The local bourse shed 437pts during the week and closed at 42,642pts, down by 1.0%WoW. The market observed weaker participation from the investors which is accredited to the prevailing political concerns and growing CAD, exhibiting a decline in ADT and ADTV by 2.1%WoW and 1.4%WoW respectively. Foreign institutional investors remained net seller during the week with an outflow of USD9.8mn.
During the week, two Chinese auto companies showed interest in setting up an assembling unit in Pakistan. Furthermore, China signed an agreement to build oil refinery in Dera Ismail Khan. On the other hand, Auditor General of Pakistan (AGP) has discovered PKR1.32trn worth of irregularities by companies under WAPDA and Power Ministry in FY17.
On the macro front, LSM exhibited a 4yr high growth of 5.6%YoY on the back of expansion in credit to private sector and continued improvement in power supply. Also, total foreign exchange reserves inched up by USD105mn to USD20.05bn (↑0.5%WoW).
CAD swelled by 210%YoY in Jul’17 on the back of alarmingly high import bill. Moreover, as per economic experts, Pakistan shall be negotiating a new IMF package soon since an external debt payment of USD7.43bn is due this year.
We expect weaker market participation among investors in the upcoming week due to looming political uncertainty and lower number of working days owing to Eid Holidays.
NEWS THIS WEEK
ECONOMIC HIGHLIGHTS & DATA POINTS
Large-scale manufacturing growth hits four-year high (DAWN): Large scale manufacturing (LSM) expanded by 5.6% in 2016-17, the Pakistan Bureau of Statistics (PBS) reported on Friday.
Govt to raise up to USD1bn through Eurobond (DAWN): The government is planning to raise USD500 million to USD1bn by floating eurobond in the international debt market, sources in the financial sector said on Saturday.
External debt: government required to pay off USD7.4bn this year (BR): Pakistan has to pay USD38.2bn and PKR15.9trn against external and domestic public debt respectively including principal amount and interest in the next seven years, (during 2017-2023). Minister for Finance, Revenue and Economic Affairs Senator Ishaq Dar informed this to National Assembly on Friday in a written response to a question asked by Pakistan Tehreek-e-Insaf member.
Current account deficit swells two-fold to USD2.1bn in July (The NEWS): The country’s current account deficit swelled more than two-fold year-on-year to USD2.1bn in the first month of FY18 as growing imports damped the positive impact of a rise in exports in July, the central bank data showed on Monday.
AGP finds PKR1.3trn irregularities in power sector (DAWN): The auditor general of Pakistan (AGP) is reported to have found more than PKR1.32trn worth of embezzlement, irregularities, recoveries and overpayments by companies and organizations under the Water and Power Ministry during 2016-17.
Pakistan on the verge of seeking IMF Bailout, experts claim (Tribune): Pakistan’s economy is once again fading due to endemic issues on the external front including a high-current account deficit (CAD) that has ballooned three times to USD2.1bn in the single month of July 2017 Year-on-Year. The widening deficit is fast eating the foreign exchange reserves and the time may not be far for the country to start negotiating a new bailout package from International Monetary Fund (IMF).
Forex reserves soar to USD20bn (BR): The country’s total liquid foreign exchange reserves increased by USD104mn during last week. According to foreign exchange reserves report issued by State Bank of Pakistan Thursday, the country’s total liquid foreign exchange reserves surged to USD20.0bn as on August 18, 2017 up from USD19.9bn on August 11, 2017. During the week under review, SBP’s reserves increased by USD64mn to reach USD14.4bn compared to USD14.3bn a week earlier. Reserves held by banks increased by USD40mn to USD5.7bn at the end of last week.
SECTOR AND CORPORATE HIGHLIGHTS
Chinese companies to assemble trucks, buses in Pakistan (DAWN): Two Chinese auto companies truck maker Sinotruck Limited and bus manufacturer Shanghai Sunlong — on Friday expressed interest in establishing assembling units in Pakistan.
Gas companies to spend PKR64.2bn on transmission network (The Nation): SNGPL and SSGCL would spend around PKR64.2bn on upgradation of transmission and distribution network in their respective areas during the current fiscal year. The gas utility companies have planned to invest PKR12.7bn on transmission projects, PKR43.0bn on distribution projects and PKR8.5bn on other projects bringing the total investment of PKR64.2bn
Pakistan, China to build Oil Refinery (Tribune): Pakistan and China have reached and an agreement on building an oil refinery in Dera Ismail Khan. WAK group from Pakistan and Guangdong Electrical Design Institute from China will build the refinery and have signed the agreement in this regard. The refinery, expected to be Asia’s largest, taking two and a half years at a cost of around PKR400bn. The plant will have the capacity to refine 100,000 barrels of oil per day.
STOCK MARKET SYNOPSIS
Mkt. Cap (US $ bn)
Avg. Dly T/O (mn. shares)
Avg. Dly T/O (US$ mn.)
No. of Trading Sessions
KSE 100 Index
KSE ALL Share Index