Throughout last week, market was busy contemplating how the case of HBL vs. NYDFS will unfold. With strong allegations and accusations hurled at HBL's New York Branch activities of, investors feared worst for HBL in the case ruling. However; the situation was resolved before a trial could take place in a court, an early settlement was reached between the two parties, helping investors gain some sense of certainty for the stock's behavior in the upcoming days. Volatility in HBL stock usually means make or break for the entire index, as HBL currently has highest market cap of all listed stocks on KSE.
Despite market’s attention being captivated by events unfolding in HBL case, in other important economic news, PBS released CPI numbers for August, clocking in at 3.42, falling within the anticipations of market. Meanwhile, on the fiscal front, Government continues to borrow heavy sums via SBP to fill up the ever broadening deficit, while banks were seen to be reluctant to participate in Government Securities auctions as they await further guidance in interest rate, which some analysts expect to reverse in coming Monetary Policy.
The week witnessed a major positive uplift from Oil & Gas Exploration, Food & Personal Care and Automobile sector stocks. Highlighting investor participation, Foreign Investors offloaded stocks worth 0.3 million during the week compared to a net sell of 14.3 million in the last to last week. The day pivotal for the foreign activity was Tuesday as five of Pakistani companies (MCB, THALL, SNGP, BAFL and MTL) made the cut for ex-Japan global market index FTSE rebalancing. Markets witnessed a total of 6.34 million USD net buying from foreign investors on Tuesday, coinciding with FTSE news.
Of the other major news making an impact on the market: SBP reserves for Foreign Exchange increased by 2.35% week on week, HBL’s New Branch was ordered to shut down its operation and pay a fine worth 225 million USD after settlement, K-Electric invited bids for 1 million ton per year LNG contracts for its operation on the RLNG fueled Power Plant.
Moving on from last week to the upcoming one, investors would look out for corrections in HBL share prices which rose on Friday after four consecutive lower circuit breakers. In addition to that, some heavyweights are expected to announce Earnings for the quarter. Attock Group of companies is all set to announce results for Attock Petroleum, Attock Cement, Attock Refinery in addition to that National Refinery Ltd. and Pakistan Oilfields Ltd. are also geared up for Fiscal Year 17 results on 11th of September.
KSE-100 index weekly net position was in the green for the week, as it gained 194 points during the week up by roughly 0.5 percent. The index continues to underperform with respect to Price to Earnings ratio; currently KSE-100 is trading at PER of 8.0x (2018) against a regional (Asia Pacific) average of 13.4x while offering a Dividend Yield of 6.2% against 2.5% of the region.
