Market Review for the week
The outgoing week witnessed the KSE100 closing at another multi-year record low level (lowest since Jul’15) of 29,565 points (down 6.6% WoW) as regional and domestic political noise overshadowed positive momentum in domestic macro-economic indicators. Renewed Pakistan India tension due to India revoking Kashmir’s special status, arrest of PML-N leader Maryam Nawaz and depreciation of Chinese Yuan in response to USA levying fresh tariffs on Chinese exports to China led to heightened risk off environment at the local bourse. Provisional trade numbers for the month of Jul’19 were reported in the press and point towards substantial reduction in both trade and current account deficits for the month of Jul’19. Amongst key results, EFERT reported financial results for 2Q19 and announced better than expected dividend which gave a breather to the market. Encouragingly, market activity improved during the outgoing week as evident by 25%/44% expansion in ADTO/ADTV to 71mn shares/USD18mn. Most of the improvement in activity was evident in the last two trading sessions of the week.
For the week, foreign investors were net sellers worth USD0.91mn. Selling from foreign investors was mainly concentrated in Banks (USD4.5mn). On the other side, all other sectors (USD1.61mn) witnessed inflows. Amongst domestic investors, Mutual Funds (USD15.2mn) were seen offloading positions while Individuals (USD11.0) were seen absorbing liquidity.
Outlook
We opine that the attractive valuations on offer (KSE100 index trading an 59% discount to MSCI EM as compared to historical average discount of 27%) won’t go unnoticed for long and eventually draw inventors to the local bourse. As per BMA universe, Pakistan’s market is trading at a 12-month forward P/E of around 5.8x lowest since CY09. Currently KSE-100 index earnings yield stands at 18.5% vs. 12M T-Bill rate of 14.2%, resulting in a discount of 4.3% against historical average of ~1.5%. We continue to see deep value in the market with our top picks OGDC, PPL, MCB, UBL, EFERT, LUCK, NML, LOTCHEM and HUBC.
Topic: PSX -- Pakistan Stock Exchange formerly Karachi Stock Exchange (Read 6988472 times)
