PSX expected to yield double-digit return in 2017

KARACHI: Pakistan’s capital market is expected to continue its upward trend after the Panama verdict and deliver a healthy double-digit return this year, a senior analyst said on Tuesday. 

“However, domestic political fluidity and global policy uncertainty may generate bouts of volatility,” Amjad Waheed, chief executive officer of NBP Fullerton Asset Management (NAFA) said in a capital market review. 

Waheed said the expectation is based on impending inflows pertaining to up-gradation to Morgan Stanley Capital International Emerging Markets Index, receipt from Pakistan Stock Exchange’s divestment, a likely introduction of new margin financing products and reasonable stock market valuations would bolster the market performance.

“However, in the absence of any credible and decisive policy measures by the government, especially to mitigate the widening current account deficit, 2018 and 2019 can be challenging years for the economy and the stock market,” he added.

NAFA CEO said a host of domestic developments recently caused a lot of volatility in the local stock market, while reports of concluding proceedings on the Panama leaks case sent jitters into the market.

“Adding to the investors’ angst was a fresh wave of terrorist attacks in the country, while clampdown by the regulator on in-house financing by brokers contributed to the indiscriminate forced selling by the individual investors,” he added.

Investors are also cautious because of widening current account deficit on decreasing exports and increasing imports and falling remittances. 

Waheed said the fresh corporate results also failed to create any excitement in the market. However, the selloff has opened up valuation gap in good companies with prospects of strong growth in earnings.