Weekly Review: investors may shy away on rising COVID cases

KARACHI: The rising cases of coronavirus and fear of complete lockdown to keep investors away from venturing in the market during coming days.

Analysts at Arif Habib Limited said that the deteriorating scenario on the COVID front as a major risk for local investment climate.

Albeit the government has so far avoided a nation-wide complete lockdown, which if imposed, could be seriously adverse for the bourse.

That said improving economic fundamentals and strong corporate profitability trends may revive market sentiment once risks associated with COVID subside.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.1x (2021) compared to Asia Pac regional average of 15.1x and while offering DY of 6.3 percent versus 2.5 percent offered by the region.

Continuously improving macro-economic fundamentals did little to ignite positivity in the investment climate as rising COVID infections kept investors cautious.

The Current Account posted another surplus (USD 382 million) during October 2020 – fourth consecutive monthly surplus, taking the total surplus for 4MFY21 to USD 1.2 billion.

However rising daily COVID cases prevented any positive sentiment. This week infection touched 7.3 percent – a high of almost 4 months.

Following Pfizer/BioNTech’s announcement, this week Moderna also announced an efficacy of 95 percent of its vaccine. KSE-100 index closed at 40,187 points, down 0.9 percent WoW.

Sector-wise negative contributions came from i) Fertilizers (94 points), ii) Oil & Gas Exploration Companies (81 points), and iii) Cement (67 points). Scrip-wise negative contributions were led by DAWH (68 points), OGDC (45 points), and SYS (44 points). On the flipside, major sectoral gains were observed in Banks (28 points) while scrip wise positive contributions were led by UBL (55 points) and MEBL (15 points).

Foreign selling continued this week clocking-in at USD 6.6 million compared to a net sell of USD 7.4 million last week. Selling was witnessed in Commercial Banks (USD 4.0 million) and Cement (USD 2.1 million).

On the domestic front, major buying was reported by Individuals (USD 6.5 million and Companies (USD 4.3 million).

Average volumes arrived at 171 million shares (down by 41 percent WoW) while average value traded settled at USD 44 million (down by 34 percent WoW).

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