Weekly Review: turmoil in international market to impact on local bourse

Weekly Review: turmoil in international market to impact on local bourse

KARACHI: The local bourses may under pressure during next week owing to turmoil in international market, analysts said.

Analysts at Arif Habib Limited said that with economic indicators continuing to show improvement, we expect the profit-taking to be short-lived.

So far Pakistan seems to be far from a second wave of the coronavirus.

However turmoil in international markets may continue to suppress sentiment in the domestic bourse.

The benchmark KSE-100 index is currently trading at a PER of 7.6x (2021) compared to Asia Pac regional average of 13.6x and while offering DY of ~6.0 percent versus ~2.7 percent offered by the region.

The index continued trading in the red zone for another week. Primary concerns that kept investors’ sentiment bearish included a major sell-off witnessed in international markets on the back of rising coronavirus cases internationally, particularly in Europe.

Pakistan has also seen a rise in cases but that has been a result of a marked rise in testing (a high of 42,299 tests was seen on 23rd Sept).

Infection rate has however continued to remain low, hovering around 2 percent. Positive economic developments such as a surplus on the Current Account (USD 297 million) witnessed for the second consecutive month failed to uplift sentiment.

Moreover, the SBP maintained interest rates at current levels in its MPC meeting. The index closed at 41,701 points, down 1.9 percent WoW.

Sector-wise negative contributions came from i) Oil & Gas Exploration (267 points), ii) Commercial Banks (180 points), iii) Power Generation & Distribution (81 points), iv) Cement (70 points), and v) Technology & Communication (61 points). Whereas, positive contributions came from Textile Composite (11 points). Scrip-wise negative contributions were led by OGDC (118 points), PPL 94 points), UBL (75 points), HUBC (73 points) and TRG (52 points).

Foreign selling continued this week clocking-in at USD 10.5 million compared to a net sell of USD 1.7 million last week. Selling was witnessed in Cement (USD 6.1 million) and Commercial Banks (USD 3.8 million). On the domestic front, major buying was reported by Insurance Companies (USD 9.1 million and Companies (USD 7.0 million).

Average volumes arrived at466 million shares (down by 13 percent WoW) while average value traded settled at USD 82 million (up by 11 percent WoW).