By: Intermarket Securities Limited
Pakistan Equity: In what was a very volatile month, the KSE‐100 Index fluctuated between +1.4%/‐ 7.4% to eventually close 2.8%MoM lower for Aug’15 at 34,727 points, clipping CYTD/FYTD gains to 8.1%/1.0%. The Pakistan Market was clearly affected by volatility in global equities with net FPI outflow of US$61.3mn, bringing CYTD net outflow to US$157mn, while Banks/DFIs remained key buyers on the domestic front (+US$45mn) during Aug‐15.
Global events aside, this was a mixed month for local newsflow; macro developments were generally on track with successful 8th IMF review and a new 2015‐19 country assistance program from ADB (US$1.2bn pa) but political noise rose on MQM resignations and arrest warrants for key PPP leaders. That said, the FO’s claim that the Haqqani network has been eliminated from N.Waziristan is a clear +ve.
Immediate‐term market direction will likely be dictated by the ~24% (weighted Avg.) increase in gas tariffs (negative for Fauji’s) while check points over Sep’15 include (i) trend in FPI flows, (ii) monetary policy decision and (iii) domestic political developments. Expect the market to remain volatile but add quality names on dips. We like, Financials (HBL, AICL), Cements (DGKC, CHCC), Consumer Durables (PAEL) and IPPs (LPL).