Exploration and Productions (E&Ps) also posted gains of 0.8 percent WoW owing to 1.9 percent WoW/3.7 percent WoW increase in Brent/WTI prices.

Trading activity declined during the week where average traded volumes and average traded value fell by 21 percent WoW and 27 percent WoW to 195 million shares and $ 42 million. On economic front, goods exports grew by 11.0 percent year-on-year (YoY) but were down 0.3 percent month-on-month (MoM) to $1.97 billion in January-2017 helped by exports package and recent Pakistani Rupee depreciation.

In continuation of recent global sell off from emerging markets, Foreigners remained the major net sellers offloading shares worth $ 16.1 million during the week. Insurance/Companies absorbed the major selling with net buying of $ 16.8 million/$ 5.2 million.

Published in Daily Times, February 18th 2018.

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