Daily Times

The year 2019 proved enthusiastic particularly for the equity market. Financial year 2019 commenced on negative note for dimmed economic activities of the post-burden of taxes and deteriorating relationship between the nuclear-armed India-Pakistan resulted in anxious investor’s sentiments. In the third and fourth month of the year the market posted a considerable return led by the significantly improved Current Account Deficit (CAD) and robust earnings announcement and healthy pay-outs by the select Index heavy companies belonging to the Oil & Gas, Fertilizer, and Banking sectors, caused to reprieve the investors’ confidence. Amidst all this volatility, the benchmark KSE-100 closed on November 12, 2019 with a net growth of 8.45 percent. The index gained about 23.91 percent during the period start from August 2019. According to the data provided by MUFAP (Mutual Funds Association of Pakistan), conventional equity funds gave an average return of 8.59 percent compared to 8.45 percent return of KSE-100 index. The top performing fund in this category was HBL Investment Fund?Class A with a return of 20.18 percent followed by HBL Growth Fund?Class A with a return of 19.44 percent. First Capital Mutual Fund is ranked on third number with a return of 14.57 percent.

Out-performance of the funds was subjected to holdings in sector’s stocks such as Oil & Gas Exploration, Oil & Gas Marketing Companies (OMCs), Engineering, Chemical, Pharmaceuticals, and Power Generation & Distribution sectors, which outperformed the market. Foreign investors remained net buyer with an inflow of USD 17.340 million as compared to net outflow of USD 355.949 million during the Financial Year 2019.

The key drivers for the market based on upcoming Monetary Policy and other strategic decisions to prop up the FX reserves. It is being expected that CPI inflation will be clocked at 10 percent due to base effect and project it to peak at around 12% in January 2020.Despite a strong 24 percent recovery from its recent low of 28,765 points on November 12, 2019, the market still trading at a cheap forward Price-to-Earnings (P/E) multiple of 6 (Earnings Yield of 17%) and is offering an attractive dividend yield of 7%, as compared to its peer competitors.