After a volatile week, the benchmark index closed at 42,913pts, up by ~2%WoW. Market participation exhibited a decline of -0.4%WoW in ADT while ADTV increased by 12.5%WoW. Additionally, foreign investors exhibited a net outflow of USD17.5mn.
Major news of the week include the data released by NFDC on fertilizer offtake that posted a growth of 27%YoY to 570,000 tons in Apr’18 amid higher demand from dealers on account of anticipated increase in urea prices. Furthermore, senate special committee informed that circular debt has reached PKR573bn over the period of last 5yrs (2013-2018). Moreover, as per the data released by PBS, petroleum products production witnessed 12.3%YoY increase during the 9MFY18 as compared to the same period last year. Further, ECC has extended the export package worth of PKR195bn for next 3yrs (FY18-FY21) to improve the competitiveness of the textile and non-textile export sectors.
On the macro front, country’s foreign exchange reserves decreased to USD16.4bn, declining by USD246mn over the week, owing to the external debt servicing. Additionally, federal government borrowed over PKR20bn through the sale of first ever floating rate Pakistan Investment Bonds to improve the debt profile and meet the rising financial needs. Also, FBR during the 11MFY18 recorded a provisional net revenue collection of over PKR3.27trn as against PKR2.85trn, up 15%YoY and has to collect PKR661bn in Jun’18 to achieve the revised target for FY18.
Historically speaking, the market witnessed a rally of ~15% during the tenure of last 4 interim governments. Therefore, taking cue from the past, we expect a short term rally in market till the next general elections, scheduled on Jul 25, 2018.
NEWS THIS WEEK
Economic highlights & Data points
Forex reserves fall to USD16.4bn| (The News): Pakistan’s foreign exchange reserves dropped to USD16.4bn during the week ended May 25 from USD16.7bn a week earlier, the central bank said on Thursday. The reserves held by the State Bank of Pakistan decreased USD286mn to USD10.0bn due to external debt and other official payments.
PSDP 2017-18: Govt. releases PKR676.3bn for uplift projects so far| (BR): The government has released PKR676.3bn (90.2%) including PKR155.8bn foreign aid for different development projects so far under the Public Sector Development Programme (PSDP) 2017-18 against the total revised budgeted allocation of PKR750bn.
Govt. extends export package of PKR195bn for 3 years| (Nation): The government on Wednesday has extended the export package worth of PKR195bn for next three years to increase the exports. The Economic Coordination Committee (ECC) of the Cabinet, which met with Prime Minister Shahid Khaqan Abbasi in the chair, has extended the PM Export Package for the next three years i.e. up to 30th June 2021.
First-ever floating rate PIB auction fetches PKR20bn| (BR): The federal government Wednesday borrowed over PKR20bn through the sale of first-ever floating rate Pakistan Investment Bonds.
FBR struggling to meet revised target| (Nation) Negative: The Federal Board of Revenue (FBR) is struggling to achieve the revised tax collection target during outgoing fiscal year despite it would generate additional revenue due to enforcement of new taxation measures of next year before June.
PKR31.3bn released hours before Govt. term ends| (Dawn): The PML-N government on Thursday paid PKR31.3bn sales tax refunds to traders and exporters a few hours ahead of completion of its five-year term of government. The total amount of refund issued till May 31 reached to PKR100bn in 11MFY18 up by 85% from PKR54bn paid out over the corresponding period of last year.
Sector and Corporate highlights
Fertilizer off-take grows 27% to 570,000 tons in April| (The News): Sales of fertilizers posted a strong growth of 27%YoY to 570,000 tons in April as urea demand continued to surge on prospects of price hike.
Circular debt reaches PKR573bn, Senate body told| (Nation): Senate Special Committee on Circular Debt was Tuesday informed that during last five years the circular debt has reached to PKR573bn. The committee, held with Senator Shibli Faraz in the chair, discussed the issues of circular debt, electricity theft and load shedding.
POL products output rises 12.3% in nine months| (The News): Petroleum products production witnessed 12.3% increase during 9MFY18 as compared to the corresponding period of the last fiscal year, data released by the Pakistan Bureau of Statistics, revealed on Tuesday. The petroleum products that contributed in positive growth included motor spirits, output of which grew 18.7% during the period under review.
OGRA recommends up to 16.9% hike in oil prices| (Nation): The Oil and Gas Regulatory Authority (Ogra) on Wednesday recommended an increase of PKR12.5 per litre in the price of high speed diesel and PKR8.37 per litre in the price of motor spirit (petrol) for the month of June. In a summary moved to the Ministry of Energy (Petroleum Division) and Finance, the Oil and Gas Regulatory Authority (Ogra) proposed an upward revision in oil prices and recommended up to 16.9% increase in prices of different petroleum products.
|Stock Market Synopsis|
|Last week||This Week||%Change|
|Mkt. Cap (US $ bn)||75.5||77.0||2.0%|
|Avg. Dly T/O (mn. shares)||119.5||119.0||-0.4%|
|Avg. Dly T/O (US$ mn.)||42.9||48.3||12.5%|
|No. of Trading Sessions||5.0||5.0||0.0|
|KSE 100 Index||42,074.1||42,912.8||2.0%|
|KSE ALL Share Index||30,718.7||31,401.2||2.2%|