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Pakistan Market: Jan’17: KSE-100 returns 2% led by domestic liquidity

​After a 20% run-up in the last two months of 2016, the KSE-100 gained 2.0% in Jan’17. FPI saw outflow for the 3rd consecutive month, but US$100mn was slightly slower than 3m avg. of US$125mn. Returns could have been higher, but consternation regarding US travel ban on regional countries and enhanced SECP vigilance on local brokerages triggered profit taking in last few days.

On the political front, hearings on the Panama Leaks resumed but has not reached any conclusion so far. SBP kept interest rates unchanged at 5.75%/6.25% in the Jan’17 MPS, amid nascent external a/c concerns which took precedence over soft inflation.

Key near-term checkpoints include (i) progress on the Panama Leaks case, (ii) local liquidity dynamics and (iii) result season which has just commenced. We believe MSCI tailwinds can take the index to 54,500pts by Jun’17; our top picks are OGDC, APL, UBL, DGKC and NML. Outside our coverage, ISL, SPEL and BAHL are interesting names.