With the KSE-100 CY09 return (60%) eclipsed by gains across emerging Asia, we expect valuations to continue tapering against the region as emerging markets consolidate gains amid tighter liquidity in CY10F. With a decoupled monetary policy (against the region) and economic metrics consolidating, we expect the KSE-100 to rack up a 20%+ gain over CY10F based on coverage universe target price mapping - BUY IN! Looking at sequential returns over the last 7 years, we expect the Index to rally ahead of the Federal Budget and likely peak out around the 12,000 level before consolidating gains during 2HCY10. Last year’s top picks as an equal weighted portfolio delivered a 28% outperformance against the broader market (touch wood!). Details on our potential outperformers forming part of our recommended defensive/growth cocktail this year are discussed later in the report. .
January 15 2010