Weekly Review: market may move on FATF meeting

KARACHI: The stock market may be dictated by FATF’s plenary sessions scheduled to be held next week.

Analysts at Arif Habib Limited said that the stock market next week will be dictated by FATF’s plenary session scheduled to be on October 21 – 23, 2020.

Whereas reappearance of COVID-19 infection ratio to over 2 percent may also trigger another smart lockdown in big cities.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.3x (2021) compared to Asia Pac regional average of 13.9x and while offering DY of ~6.3 percent versus ~2.7 percent offered by the region.

The market slipped again this week as APG (Asia-Pacific Group, a regional affiliate of the Financial Action Task Force – FATF) retained Pakistan on its enhanced follow-up list based on the country’s performance up until February 2020, while concerns over rising inflationary levels, news flow citing hurdles over continuation of the IMF program, and aggression from the opposition also dampened sentiment at the index.

Although Remittances attaining the above USD 2bn level for the fourth consecutive month in Sep’20 (up by 31 percent YoY) and suspension of poor nations’ debt repayment by the G20 for another six months, provided respite.

We do highlight that foreign markets remained jittery as well with the US Presidential election only a few sessions away.

The benchmark KSE-100 index closed at 40,164points (down by 1.6 percent / 634 points WoW).

Sector-wise negative contributions came from i) Oil and Gas Exploration Companies (212points), ii) Cement (116 points), iii) Power Generation and Distribution (60 points), iv) Oil and Gas Marketing Companies (56 points), and Technology & Communication (51 points). On the other hand, positive contributions were led Chemical (16 points) and Commercial Banks (10 points). Scrip-wise top negative contributors were HUBC (69 points), PPL (68 points) and OGDC (63 points).

Foreign selling continued this week clocking-in at USD 2.7 million compared to a net sell of USD 7.5 million last week. Selling was witnessed in E&P (USD 2.8 million) and Cement (USD 0.8 million). On the domestic front, major buying was reported by Banks / DFIs (USD 7.6 million and Insurance Companies (USD 2.4 million).

Average volumes arrived at 296 million shares (down by 29 percent WoW) while average value traded settled at USD 61 million (up by 24 percent WoW).

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