US air and naval presence in Middle East

Defense Secretary Lloyd Austin has ordered more warplanes and Navy ships to the Middle East to maintain US presence in the region as an aircraft carrier strike group is preparing to leave, the Pentagon announced Friday.

Austin ordered additional ballistic missile defense destroyers, a fighter squadron and tanker aircraft, and several Air Force B-52 long-range strike bombers to the region, press secretary Maj. Gen. Pat Ryder said in a statement. 

“These forces will begin to arrive in coming months as the USS Abraham Lincoln Carrier Strike Group prepares to depart,” he added. 

Ryder did not say how many American forces will be in the region with the changes, but as many as 43,000 US troops have been there recently.

The bulked up US military stance comes as Israel has shown no sign of relenting in its war with Hamas in the Gaza Strip and a separate conflict against Hezbollah in Lebanon.

Israel also launched a retaliatory strike on Iran last week targeting military bases and weapons production. That followed Tehran’s strike on Israel exactly one month ago when it fired a barrage of about 180 missiles at the country.

Washington, while pressing for a cease-fire in Gaza and Lebanon, has made little progress on that front ahead of the US presidential election.

Two White House officials, Amos Hochstein and Brett McGurk, were in Israel on Thursday to speak with Israeli Prime Minister Benjamin Netanyahu, but they returned home on Friday with little to show.

In the meantime, US officials have repeatedly said it will defend Israel and US personnel and interests in the region, with the Pentagon last month sending roughly 100 American troops to Israel to operate a provided Terminal High Altitude Area Defense system.

The additional B-52 bombers are notable as it is the second time within a month that the US has ordered the warplanes to the Middle East, where it uses the aircraft to send a warning to Iran and its proxies.

“Secretary Austin continues to make clear that should Iran, its partners, or its proxies use this moment to target American personnel or interests in the region, the United States will take every measure necessary to defend our people,” Ryder said.

 

PSX daily trading volume up 30.6%WoW

Pakistan Stock Exchange (PSX) started the week on a strong note, with KSE-100 index reaching its highest-ever closing at 90,864 points on Tuesday, closing the week ended on November 01. 2024 at 90,859, up by 0.96%WoW. Average daily traded volume was up 30.6%WoW to 649.2 million shares, from 497.1 million shares traded a week ago.

The momentum was fueled by anticipated continuation of monetary easing and the country reporting its first-ever quarterly budget surplus in over 20 years of PKR1.7 trillion during 1QFY25, coupled with strong corporate results.

Regrettably, Pakistan missed two of the IMF's quarterly targets: tax collection marking a shortfall of PKR90 billion, and cash surplus for the provinces, marking a shortfall of PKR182 billion.

CPI for the month was reported at 7.2%YoY, with real interest rate comfortably above 10% at current policy rate levels.

Trade deficit for October 2024 was reported at US$1.4 billion, with exports for the month at US$2.97 billion, up 4.9%MoM.

Foreign exchange reserves held by State Bank of Pakistan (SBP) increased by US$116 million WoW at US$11.15 billion as of October 25, 2024.

On the currency front, PKR largely remained stable against the greenback throughout the week, closing the week at PKR277.7 to a US$.

Other major news flow during the week included: 1) Prime Minister visited Saudi Arabia and Qatar, 2) Saudi Arabia likely to finalize US$1.2 billion oil facility by end December this year, 3) Germany seeks COAS help over IPP deal termination, 4) MoUs signed with Pakistan increased to 34 and 5) T-Bills yields slip by 64-140bps ahead of inflation data.

Pharmaceutical, Wollen, and Leasing Companies were amongst the top performing sectors, while Inv.Banks/ Inv.Cos/ Securities Companies, Leather & Tanneries, and Engineering were amongst the laggards.

Major net selling was recorded by Banks/DFI with a net sell of US$13.0 million. Insurance and Mutual Funds absorbed most of the selling with an aggregate net buy of US$12.3 million.

Top performing scrips of the week were: GLAXO, CHCC, NCPL, SYS, and KAPCO, while top laggards included: KOSM, NBP, PKGS, MUGHAL, and SRVI.

Market is expected to remain positive, with primary focus on the upcoming Monetary Policy Committee meeting, where an anticipated rate cut could further bolster market momentum.

Despite the recent rally, valuations remain attractive, with the market trading at a P/E of 4.0x and offering a dividend yield of 11.4%.

AKD Securities recommend focusing on sectors that stand to benefit from monetary easing and structural reforms, particularly high-dividend-yield stocks that are likely to re-rate as yields converge with fixed-income returns.

Top picks of the brokerage house include: OGDC, PPL, MCB, UBL, MEBL, FFC, PSO, LUCK, MLCF, FCCL and INDU.