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Stock market at a glance

MARKET REVIEW

Index remained under pressure as political noise, higher VaR requirement by regulator and lower international oil price kept the index in check. Index closed the week at 49,191pts, down by 0.9% WoW. FIPI registered net inflow of US$15mn. Average volume traded decreased by 21% WoW while average value traded decreased by 20% WoW.

During the week Engro fertilizer announced the conversion of IFC’s USD1mn loan into ordinary shares (however this has a negligible dilution impact). 13 IPPs invoked their sovereign guarantee as their overdue receivable exceeded PKR250bn. Also, ENGRO & SSGCL reached a deal to re-gasify additional 200 mmscfd RNLG. Furthermore, cement numbers released by APCMA showed 6% YoY growth in dispatches during 8MFY17.

On the macro front, foreign exchange reserves rose by 1.5% WoW as the central bank received US$350mn under CFS. Moody’s however forecasted widening of country’s trade deficit due to rise oil prices.

OUTLOOK

Moving forward, any verdict announced by the Supreme Court on Panamagate scandal can be expected to impact investor sentiment and decide market’s direction. As military operation continues, any disruption on the law and order front can also put a dent on the index. Our top picks are PPL, OGDC, BAHL, HBL, EFERT, PSO, PIOC, MUGHAL and DGKC.

NEWS THIS WEEK

ECONOMIC INDICATORS & DATA POINTS

PSX RECEIVED USD 85MN FROM DIVESTMENT OF 40% STAKE (DAWN): PSX has received PKR 8.96bn (USD 85Mn) from consortium of Chinese investors. The proceeds of PKR 40Mn is expected to be received by the brokers this week.

MOODY’S FORECASTS WIDENING TRADE DEFICIT (TRIBUNE): Moody’s has forecasted widening of current trade deficit due to rising oil prices and alarming increase in Pakistan’s imports.

POWER SECTOR BILLS INCREASE TO PKR 414BN BY MID FEB (DAWN): Power sector bills have pilled to PKR 414bn by the mid of Feb. Furthermore, 13 IPPS have started the process of invoking sovereign guarantees.

PAKISTAN TO COMPLETE IP PIPELINE IN 30 MONTHS AFTER SANCTIONS ARE GONE (TRIBUNE): The pipeline will begin from Iran’s south pars gas filed and end at Nawabshah and 750 cubic feet of gas per day will be supplied through the IP pipeline.

CHINESE FIRM AWARDED DASU DAM CONTRACTS (DAWN): Government on Wednesday awarded Rs180 billion worth of two contracts to a Chinese firm for carrying out main civil works in the first stage of the Dasu hydropower project. This stage of the project is expected to be completed in 2021 under the contract and would generate 2,160MW of electricity.

FOREIGN EXCHANGE RESERVES RISE 1.5% WOW (DAWN): Pakistan’s total liquid foreign exchange reserves increased by US$329.2mn during the week to to $22.1bn on March 3. The central bank received US$350mn under the Coalition Support Fund. Furthermore, US$200mn in CSF came in after 3rd March.

POWER COST RISES 25% (TRIBUNE): The cost of electricity production rose 25% in January following higher generation by expensive oil-fired plants and lower output from hydroelectric power plants. Share of RFO based power production increased to 43% in Jan-17 from 37.13% in Dec-16.

SECTOR AND CORPORATE HIGHLIGHTS

SUGAR INDUSTRY SEEKS ADDITIONAL ALLOWANCE FOR SUGAR EXPORT (DAWN): Sugar industry has requested the government to allow .5Mn tons additional export of sugar with any rebate.

CEMENT DISPATCHES GREW 6% YOY IN 8MFY17 (DAWN): Cement dispatches during 8MFY17 grew by 6% YoY to 26.339Mn tons. Domestic consumption increased by 9% YoY and export declined by 8.54% YoY during the same period.

ENGRO & SSGCL REACH DEAL TO RE-GASIFY ADDITIONAL 200 MMCFD RLNG (THE NEWS): SSGCL and Engro Terminal Company have in principle entered into an agreement for re-gasification of additional 200 mmcfd LNG enabling the country to have 600 mmcfd LNG re-gasified at the average tolling fee of 47.9 cents per mmbtu.

GOVERNMENT TO CONSIDER REMOVING DUTY ON AUTO-GRADE STEEL (DAWN): BOI has said that the government would consider auto-vendor’s proposal for removing duty on auto-grade steel in coming budget.

THAILAND DEMANDS ACCESS TO AUTO SECTOR UNDER FTA (DAWN): Thailand has sought a drastic reduction in the tariff on the auto sector under the proposed FTA. Thai authorities have conveyed that the FTA’s implementation would be linked with access to the auto sector in Pakistan.

TURKEY LINKS FTA TO MARKET ACCESS FOR AUTO SECTOR (DAWN): Turkey has linked finalization of FTA with market access for Turkish auto sector. Turkish authorities have linked giving market access to Pakistani textile with auto sector liberalization.

NON-PERFORMING LOANS DECLINED IN THE LAST QUARTER OF 2016 (DAWN): The infection ratio in the corporate segment fell to 10.6% at the end of December from 12% at the end of the third quarter of 2016.

STOCK MARKET SYNOPSIS
LAST WEEK
THIS WEEK
% CHANGE
Mkt. Cap (US$bn)
93.6
92.5
-1.2%
Avg. Dly T/O (mn. shares)
301.0
237.6
-21.1%
Avg. Dly T/O (US$ mn.)
136.8
109.0
-20.3%
No. of Trading Sessions
5.0
5.0
KSE 100 Index
49,623.8
49,191.8
-0.9%
KSE ALL Share Index
33,529.9
33,168.0
-1.1%

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