Stocks thunder ahead as FATF hopes add fuel to valuation-fired rally

Stocks on Thursday thundered ahead as a valuation-fired rally drew further support from encouraging developments on terror-financing watchlist front and bond market, dealers said, bringing the total tally of points gained this week to 3,100 or 10.8 percent, highest since March 2009 in four straight sessions.

Saad Hashmi, executive director at BMA Capital, said Pakistan Investment Bonds’ auction results and the participation amount were taken as positive signals by the investors. “Further, current account numbers and government intentions to change NAB (National Accountability Bureau) laws were also largely welcomed by all the stakeholders,” Hashmi said.

He added that investors were coming back to the market to take the advantage of low prices. The market had registered highest volumes in the last six months, Hashmi said, adding buying was witness across the board in all categories of shares, showing a broad participation by all class of investors.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 2.94 percent or 911.70 points to close at 31,884.45 points level, while KSE-30 followed suit with a high of 3.20 percent or 469.76 points to end at 15,138.24 points level.

Madiha Javed, head of research at Ismail Iqbal Securities said the positive momentum continued for the fourth consecutive session with expectations that Pakistan would likely get a favorable verdict in the upcoming Financial Action Task Force (FATF) review in mid-October.

Javed said trading volume saw significant improvement as investors’ participation returned with 261 million shares traded compared to 134 million shares yesterday. Oil & gas exploration, commercial banks, and fertilisers were the major contributors today, cumulatively adding 486 points, she added.

Ahsan Mehanti from Arif Habib Corporations said bullish activity was witnessed amid higher trades at the PSX on investor interest in scrips across the board on strong valuations. “Upbeat data on external account, surging global crude oil prices, rupee stability against dollar, and higher global equities contributed to today’s massive gains,” Mehanti added.

Khurram Schehzad, economist and capital market analyst said, “Within this week, there have been several positive triggers on the economic and political front including current account deficit improvement, army chief’s extension, FATF, interest rates (yield curve downward trend), good discussion on NAB by the cabinet and its workings”.

Currently, the market was extremely cheap, which, along with other factors, gave rise to the prevailing positive sentiment among investors who now have started thinking the issues were being addressed, Schehzad said.

Topline Securities in a note said,” Equities have continued to show colossal gain due to attractive valuations, which were further boosted by the exploration and production companies”.

The fresh gains, led by trading and investment stocks, can also be attributed to FATF’s Asia Pacific Group’s statement that Pakistan is making immense progress in introducing stricter laws to curb money laundering and terror financing and is unlikely to end up in black list.

The highest gainers were Rafhan Maize, up Rs300 to close at Rs6300/share, and Nestle Pakistan, up Rs57.61 to finish at Rs6187.61/share. WorldCall Telecom recorded the highest volumes with a turnover of 22.750 million shares, whereas it gained Rs0.16 to end at Rs0.75/share.