Dear Clients,
The sell-off continued today as well. Investors fret over approved bill that reverses Corporate Tax exemptions to meet the IMF conditions. That might have impact on Tax credit recorded by companies which expanded in last cycle. Further clarity is awaited.
Similarly, political noise continued as ECP rejected request to withhold notification of Yousuf Raza Gillani. Although, coalition government seems undeterred over Senate Chairmanship however, noise would continue as opposition parties pitch for their Senate Chairman. The election to be held this Friday should reduce political noise if coalition wins. Otherwise, uncertainty would increase as PDM is expected to do their marches in next two weeks.
Notable events today include Adamjee Insurance’s Material notice announcing their plan to list its subsidiary, Adamjee Life Insurance. This should unlock valuations along with bumper dividends received from MCB Bank, that’s part of Adamjee’s investment portfolio. Similarly, sponsors buying was witnessed in SPEL & Engro Coporation while Flying Cement announced Rights share to finance their cement expansion. Ittehad Chemicals notified PSX on establishing LC for Expansion in LABSA/SLED plant.
We expect turbulence to continue till Senate election although valuations keep getting better as market falls. Many blue-chip growth companies have come under the knife very sharply. However, given better demand, currency & FX reserves outlook keep valuations good for short & medium term gains.
KASB Research
