EUR 4.64 For Business Accounts Only

Pakistan Market: Mar’17: Weak month leads to flattish close for the quarter

• The KSE-100 Index shed 0.8% in Mar’17, leading to a flattish close for 1QCY17 vs. 13% gains for MSCI Asia Pac (ex-Japan) in the quarter. While the year got off to a strong start with gains standing at 5% at one point, political and regulatory noise dampened volumes and investor sentiment.

• Foreign selling continued for the fifth consecutive month, although outflows were modest (US$23mn vs. average c.US$100mn in the past). Net outflows were largely concentrated in Cements (performance down 3%), while E&Ps (down 5%) witnessed inflows despite 7% decline in oil prices.

• Market P/E stands at 11.0x, at 14% discount to MSCI EM. As illustrated by the FTSE inclusion during the month, the MSCI upgrade will likely lead to a noticeable spike in activity but demand may not fully translate into net inflows due to existing foreign holdings. Names we like include APL, NML, UBL, BAFL, PPL, OGDC and DGKC.