Limited triggers, budget blues, military offensive in Swat and absence of leveraged product resulted in the KSE-100 index oscillating in a range of just 4% in May-09.
* MoM the KSE return was 1%, while volumes fell ~47% MoM to US$75mn. The insipid month for the KSE combined with a healthy rally in regional markets meant that Pakistan now trades at ~56% discount to peers vs 49% a month ago.
* Coming off a very tough 2008, YoY economic indicators showed an improvement in April 2009. However, MoM numbers suggest signs of some pent up pressure.
* The initial part of June 2009 could follow a pattern similar to May 2009. In absence of triggers the market will remain apprehensive about potential new taxes in the budget in our view. In terms of our preferred exposures, we highlight Hub Power and PSO as our top picks as they provide a blend of value and growth in our view.
KASB Research