The week started off on a slightly positive note post peaceful culmination of senate elections. However, gains couldn’t sustain during the week amid lack of triggers whereby index closed at 43,011pts, down by 1.7%WoW. The activity during the outgoing week remained lackluster as evident from decline in ADT and ADTV by 16.1%WoW and 18.9%WoW, respectively. Foreign investors remained net seller, exhibiting a net outflow of USD3.9mn.
During the week, APCMA released data of cement offtake for the month of Feb’18 where local cement dispatches grew 9.4%YoY accompanied by robust offtake in exports of 18.4%YoY. Moreover, ECC in its latest meeting has approved a plan to obtain PKR80bn bank loan to retire part of the power sector’s circular debt. Furthermore, DHCL plans to acquire 45% stake in a cellular tower firm (Edotco Pakistan (Private) Limited) through proceeds of its divestment in HUBC.
On the macro front, country’s total foreign exchange reserves declined to USD18.3bn owing to external debt repayments. Amid decline in reserves, Pakistan is mulling to place an additional USD1bn Eurobond to cushion its debt financing requirement of USD10bn till Jun’18. Also, Pakistan is in talks with a Chinese financial institution to obtain USD1bn as a foreign commercial loan.
While political ambiguity has reduced with timely senate elections, weakening economic indicators will remain a pressing concern for investors.
NEWS THIS WEEK
Economic Highlights & Data Points
Forex reserves down USD84mn (BR): The country’s liquid foreign exchange reserves fell by USD84mn during the last week due to external debt payment. The State Bank of Pakistan (SBP) Thursday reported that the country’s total foreign exchange reserves stood at USD18.3bn as on March 2, 2018 compared to USD18.4bn a week earlier.
Rising deficits, forex reserves decline risk to economic stability: IMF (The News): The International Monetary Fund (IMF) has warned Pakistan about ‘continued erosion of macroeconomic stability’ with the risks of rising twin deficits — the budget deficit and current account deficit simultaneously at a time of depleting foreign currency reserves. The IMF also raised its concern over the China Pakistan Economic Corridor (CPEC) for expanding external sector pressures and stated that the Fund directors noted that the external sector pressures are in part linked to the fiscal deterioration during the last fiscal year and an accommodative monetary policy stance, as well as the high imports related to the CPEC.
Pakistan mulls raising USD1bn through Eurobond tap (The News): Pakistan is mulling to place an additional USD1bn to its dollar-denominated 10-yr Eurobond the country sold in November last year in addition to raise another USD1.5bn through short-term loans to cushion its debt financing requirement of USD10bn till June-end, finance ministry’s officials said on Tuesday.
Pakistan in talks with China to borrow USD1bn (Tribune): Pakistan is in talks with a Chinese financial institution to obtain USD1bn as a foreign commercial loan, as its recent internal assessment revealed that inflows from traditional lenders would fall below budgeted projections. The World Bank and the Asian Development Bank (ADB) have already withheld USD700mn as balance of payments’ policy loans due to deterioration in macroeconomic indicators in the past one year.
Sector And Corporate Highlights
Dawood Hercules to divest Hubco for PKR17bn investment in tower firm (The News): Dawood Hercules Corporation, the country’s leading investment conglomerate, planned to acquire 45% stake in a cellular tower firm through proceeds of its divestment in an independent power producer Hub Power Company, a top official said on Tuesday. Inam-ur-Rehman, chief executive officer of Dawood Hercules said the company planned to acquire as much as 45% equity stake in Edotco Pakistan (Private) Limited, a subsidiary of Malaysia-based Asia’s largest tower infrastructure company Edotco Group, against an equity investment and short-term loan of up to PKR17.4bn.
ECC approves plan to settle Rs80bn power sector’s circular debt (The News): Government on Wednesday approved a plan to obtain PKR80bn of a bank loan to retire part of the longstanding power sector’s circular debt. ECC also approved issuance of government sovereign guarantee against financing facility of PKR13.13bn from local banks for evacuation of power from 1,320 megawatts imported coal power plant in Hub. The committee also approved procurement target of 6.1mn tons of wheat for 2017/18.
Renault suffers setback as PSM refuses to provide allocated land (Tribune): French automaker Renault has suffered a jolt in its bid to set up a car manufacturing plant in Pakistan as Pakistan Steel Mills (PSM) has refused to provide land for the facility. A senior official of the Ministry of Industries and Production told The Express Tribune that Renault had approached the ministry with a complaint that the National Industrial Parks Development and Management Company (NIP) was asking the automaker to sign an open-ended undertaking for bearing any increase in the cost of land being provided for setting up the vehicle manufacturing plant in Karachi.
Cement dispatches touch 30mn (Dawn): Total cement dispatches in the first eight months of 2017-2018 rose to 30.1mn ton from 26.3mn ton in same period of 2016-17. The capacity utilization in July-February FY18 was 91.3% of the total installed capacity of the cement sector.
|STOCK MARKET SYNOPSIS|
|Last week||This Week||%Change|
|Mkt. Cap (US $ bn)||82.4||81.3||-1.3%|
|Avg. Dly T/O (mn. shares)||181.1||152.0||-16.1%|
|Avg. Dly T/O (US$ mn.)||74.4||60.3||-18.9%|
|No. of Trading Sessions||5.0||5.0||0.0|
|KSE 100 Index||43,740.5||43,011.3||-1.7%|
|KSE ALL Share Index||31,666.6||31,220.0||-1.4%|