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February 20, 2020

Stocks bounce back on FATF hopes, strong banking results


February 20, 2020

Stocks on Wednesday rallied on hopes of a positive outcome of the anti-terror financing watchdog’s Paris review, while well-rewarding financial results in banking sector also did their bit in cheering investors back into the game, dealers said.

Pakistan Stock Exchange’s (PSX) KSE-100 shares index gained 0.99 percent or 399.17 points to close at 40,574.52 points, while KSE-30, tracking the benchmark index secured 1.07 percent or 198.11 points to end at 18,793.12 points.

Ahsan Mehanti from Arif Habib Corporation said, “Stocks showed major recovery amid higher trade led by selected scrips in oil, banking, and fertiliser sectors on strong earnings outlook”.

Upbeat data for the current account deficit for Jul-Jan FY20, shrinking by 72 percent to $2.654 billion, higher global equities, surging crude oil prices, and speculations of a positive outcome at FATF (Financial Action Task Force) review meeting this weekend guided the market to positive close, Mehanti added.

As many as 341 scrips were active on Wednesday. Of this total 222 stocks gained, 94 lost, and 25 ended unchanged.

Volumes improved significantly to 142.964 million shares, compared to 91.643 million on Tuesday.

Samiullah Tariq, director research at Arif Habib Limited, said, “The wave of optimism surfaced following the resolution of brokers’ pending issues with regard to SECP’s (Securities & Exchange Commission of Pakistan) new broker regime, launched with an aim to protect investors interest”.

Tariq said couple of other developments that also boosted sentiment were been reports claiming FATF had softened its stance for Pakistan as government had made all-out efforts to meet the anti-terror financing watchdog’s conditions.

“Moreover financial results of the banks, reporting strong profits, also supported the overall sentiment of the market,” Samiullah added.

Shahab Farooq, director research at Next Capital said, “Although volumes remained thin, the market went up as few investors opted for value-buying and portfolio realignments”.

“Hopes of getting out of the FATF’s grey list also came into play. Higher dividend by UBL charmed investors, who shifted from HBL to UBL,” Farooq added.

Recovery was due since the market had been dull for the last couple of sessions where several equities were on the downhill course.

A leading trader said reports were doing rounds that Pakistan had made ample inroads at FATF front and during the meeting the members of the plenary committee recognised the government’s actions taken for curbing money laundering and terror financing.

However, few scrips recorded hefty losses especially Indus Motors which suffered a fall of Rs16/share on back of the financial results as the company’s profit during the second quarter of 2020 nosedived 71 percent, which made investors jittery.

Habib Bank Limited showed nominal gains despite posting healthy earnings, going up 27 percent in 2019, but, according a dealer, it was below market consensus. The bank has been in the news after being slapped with a penalty of Rs12.8 million by the central bank.

Millat Tractors, up Rs39.32 close at Rs717.34/share, and Sapphire Fibre, up Rs30 to finish at Rs760/share were the top gainers of the day, while Sapphire Textile, down Rs64.93 to close at Rs934.06/share, and Unilever Foods, down Rs50 to close at Rs7,300/share were the major losers.

Unity Foods Limited recorded the highest volumes with 21.639 million shares, gaining Rs0.73 to end at Rs13.90/share, whereas Fauji Foods turnover was thinnest with just 3.304 million shares, but it gained Rs0.41 to end at Rs11.74/share.