Weekly Review: Market expected to remain upbeat on visit of Saudi Crown Prince

KARACHI: The equity market likely to recover from recent correction and remain upbeat in the next week owing to historical visit of Saudi Crown Prince.

Analysts at Arif Habib Limited said that with market to respond positively as Crown Prince of Saudi Arabia Mohammad Bin Salman visiting Pakistan to sign historic deals, further strengthening our relationship with the gulf giant.

The domestic equity bourse remained under pressure at the start of the week as speculation over the weekend suggested that a deal had been secured with the IMF, but by Monday morning it was clear that this was just a rumor.

Moreover, Moody’s changed the banking system outlook to B3 negative which added further pressure on the market. The index closed down by 1 percent at 40,487 points.

Sector-wise negative contributions came from i) Commercial Banks (128 points) as Moody’s downgraded ratings of Pak banks, ii) Oil & Gas Marketing Companies (86 points), iii) Fertilizer (70 points), iv) Tobacco (45 points), and v) Automobile Assemblers (40 points). On the flip side, sectors that contributed positively include i) Oil & Gas Exploration Companies (70 points), and ii) Cements (17 points).

Scrips that dragged the index down were HBL (74 points), PSO (64 points), PAKT (45 points), BAHL (29 points) and PSEL (26 points).

Foreign buying continued this week clocking-in at USD 12.1 million compared to a net buy of USD 12.2 million last week.

Major buying was witnessed in Cement (USD 5.8 million) and Commercial Banks (USD 2.9 million). On the local front, selling was reported by Broker Proprietary Trading (USD 6.3 million) followed by Companies (USD 4.7 million). Volumes during the week settled at 136 million shares (down by 29 percent WoW) whereas value traded arrived at USD 45 million (down by 28 percent WoW).

Other major news: i) Reserves up by USD 11 million to USD 14.896 billion, ii) Pakistan meets all FATF requirements, iii) USD 21 billion Saudi investment likely, iv) Jul-Jan FY19: Trade deficit down by USD 2 billion due to RD on imports: Dawood, v) Remittances up 12.22 percent to USD 12.774 billion in seven months, and vi) Moody’s changes banking system outlook to B3 negative.

Whereas the ongoing result season could keep certain scrips under limelight; PSO, FCCL, KAPCO, ENGRO, MLCF, HBL, MARI, MCB, UBL, NPL, HUBC, AKBL, BAFL, KOHC, NBP and OGDC have board meetings scheduled in the upcoming week.

The KSE-100 index is currently trading at a PER of 7.9x (2019) compared to Asia Pac regional average of 12.1x and while offering DY of around 7.1 percent versus around 2.8 percent offered by the region.

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