Economy

Saudi investment fails to improve investor’s sentiments

Karachi, February 23, 2019: The successful visit of Saudi Crown Prince Muhammad Bin Salman and some $21 billion Saudi investment failed to improve investor’s sentiments as Pakistan Stock Exchange (PSX) was remained negative during the last week ending Feb 22, 2019.

This week trading commenced on a negative note despite historic visit of the Saudi Crown Prince where both the governments signed an investment deal worth USD 21 billion.

Analysts at Arif Habib Rsearch believed that market activity remained sluggish and the index hovered sideways on the back of tension between Pakistan and India post Pulwama terrorist attack which led to the imposition of 200 percent regulatory duty on Pakistani exports.

This also triggered a selling pressure in cement scrips, secondly, lower than expected results of heavy weight scrips including UBL, HBL, HUBC and KAPCO, and ongoing meeting of the Financial Action Task Force (FATF) to review Pakistan’s status also played a vital role in negative sentiments at PSX during the last week.

As a result, the benchmark KSE-100 index closed at 40,016 points, down by 471 points or 1.16 percent WoW.

Contribution to the downside was led by Power Generation and Distribution -142 points due to absence of dividend in their recent result announcement, Commercial Banks -139 points amid lower than expected results, Pharmaceuticals -35 points, Transport -27 points, and Tobacco sector -26 points.

Scrip wise major losers were UBL -120 points, HBL -115 points, HUBC -68 points, KAPCO -56 points and SNGP -37 points. While, the only sector that contributed positively to the index was Oil and Gas Exploration Companiesm, which soothed by 85 points due to surge in international oil prices.

Foreign buying continued this week clocking-in at $3.5 million compared to a net buy of $12.1 million last week.

Major buying was witnessed in Cements $3.3 million and Commercial Banks $1.4 million. On the local front, selling was reported by individuals ($ 4.7 million) followed by Companies ($1 million).

Average daily volumes for the outgoing week were down by 22 percent to 105 million shares likewise value traded decline by 14 percent to $39 million.

Other major news during the week were current account deficit shrank by 16.7 percent in seven months, IMF negotiations nearing conclusion, 200 percent RD may be imposed non-essential Indian items, FDI hits 6-month low as concerns over IMF resurface, and Roadmap for $21 billion Saudi investment finalized.

After tracking negative leads in the past three weeks, AHL Research expects the benchmark index to witness a rebound given improvement in economy as current account deficit has narrowed by 17 percent to $8.4 billion coupled with tension between Pakistan and India cooling off and materialization of Saudi deal which will improve the investment climate.

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