KSE-100 index closed almost flattish during the week, reporting an increase of 343ptsWoW (0.8%) to 43,363pts. Activity during the outgoing week remained dull as evident from a ~8.7%WoW decline in ADTV, however, ADT witnessed an increase of ~15%WoW representing a shift towards small cap scrips. Foreign investors remained net seller, exhibiting a net outflow of USD0.3mn*.
During the week, PAMA released data of auto industry for the month of Feb’18 which exhibited a 23%YoY growth to 170,354 units despite an increase in prices. Moreover, FFC, Hubco and China Machinery Engineering Corporation signed an agreement to set up a 330-megawatt local coal-based power project in Thar. Furthermore, EPCL unveiled PKR7.6bn investment plan to increase production of pipes and fittings to capitalize on growth in construction activities in the country.
On the macro front, country’s total foreign exchange reserves declined to USD18.2bn owing to external debt repayments. Further, the incumbent government is planning to launch an amnesty scheme to support worsening fiscal deficit position in the country. Also, the U.S. passed a bill to renew the GSP status of Pakistan which would allow duty free access of goods. Moreover, country’s exports have posted a growth of 11.7% during 8MFY18.
Since the result season is almost over, we expect political and economic situation to take front seat dictating the market direction. With deteriorating position of foreign exchange reserves and domestic debt, we expect market to exhibit a lackluster performance up until the elections.
*Data based on first 4 trading days.
NEWS THIS WEEK
Economic Highlights & Data Points
Pakistan’s foreign exchange reserves fell to USD18.24bn (The News): Pakistan’s foreign exchange reserves fell to USD18.24bn on March 9 from USD18.33bn a week earlier, the central bank said on Thursday.
IMF projects gross external financing needs at USD24.46bn in FY18 (The News): International Monetary Fund (IMF) on Thursday projected Pakistan’s gross external financing needs at USD24.46bn for the FY18, a projection that brushed aside the finance ministry’s claim of USD18bn by a wide margin.
Amnesty scheme this month, government tells SC (The News): The Chief Justice of Pakistan (CJP) said on Wednesday that the government was sleeping as it had done nothing in the Panama, Paradise Leaks cases. The government at this responded that an amnesty scheme was being introduced during the current month (March). The Supreme Court (SC) on Wednesday observed that transfer of money abroad without justification was disastrous for the country and hinted at banning the practice.
Domestic debts rise 6% to PKR5.8trn (Dawn): The central government’s domestic debt increased by PKR947bn in 7MFY18, State Bank of Pakistan reported on Tuesday. The domestic debt rose to PKR16trn in Jan’18, up 6.3%, from PKR15trn in Jun’17.
US renews GSP scheme for Pakistan (Dawn): The US House of Representatives has passed a bill to renew the Generalised System of Preferences (GSP) scheme allowing duty free access for goods from 120 countries including Pakistan for the next three years.
July-February: exports post 11.7% growth (BR) Positive: The country’s exports have posted a growth of 11.7% during first eight months (July- February) 2017-18 to USD14.85bn against USD13.30bn during the corresponding period of 2016-17. In February 2018, exports achieved a growth of 16.5% to USD 1.90bn against imports of USD4.80bn, showing an increase of 9.7%. In February of the current fiscal year, exports posted a 16% increase in dollar terms and 22% increase in rupee terms, in comparison to February 2017.
Sector and Corporate highlights
Auto sales jump 23% (Dawn): Sales of locally assembled cars, light commercial vehicles, vans and jeeps exhibited a 23% year-on-year growth to 170,354 units despite an increase in their prices.
Engro Polymer plans PKR7.6bn investment for expansion (The News): Engro Polymer and Chemicals on Wednesday unveiled PKR7.6bn investment plan to increase production of pipes and fittings to capitalise on growth in construction activities in the country and tap regional demand.
Hubco, Fauji Fertilizer to set up 330MW coal power project (The News): Fauji Fertilizer Company Limited (FFC) and Hub Power Company Limited (Hubco) signed an agreement to set up a 330-megawatt local coal-based power project in Thar, a statement said on Thursday.
Fertiliser sector demands abolition of GIDC (The News): Fertiliser sector on Thursday said abolition of gas infrastructure development cess (GIDC) on feedstock would make soil enriching chemicals affordable for farmers without any cash subsidy, easing the burden on national exchequer.
USD5bn refinery to be set up at Hub (BR): Pakistan in collaboration with UAE is going to establish a state-of-the-art refinery with an estimated investment of around USD5bn at Hub, Baluchistan, said Director General Oil (Ministry of Petroleum and Natural Resources), Abdul Jabbar Memon, on Friday. ”Pak Arab Coastal Refinery” would have an installed capacity to refine 250,000 barrels per day crude Oil.
|Stock Market Synopsis|
|Last week||This Week||%Change|
|Mkt. Cap (US $ bn)||81.3||82.0||0.8%|
|Avg. Dly T/O (mn. shares)||152.0||174.9||15.0%|
|Avg. Dly T/O (US$ mn.)||60.3||55.1||-8.7%|
|No. of Trading Sessions||5.0||5.0||0.0|
|KSE 100 Index||43,011.3||43,363.2||0.8%|
|KSE ALL Share Index||31,220.0||31,607.7||1.2%|