KARACHI: Constant rise in coronavirus cases may discourage investors of Pakistan Stock Market (PSX) owing to likely stringent measures from the authorities to prevent the spread of the pandemic.
Analysts at Arif Habib Limited said that although economic fundamentals are headed in the right direction, global rise in COVID infection (640,000+ cases reported in a single day) continue to pose threat of fresh lockdowns globally which may crush our exports and damage the stability achieved on the external / currency front.
That said, control in local infection may revive sentiments at the index.
The benchmark KSE-100 index of the PSX is currently trading at a PER of 7.2x (2021) compared to Asia Pac regional average of 14.8x and while offering DY of around 6.2 percent versus around 2.5 percent offered by the region.
Although local fundamentals recovered surprising fast post initial COVID-19 slump (Current account surplus of USD 792 million during 1QFY21, influx of Remittances of over USD 2 billion for the fifth consecutive month in October 2020, LSM growth at a decent 4.81 percent during Jul-Sep’20, 4 percent appreciation in the Pak Rupee to 158.4/USD amid growing FX reserves to USD 12.7 billion), reemergence of domestic Coronavirus cases (infection peaked at 6.2 percent on Thursday; high after over 110 days) together with arbitrary second-wave theories gaining momentum in Europe and Western countries, despite impending development of a vaccine, kept performance of the local bourse mundane.
The KSE-100 index closed at 40569 level, down by 0.4 percent / 167 points WoW.
Sector-wise negative contributions came from i) Cements (161 points), ii) Oil & Gas Marketing Companies (72 points), and iii) Power Generation and Distribution (61 points). Scrip-wise negative contributions were led by LUCK (76 points), HUBC (34 points), and SNGP (35 points).
On the flipside, major sectoral gains were observed in Oil and Gas Exploration (161 points), Commercial Banks (83 points), and Technology (34 points).
Foreign selling continued this week clocking-in at USD 7.4 million compared to a net sell of USD 5.5 million last week. Selling was witnessed in Commercial Banks (USD 3.7 million) and Cement (USD 2.7 million).
On the domestic front, major buying was reported by Individuals (USD 7.5 million and Banks / DFIs (USD 3.3 million).
Average volumes arrived at 290 million shares (down by 21 percent WoW) while average value traded settled at USD 66 million (down by 16 percent WoW).