Weekly Review: Equity market to eye future investment prospects

Weekly Review: Equity market to eye future investment prospects

KARACHI – The Pakistani equity market is poised to evaluate the potential for foreign investments as Prime Minister Imran Khan prepares for a visit to the UAE on February 10, followed by the anticipated visit of the Saudi Crown Prince to Pakistan on February 16, 2019.

Analysts at Arif Habib Limited suggest that while the market is likely to remain range-bound due to the absence of significant events in the upcoming week, these high-profile visits could unveil opportunities for substantial investments.

The visit of the Saudi Crown Prince on February 16 is expected to shed light on potential investments, including the construction of an oil refinery in Pakistan and other ventures. Additionally, Prime Minister Imran Khan’s visit to the UAE on February 10 to attend the World Government Summit aims to encourage foreign investors to explore diverse sectors in Pakistan.

This week began on a positive note for the Pakistani stock market, with a gain of over 502 points on Monday. China’s commitment to providing a USD 2.5 billion loan to support Pakistan’s depleting foreign exchange reserves contributed to the positive momentum. Other positive developments, such as progress on the Gas Infrastructure Development Cess (GIDC) settlement and the State Bank of Pakistan’s (SBP) directives for overseas investors to invest in Pakistan Banao Certificates, also fueled investor sentiment.

However, investor optimism faced challenges, with the downgrade of Pakistan’s long-term credit rating from B to B- by S&P Global Ratings and pressure on international oil prices. As a result, the benchmark KSE-100 index closed at 40,887 points, down by 225 points or 0.55 percent for the week.

The downward movement was primarily driven by various sectors, including Commercial Banks (-185 points), Oil and Gas Exploration Companies (-83 points), Oil and Gas Marketing Companies (-52 points), Tobacco (-33 points), and Chemicals (-25 points). Major scrip-wise losers included HBL (-79 points), UBL (-47 points), DAWH (-41 points), PPL (-41 points), and OGDC (-36 points).

Conversely, sectors contributing positively to the index were Cement (+106 points), Automobile Assembler (+28 points), and Pharmaceuticals (+20 points). Foreign buying continued during the week, reaching USD 12.2 million compared to a net buy of USD 12.3 million in the previous week. Significant buying was observed in Commercial Banks (USD 4.7 million) and Fertilizer (USD 2.7 million).

On the local front, selling was reported by mutual funds (USD 22.6 million) followed by other organizations (USD 1.1 million). Despite market fluctuations, average daily volumes for the week increased by 10 percent to 192 million shares, and the value traded surged by 26 percent to USD 62 million.

Key news highlights during the week included China’s financial support with a USD 2.5 billion loan, SBP issuing directives for investments in Pakistan Banao Certificates, Pakistan signing a USD 10 billion gas pipeline agreement with Russia, GIDC reduction providing industries with a relief of Rs50 billion, the introduction of the Sehat Insaf Card providing free health facilities for 80 million people, and an increase in forex reserves to USD 14.89 billion. Investors are keenly watching these developments as they navigate the evolving landscape of the Pakistani stock market.