Karachi Stock Exchange rebound on enduring foreign investors' interest and the benchmark KSE-100 index surged by modest 4.1 percent MoM during September-14 as compared to 8.4 percent decline in August-14. According to a research report of InvestCap, likewise, during the last 10 years the KSE-100 Index provided 4 percent return on average in September. However, improved trading activity took the average daily volumes to 151 million shares; up by 13 percent MoM.
Similarly, the total traded value of the index registered a growth of 32 percent MoM to Rs 173 billion ($1.69 billion), up by 30 percent MoM during September-14. "The muscle stretching impact of political sit-ins of PTI & PAT was relaxed in September when compared with August and the same contributed positively to the market rebound," said Abdul Azeem, an analyst at InvestCap.
Furthermore, better foreign investment in the market and strong results expectations also played a pivotal role in the growth of the index, he added. However, during 1QFY15, the local equity market's performance remained lacklustre as KSE-100 Index posted a minimal growth of 0.25 percent QoQ. The average volume of KSE also followed a declining trajectory as it posted a decline of 39 percent QoQ to 133 million shares. Similarly, the total traded value of the market also witnessed a drop of 32 percent QoQ to Rs 420 billion, the report said.
While comparing the performance with regional peers, the KSE-100 index stepped down by 0.3 percent MoM in USD terms in MSCI Index during Sep14. Pak equities thus performed better than average of three major MSCI Indices (EM, FM, WM) with -0.3 percent in September-14 as compared to negative average return of 3.3 percent of the said indices.
In comparison with regional countries, Pakistan equity market fell with slower pace when compared with South Korea, Vietnam, Taiwan and China which declined by 8.2 percent, 7.6 percent, 7 percent, and 6.8 percent, respectively in MSCI index, the report said. During September-14, Foreign Investors Portfolio Investments (FIPI) improved by 48 percent MoM to $53 million as compared to 36 million during August-14.
Banks/DFIs were the major sellers on local front with net selling of $32 million during September-14 followed by companies and individuals with an outflow of $14 million and $8.2 million, respectively while mutual funds invested $18.2 million during September-14 in local bourses. On a cumulative basis, net inflow of $157 million was witnessed during 1QFY15 as compared to outflow of $94 million during the same period last year. Talking about the market outlook, Abdul Azeem said with the ending of corporate results season, the KSE-100 index is expected to be slowing down in October-14.
The building pressure of the ongoing political sit-ins on the government is expected to keep the local bourses in mess during October-14, he added. "Although foreign investment is continuously supporting the equity market but any slowdown in this investment due to delay in the IMF tranche or low response to upcoming OGDCL transaction would be negative for index," he said.