The period under review (Friday-Thursday) remained flattish owing to lack of triggers and increasing political uncertainty in the country. A declaration of PKR1.8trn under tax amnesty scheme also failed to lift the market sentiments where the index closed at 39,875pts, down by 0.9%WoW. Market participation increased as indicated by a rise of 2.8%WoW in ADT and 14.6%WoW in ADTV as investors became more active post clarity on the judgment against ex-PM. Foreigners continued their selling spree in this week as well with a net outflow of USD25mn.
During the week, PSMC announced to discontinue production of VX Mehran in Nov’18 owing to its low demand. PAMA released the latest numbers on auto sales that increased by 20%YoY, clocking in at 18.5K units for Jun’18 taking the cumulative FY18 units to 258.6k, up by 21%YoY. Moreover, the Ministry of Industries and Production awarded Greenfield status to 2 more auto companies namely M/s Topsun Motors and Pak China Motors. Additionally, Sindh Engro Coal Mining Company planned a coal supply agreement with Shanghai Electric Corporation to undertake expeditious expansion of Thar Block-II.
On the macro front, central bank’s foreign exchange reserves decreased to USD9.5bn, down by USD309mn mainly accredited to outflow of debt repayments. Also, Pakistan received USD19.62bn workers remittances in FY18 which is 1.4%YoY higher as compared to last year but still missed the target by USD1.0bn. Furthermore, Pakistan’s public debt increased 14.5%YoY to PKR23.7trn during 11MFY18. Additionally, as per the data released by SBP, the Government borrowed PKR1.4trn in FY18 as compared to PKR908bn in FY17.
With the beginning of result season from next week, corporate earnings will dictate the direction of market. Additionally, as we are just 2 weeks away from the general elections, heightened political noise may continue the market’s volatile performance. Moreover, monetary policy is set to be announced on Jul 14, 2018 where we expect a 50bps rise in interest rates; however any surprises in this regard may further dent the already dwindling sentiments of the market.
News This Week
Economic highlights & Data points
Revenue collection falls PKR90bn short of target for FY18 (Dawn): Despite a revision of the revenue collection target for 2017-18, the Federal Board of Revenue (FBR) saw a shortfall of PKR90bn. The provisional revenue collection reached PKR3.8trn, which is lower than the target set at PKR3.9trn. The FBR had initially targeted a total collection of PKR4.1trn for the fiscal year.
Government borrowing jumps 58.5% to PKR1.4trn in FY18 (The News): The government borrowing to finance its budgetary deficit vaulted 58.5% during the last fiscal year as the gap between spending and revenues continued to widen owing to a huge shortfall in receipts, official figures showed on Friday.
Public debt reaches PKR23.7trn in 11 months (The News): Pakistan’s public debt stock increased 14.5% to PKR23.7trn during 11 months of the last fiscal year. The debt stood at PKR20.8trn on June 30, 2017. A major jump in the public debt levels was driven by increasing domestic and foreign borrowings amid hefty twin deficits.
Remittances amount to USD19.6bn in FY18, but target missed (Tribune): Pakistan received workers’ remittances amounting to USD19.6bn in fiscal year ended June 30, an amount short of the target by over USD1bn, but 1.4% higher when compared with the previous fiscal year. Authorities had set a target of USD20.7bn for the year.
Amnesty beneficiaries declare PKR1.8trn assets, pay PKR97bn in taxes (The News): Tax amnesty beneficiaries have declared around PKR1.8trn of concealed foreign and local assets by depositing PKR97bn in taxes to the exchequer since April, finance ministry said on Wednesday.
Forex reserves fall to USD16.1bn| (The News): Pakistan’s foreign exchange reserves fell 1.83% to USD16.1bn during the week ended July 6, the State Bank of Pakistan reported on Thursday.
Sector and Corporate highlights
Urea sales up 22%MoM in June| (The News): Urea sales recorded a 22%MoM increase to 601k tons in June 2018, while the off-take decreased 43%YoY due to the high base effect of last year.
Two more companies awarded Greenfield status| (BR): The Ministry of Industries and Production (MoI&P) has awarded Greenfield status to two more companies M/s Topsun Motors and Pak China Motors. The number of companies which have been awarded Greenfield status is now 10.
PSMCL to discontinue Mehran VX from end November| (Dawn): Pak Suzuki Motor Company Limited (PSMCL) has finally decided to discontinue Mehran VX model from end of November due to its thin demand as compared to the hot-selling VXR model.
Auto sales surge 21%YoY to 258,632 units in FY18| (The News): Auto sales surged 21%YoY to 258,632 units during FY18 as low-cost financing boosted demand of cars, light commercial vehicles, vans and jeeps.
SECMC eyes coal supply deal with Shanghai Electric| (The News): Sindh Engro Coal Mining Company (SECMC) planned a coal supply agreement with Shanghai Electric Corporation to undertake expeditious expansion of Thar Block-II — a move likely to further trim the coal tariff, an official said on Thursday.
|Stock Market Synopsis|
|Last week||This Week||%Change|
|Mkt. Cap (US $ bn)||68.7||67.7||-1.5%|
|Avg. Dly T/O (mn. shares)||123.1||126.5||2.8%|
|Avg. Dly T/O (US$ mn.)||39.5||45.3||14.6%|
|No. of Trading Sessions||5.0||5.0||0.0|
|KSE 100 Index||40,238.8||39,875.1||-0.9%|
|KSE ALL Share Index||29,495.3||29,050.9||-1.5%|