Pakistani equities fail to compete with regional markets

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Witnessing a 2.2 percent growth on monthly account, the Pakistani stocks failed to compete with its regional competitors during the month of October.

“KSE100 (was) unable to compete with Asian region,” said analysts at InvestCap Research.

Analyst Abdul Azeem said that Pakistan equities remained lower when compared with Asia pacific region during the month.

The benchmark index posted a negative return of mere 1.5 percent as against the Asia region average return of 1 percent month-on-month.

KSE-100’s YTD return in MSCI Index, the analysts said, was still below that of the regional markets’ as well as other world benchmark indices with 3.4 percent CYTD return compared to average Asia region return of 14.2 percent during the same period.

On foreign inflows basis, Pakistan equities performance remained lacklustre as it posted outflow of $31 million as against inflows in the Asia Pac region of $524 million during Oct-14.

On CYTD basis, Pakistan and Vietnam equities stood with smallest size of inflow with only $383 million and $175 million respectively. Regional equities combined stood with a massive inflow of $36 billion during this period.

Marked with relatively high volatility while having rebounded at the tale-end of the month, the KSE-100 extended its ride further with MoM increase of 2.2 percent during Oct-14.

The market closed at 30,377 points.

“Primary reason for such improved performance from equities has been local buying in Oct-14,” said Azeem.

Moreover, he said, better results of different companies also supported the market.

The average market volume stood 176 million shares during the month under focus, which is relatively higher against the volumes of the previous month, up by 17 percent MoM.

KSE-100 yielded a decent return of 2.4 percent during 4MFY15 and settling YTD return at 20 percent during 10MCY14.

Giving future outlook, the analysts said with the depressed oil prices in international markets oil companies’ stocks in local bourses were likely to lose their strength.

“However, manufacturing companies’ stocks are expected to perform well in ongoing month,” said the analysts.

With an expectation of 6.2 percent YoY inflation in Oct-14 coupled with decline in yield in latest Pakistan Investment Bonds auction suggested that the monetary policy should be ease off going forward.

“We maintain our positive long-term stance on the market,” said the analysts.