EUR 4.08 For Business Accounts Only

Intermarket Pulse: Pakistan Market: Flat in Apr'18; politics to dictate performance now

• Pakistan’s KSE-100 Index was flat in Apr’18, with some macroeconomic positives being countered by political noise and weak results. Daily turnover rose 16%MoM to US$82.5mn, but this remains very low against the CY17 average of US$114.6mn. Foreign investors were again net sellers of US$23.5mn; however, adjusted for a large ticket OGDC divestment, we are tracking a net buy of US$17.3mn for the month.
• The market is currently taking cues from the FY19 Federal Budget where we see positives for Fertilizers and Textiles in particular. On the flipside, we see negatives for Autos and Construction. We further believe that some budgetary incentives may come in for tweaking as the year progresses, particularly if another IMF program is sought. For details, please see our separate note on the Budget.
• Attention will now turn to General Elections where our conviction for PML-N forming government again is getting weaker. We flag that if PML-N is not re-elected, the Pakistan Market may depict a kneejerk downward reaction and possibly again test the 40,000pts level. As such, we have a cautious stance over the next few months where we are not convinced that the traditional pre-election rally will occur this time.