KARACHI: The Pakistan equities ended the year on a bullish note with generating above average gains in the outgoing year 2016. The benchmark KSE 100 Index gained 46 percent (45 percent in dollar terms) in 2016 compared to last 10-year average return of 20 percent (15 percent in dollar terms) and last 20 year average return of 24 percent (19 percent in dollar terms). Amongst Asian markets Pakistan remained on top. Moreover, it also remained No 1 in MSCI Frontier Markets. As shown in accompanied table, according to Bloomberg, Pakistan market posted 5th highest return in the world, said report by the Topline Securities. Strong performance of Pakistan equities in 2016 was mainly led by strong local cash liquidity thanks to falling interest rate and rising investor confidence. Economic recovery positively affected local demand for various sectors, rebound in oil prices, better security situation and exuberance on Pakistan’s reclassification in MSCI EM Index also helped, the report added. On Friday during the last trading session of year 2016 the benchmark KSE 100 index added 140 points or 0.29 percent to close at its highest ever level of 47,806 points. “Stocks closed higher at the year end close led by oil and banking stocks on investor speculations ahead of financial results. Likely revision in local POL prices and higher banking spreads played a catalyst role in new highs amid concerns for foreign outflows”, said Ahsan Mehanti, senior equity analyst.
UBL, HBL and LUCK contributed 135 points to the gain in index while stocks increased by 2.2,1.1 and 2.1 percent respectively. DSL and BOP led the volumes with 83 million shares traded combined. Overall, volumes decreased by 0.1 percent to 387 million shares, while value rose by 1 percent to Rs 18.8 billion/$180mn. Thursday Rs18.6 billion/$178 million of shares were traded at Pakistan stock market. Dost Steel with 45 million shares remained as top volume leader followed by Bank of Punjab 38 million, NIB Bank 18 million Dewan Cement 15 million, IGI Investment Bank 13 million and TRG Pakistan 12 million. Shares of 409 companies were actively traded at the bourse out of which shares of 190 companies ended in green, 203 in red, while 16 remained unchanged. Outlook for 2017: Analysts expect that KSE 100 index will hit 56,000 level in 2017 offering return of 21 percent (inclusive of dividend yield). Pakistan market, is likely to benefit from rising domestic demand, CPEC led investments, and increasing local liquidity, Topline Securities said adding Pakistan market is currently trading at a PE of 9.7x which can potentially re-rate to 10x in 2017. This coupled with 22 percent earnings growth of our sample companies (70 percent of market cap) will drive the market in 2017. Pakistan is still trading at a discount of 23 and 29 percent discount to MSCI FM and MSCI EM markets respectively.