Pakistan equities bounced back to cover some of yesterday's losses gaining +1.7%. Financials led the recovery as State Bank announced relaxation in regulations related to provisioning. As per the new rules, banks with infected loan portfolio and high exposure to corporate loans (high collateral against loans to increase advantage) are likely to benefit. We believe this move is positive for the banking sector and will certainly improve investor sentiment, however the quantum of the impact will only be know at year end (4Q results). NBP, UBL and HBL closed at upper limits on the news. In line with expectation, oil stocks also pulled back with POL trading strong ex dividend (PKR10/sh Cash payout). Company is to announce 1QFY10 results in couple of days where we expect +25%QOQ earnings jump on the back of 13%QOQ oil prices increase. Cements took opposite direction to market as lower cement retail prices (hurting retention prices) and development on case against cement industry on alleged charges of cartelization forced stocks to remain in check.
South Waziristan offensive continues with army making significant grounds.
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