Continued selling by foreign portfolio investors weighed heavily on the country's otherwise booming equity market which remained flat during the outgoing 2015. Year-to-date in 2015, offshore investors sold portfolios worth $313.5 million, on net basis.
The benchmark KSE-100 index grew 1.7 percent while MSCI Pakistan declined by 16 percent. Pharma Sector was the best performing sector posting return of 17 percent while Oil & Gas was the worst performing posting decline of 31 percent. "After 3 consecutive years of exceptional performance, Pakistan market remained flat in 2015 following major selling by foreigners," said Saad Hashemy of Topline Research in a note issued Tuesday.
Amongst the top 10 sectors in terms of market capital, pharmaceutical and automobile sectors remained top performers as the sectors posted return of 17 and 13 percent. Pharmaceutical sector rallied following approval of drug pricing policy and launch of hepatitis 'C' medicine Sovaldi by Ferozsons (FEROZ), said the analyst.
Automobile sector remained in limelight due to what Saad said improving car sales volume amid Punjab taxi scheme, launch of new Corolla model and increasing car financing due to lower interest rates. Chemical sector rallied by 13 percent. The apparent trigger was reports of award of concessionary gas to Engro Fertilizer (EFERT) and Fauji Fertilizer Bin Qasim (FFBL)'s diversification into different business ventures. Chemical sector was followed by cement and electricity sectors, which were up 13 and 10 percent. "Cement sector was up due to increasing cement sales amid infrastructure spending and initiation of China-Pakistan Economic Corridor (CPEC) projects and declining coal and energy cost," Saad opined.
Electricity sector also outperformed the market increasing by 10 percent due to better sector dynamics on the back of lower input costs. Tobacco Sector outperformed market increasing by 7 percent due to better sentiments after price increase. Food producers and textile sectors remained underperformers with decline of seven and 14 percent, respectively. Price correction in food sector heavy weights NESTLE (NESTLE) and National Foods (NATF) mainly led to a decline in food sector.
This is likely because of stellar price performance of these companies and sector during previous few years. Textile sector remained under pressure due to slowdown in demand of cotton yarn by China and decline in exports. Index heavyweight sectors including oil and gas and commercial banks, weighing 40 percent in the index, remained under pressure during 2015 because of "lower oil prices and reduction in interest rates". The banks dipped by 16 percent given expectation of contraction in banking margins while oil and gas sector saw a major decline of 31 percent as oil price continued to decrease. "Lackluster performance in these two sectors led to only 1.7 percent increase in the KSE-100 Index YTD," said Saad.
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