PSX: Recommendation for next week

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The ongoing political tensions are expected to reach a climax on Sunday, whereby voting on the no-confidence motion against the Prime Minister will occur in the National Assembly. Thus far, the opposition claims to have enough votes to remove the Premier successfully.

If the situation arises, we believe that a new government will immediately step into power.

On the commodity front, we continue to see sticky oil prices upwards. Two major events are likely to bring down other commodities, including a peace deal between Russia and Ukraine and the US-Iran nuclear deal. The materialization of those mentioned above will be positive for Pakistan’s external position.

The upcoming month also marks the commencement of Ramzan, whereby shorter market hours are observed, which dries out volumes. We find it pertinent to highlight Pakistan’s inclusion in the MSCI FM index effective May’22, which should augment foreign activity in the bourse. Historically, foreign buying has been synonymous with good returns on the index.

The KSE-100 index is currently trading at a PER of 4.8x (2022) compared to the Asia Pac regional average of 12.3x and offering a DY of ~8.4% versus ~2.5% offered by the region.

Our preferred stocks are OGDC, PPL, MARI, HBL, MCB, UBL, MEBL, FABL, LUCK, MLCF, FCCL, ENGRO, FFC, and HUBC, PSO, INDU, EPCL, and ASTL.

Courtesy – AHL Research

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