Stocks end week on green note; all eyes on PM’s visits

Stocks sealed a topsy-turvy week with a positive close, breaking a fortnight-long losing drought, going up 2.4 percent on week-on-week basis, mainly on some positive developments and attractive valuation, dealers said.

Analysts say Pakistan Stock Exchange’s performance in the next week hinges on Prime Minister Imran Khan’s Saudia Arabia and China visits’ success in terms of securing much-needed financial assistance from both the countries and investment plan from the Kingdom. Topline Securities in its market review said during the week, Finance Minister Asad Umar’s announcement that Pakistan would be entering an International Monetary Fund (IMF) program within two months as well as potential funding from other multilateral agencies, fueled Investors’ confidence.

The rout that ransacked the benchmark KSE-100 Shares Index of more than 3400 points finally came to an end during the outgoing week where the index gained 912 points in the last three sessions to close the week at 38,430 points. A BMA Capital Management analyst said with macroeconomic concerns in the limelight, tangible progress on IMF bailout package remains crucial.

“We flag that any positive development on PM’s planned Saudi visit, early next week, may feed positive sentiments,” the analyst said. Moreover, six month extension in timeline to ensure compliance on key steps to combat money laundering and terrorist financing by Financial Action Task Force (FATF) may act also as a sigh of relief.

Key data points expected next week include current account data (CAD) for Sep 2018 and textile export figures. With results’ season in full swing, any positive surprise on the earnings front will likely garner investors’ attention. Foreigners sold $19.1 million worth of shares during the week as against net selling of $32.6 million last week. On the local front, companies and individuals emerged as net buyers by purchasing shares worth $5.8 million and $5.2 million, respectively. An analyst from Habib Metro-Finance Securities said the index witnessed a choppy ride during the outgoing week, starting off on a negative note, but later recouped most of the losses. “The decline was triggered by lack of clarity on the macroeconomic front and bone dry volumes as most investors shied away from taking fresh exposure,” the analyst added.

The recovery can be duly attributed to attractive valuation levels that invited cherry-picking, a meeting between stock brokers association and the finance minister, which ended on a positive note with promises to resolve long-standing issues such as excessive taxes on share transactions and carry-over of losses for capital gains tax purposes. The index also tracked international equity markets, which witnessed a dicey week. Locally the quarterly results’ season was in full swing where Engro Fertilizer’s stellar earnings and payout came as pleasant surprise, while United Bank Limited unveiled lower than expected earnings, citing higher provisioning expense and pension liability.

Among other names, Cherat Cement reported a dip in earnings on margin compression in the wake of weakened pricing power and higher input costs. International Steel was under pressure as the company reported weaker earnings. The impact of higher gas prices eroded any positive triggers in the sector.