Pakistan stock market remained rather disconnected from the global and regional events during September’15. However, multiple rumors with regards to heightened vigilance of the regulator has created a cloud of uncertainty and depressed market sentiments. This is evident by the shrinkage seen in overall volumes as activities at the market remained dull. The market posted a negative return of 6.6%MoM in US Dollar terms and lost US$5.6 billion in market capitalization
Average daily turnover declined by 40%MoM to slightly more than 183 million shares while average traded value came off by 39%MoM to US$77.8 million. During the period under review, foreigners, mutual funds and companies remained net sellers as they offloaded net positions worth almost US$58 million, while other organizations, individuals and banks remained net buyers. In the backdrop of visible macro-economic improvement, analysts believe this discount is unwarranted and expect market performance to rerate going forward.
Similar to August’15, foreigners continued to be the net sellers as positions worth US$22.4 million were offloaded during the period under review. In addition to foreign institutions, local mutual funds emerged net sellers (US$18.4 million) and companies also liquidated positions (US$17.1 million). As against this, the net buyers were other organizations (US$20.4 million), individuals (US$15.2 million) along with Banks, DFIs and NBFCs (US$16.9 million) providing much needed liquidity to the bourse.
Only 4 sectors out of a total of 33 posted positive returns. These included Beverages, REIT, Support Services and Tobacco. That said, within the top 6 sectors (in terms of market cap) that represent nearly 71% of the KSE’s total weight, those posting negative return were E&P, Banks, Chemicals, Food processors, Construction & Materials and Personal Goods.
The regulator has officially clarified the scope of punitive action which addresses the cloud of uncertainty and should strengthen confidence of stakeholders. That said, any rebound in the regional markets can create a spillover effect, providing a boost at the bourse. In this backdrop, the market remains attractive especially for value investors where we encourage building long positions in selected companies in Banking and Oil & Gas, cement and fertilizer sectors.