Six-week drought ends with historic high weekly return

Karachi, August 24, 2019: The KSE100 Index at Pakistan Stock Exchange sharply bounced back during the last week with a positive weekly return after a long six-week bloodbath.

Participation in the index also increased with volumes witnessing a drastic surge compared to recent trends. The index closed at 31,350 points, rising 2585 points WoW (9 percent WoW) which is the highest weekly return ever in terms of points. The stellar inflection of the index was long over-due with valuations nose-diving to dirt-cheap levels.

Moreover, improving trend of the external account balance further rejuvenated sentiment, with the Current Account Deficit declining 73 percent YoY/37 percent MoM during Jul’19 (USD 579 million). The latest PIB auction saw rising of PKR 434 billion against a target of PKR 100 billion with cut-off yields declining by 25 bps and 40 bps for the 5-Yr and 10-Yr PIBs respectively, indicating that the markets see interest rates to have peaked.

Reduction in the cut-off yields is likely to have a positive bearing on equity valuations. That said, the last trading session saw a decline of 534 pts primarily attributable to profit-taking.

Sector-wise positive contributions were led by Commercial Banks (744 points) Oil & Gas Exploration Companies (469 points), Fertilizer (319 points), Cement (235 points), and Power Generation & Distribution (216 points). Scrip-wise positive contributions came from ENGRO (256 points), OGDC (205 points), HBL (188 points), HUBC (160 points) and MCB (147 points).

Foreign selling was witnessed this week clocking-in at USD 4.97 million compared to a net buy of USD 1.70 million last week. Selling was witnessed in Exploration & Production (USD 6.0 million) and fertilizer (USD 0.8 million).

On the domestic front, major buying was reported by Individual (USD 6.5 million) and Broker Proprietary Trading (USD 3.8 million). Average Volumes settled at 174 million shares (up by 135 percent WoW) while average value traded clocked-in at USD 38 million (up by 83 percent WoW).

Other major news:

  • C/A gap narrows in July on the improved trade balance.
  • World Bank president to visit Pakistan in the first week of Nov.
  • Another hurdle crossed as FATF meetings loom.
  • Rs 417 billion dues on account of GIDC: Presidential Ordinance to be promulgated.
  • 1320MW coal-fired Hub power plant commissioned.

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