Stocks rally on China loan rollover hopes

Value-hunting lifted stocks higher on Wednesday amid chatter that China would roll over $2.3 billion loans and optimism that global terror financing watchdog might whitelist Pakistan in its latest review, traders said.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 Share Index jumped 384.11 points or 0.94 percent to 41,438.79 points after swinging between a high of 41,535.24 and a low of 41,054.68 points.

Topline Securities in its daily market review said equities cheered unconfirmed reports of rollover of Chinese loans amid expectations of a positive outcome on the FATF front. The index initially opened in the green zone and stayed positive throughout the day, the brokerage said.

They further added that value-hunting remained in full swing as most of the stocks were available at attractive prices, offering good fundamentals. KSE-30 Shares Index also climbed 167.13 points or 1.07 percent to 15,815 points.

Traded shares increased 21 million shares to 141.705 million shares from 120.125 million shares. The trading value surged to Rs4.763 billion from Rs3.363 billion, while market capital rose to Rs6.897 trillion from Rs6.856 trillion. Shares’ turnover in the future contracts jumped to 43.818 million shares from 37.301 million shares. Out of 337 companies active in the session, 175 advanced, 131 retreated, while 31 ended unchanged.

Analyst Ahsan Mehanti at Arif Habib Corp said stocks recovered sharply on investor speculations ahead of results of FATF plenary meeting discussions.

China's agreement to roll over $2.3 billion lending and additional assistance of $2.5 billion to $2.8 billion supported the index to close near day high, Mehanti said.

Colgate Palmolive secured best gains of the day by surging Rs88.75 to Rs2,200/share, followed by Sapphire Fiber, up Rs79.90 to close at Rs1,179.90/share.

Unilever Foods led the losers as it shed Rs600 to end at Rs24,000/share, followed by Premium Textile, down Rs57.72 to end at Rs718.61/share.

Arif Habib Ltd expectation of Pakistan’s exclusion from the grey list of FATF gave investors heart to buy value stocks. OMCs, cements, and E&P sectors remained in the limelight, while volumes were sluggish in the main board whereas third-tier stocks posted sizable turnover, the brokerage said.

Sectors contributing to the performance included cement (+73.6 points), banks (+70.6 points), fertiliser (+70.0 points), E&P (+54.7 points), and power (+34.5 points). JS Research said according to reports, China had agreed to roll over a $2.3 billion loan to Pakistan in the initial phase, which lifted the sentiment.

“However, the market is still expected to be range-bound and therefore investors are recommended to stay cautious,” the brokerage said. TPL Properties was the volume leader with 17.352 million shares. The realty stock closed lower by 36 paisas to Rs19.13/share. It was followed by Balochistan Glass Limited with 9.854 million shares. The glassmaker lost 19 paisas to close at Rs8.32/share.

Among other major contributors to trade volume were Pakistan Refinery, WorldCall Telecom, Sui North Gas, TRG Pak Ltd, Unity Foods Ltd, Bank of Punjab, Cnergyico PK and K-Electric Ltd.