Stocks end stellar week; PM’s loan-missions in focus

KARACHI: Stocks staged an explosive recovery in the week as investors went on a trolley dash for lush bargains following Saudi Arabia’s $6 billion bailout and similar pledges from other countries, hoping Pakistan’s economy is finally on its way out of the woods, dealers said.

Pakistan Stock Exchange’s benchmark KSE-100 Shares Index shot up 2,126 points or 5.5 percent in the week that ended on October 27, 2018, nailing down the highest weekly gain in over a year.

Topline Securities in its weekly market review said fertilisers, oil and gas exploration companies, and commercial banks led the way in sector-wise gains due to their attractive valuations, cumulatively contributing 1,051 points to the index.

Adil Ghaffar, chief executive officer at First Equity Modaraba, said investors should keep an eye on Prime Minister Imran Khan’s visit to China, where financial assistance was likely to be announced for Pakistan on or after November 03, 2018, which might eventually help index touch 45,000 points level.

“Before the announcement, and in expectation of friendly quid pro quo, this fresh rally might touch 42,000 points, same level when the PTI (Pakistan Tehreek-e-Insaf) took charge,” Ghaffar said.

He said the mixed-bag results and continuous foreign selling were key concerns for the investors.

“However, in last two sessions the volume, regular plus future, was over 500 million shares and value exceeds Rs13 billion. This shows the level of local investors’ confidence on the country’s new leadership,” Ghaffar added.

Foreigners sold $17.2 million worth of shares during the week against a net selling of $19.1 million last week. On the local front mutual funds were net buyers offloading shares amounting to $24 million, while individuals and banks were net sellers of equities valuing $9.9 million cumulatively. The outgoing week saw intermittent changes in investor sentiment, fueled by macroeconomic developments and on-going earnings season. Bears remained in charge during the first leg of the week; however, Saudi assistance helped bulls to take comfortable position in the local bourse.

An analyst from Habib Metro-Finance said in the backdrop of the loan package, with two more on the cards, from China and Malaysia, rupee swiftly gained 1.4 percent in the open and inter-bank markets.

“However, those gains did not sustain due to several question marks still hanging on multiple fronts,” the analyst said adding this coupled with the heightened fear of a reinstatement of local stocks from MSCI-EM to MSCI-FM also led the exodus of the foreign funds in just four trading sessions in the preceding week.

An analyst from BMA Capital Management said they were expecting a possible spillover of positive momentum next week given Prime Minister’s upcoming visit to Malaysia and the visit of a delegation from UAE for possible discussion on support for Pakistan bear fruit.

“On macro front, Consumer Price Index data is due to be released on November 1, 2018 and is expected to be around 5.8 percent,” the analyst said. He added that also, with the results season in full swing, any positive surprise on this front was likely to extend the rally into the next week.