The market commenced on a positive note this week as the country is expected to get USD 13bn financing from China (USD 9bn) and Saudi Arabia (USD 4bn). The momentum carried on during the week as Saudi Crown Prince Mohammad bin Salman is expected to visit Pakistan on November 21st and may announce various investment projects. The Pak Rupee was slightly down against the greenback, closing at PKR 221.95 (down by 0.1% WoW). In addition to this, SBP reserves went down to USD 7.95bn this week, down by USD 956bn compared to USD 8.91bn on Oct 28th, 2022. The market closed at 43,093 points, gaining 1,237 points (up by 2.95% WoW).
Sector-wise positive contributions came from i) Commercial Banks (368pts), ii) Oil & Gas Exploration Companies (285pts), iii) Technology & Communication (205pts), iv) Cement (80pts) and v) Power Generation & Distribution (76pts). Whereas, sectors which contributed negatively were i) Miscellaneous (87pts), ii) Automobile Parts & Accessories (3pts), and iii) Food & Personal Care Products (2pts). Scrip-wise positive contributors were TRG (176pts), OGDC (130pts), PPL (119pts), MEBL (106pts) and BAFL (56pts). Meanwhile, scrip-wise negative contribution came from PSEL (81pts), RMPL (29pts), SHFA (6pts), SCBPL (3pts) and ILP (3pts).
Foreigners selling continued during this week, clocking in at USD 4.7mn compared to a net sell of USD 1.6mn last week. Major selling was witnessed in Banks (USD 5.3mn), Technology and Communication (USD 1.1mn) and other sectors (USD 0.4mn). On the local front, buying was reported by Mutual Funds (USD 3.6mn) followed by Banks/DFIs (USD 3.0mn). Average volumes clocked in at 251mn shares (up by 10% WoW) while the average value traded settled at USD 33mn (up by 31% WoW).
Other major news: i) Pakistan, KSA to sign several pacts ii) 9th IMF review: Framework yet to be finalized, iii) FBR officials meet CFOs of large firms on tax filling, iv) Govt raises Rs46b through Sukuk.
Outlook and Recommendation
The market is expected to remain range bound in the upcoming week as the participants will remain cautious due to the political noise in the country. Furthermore, any positive news coming from the FM’s visit to UAE and IMF 9th review will benefit the market. Our preferred stocks are OGDC, PPL, MARI, MCB, FABL, MEBL, BAFL, LUCK, MLCF, FCCL, ENGRO, FFC, HUBC, PSO, HUMNL and SNGP. The KSE-100 is currently trading at a PER of 4.1x (2023) compared to Asia Pac regional average of 12.6x while offering a dividend yield of ~10.2% versus ~2.8% offered by the region.
Courtesy – AHL Research