Market Review for the week of PSX

Positive sentiments prevailed in the market during the outgoing week on account of news flows primarily on economic front. The week started with development surrounding lending of USD10bn from ADB in next five years followed by statement of SBP governor that economy is now capable of absorbing external shocks and addressing investors’ concerns over external account to some extent. SBP foreign exchange reserves also remained stable during the week.

On the local front, 5.8% decrease in petroleum prices, in-line inflation of 11.6%/10.5% on old/new base for the month of August, 28% YoY increase in domestic tax collection during FY19 and the broadening of tax base (number of tax filers increased from 1.5mn in CY17 to 2.5mn in CY18) were the key positives. On the other hand, dismissal of GIDC ordinance was negative for the market. Resultantly, the KSE-100 Index ended the week up 795 points to close at 30’467 points (up 2.7% WoW). Overall market activity was interestingly noted 25% WoW lower as ADTO averaged at 93mn shares while ADTV saw a dip of 26% WoW to USD22mn.

Foreign investors continued to remain net sellers during the outgoing week, offloading scrips worth USD5.45mn (four days). This was mainly concentrated in oil & gas (USD2.4mn), commercial banks (USD2.4mn), cements (USD2.3mn) witnessed inflows. Amongst local participants, individuals (USD5.3mn) and NBFCs (USD1.9mn) provided most of the liquidity.

Outlook

A meeting of the FATF is scheduled to be held in Bangkok on 9th-Sept’19, to discuss progress Pakistan has made against terror financing. Any positive development on this front may provide boost to investor sentiments, in our view. We believe upcoming T-Bill auction (11th-Sep’19), PIB auction (18th-Sept’19) and monetary policy announcement (due in last week of September) will be the key events for the direction of interest rates. IMF staff is also scheduled to visit Pakistan on 17th-Sep’19 to review Pakistan’s performance. We maintain our constructive view on the market and recommend OGDC, PPL, MCB, UBL, EFERT, LUCK, NML, LOTCHEM and HUBC as our top picks. (Courtesy :; BMA Capital Management Ltd)

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