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Stock market at a glance

Market Review

During the outgoing week, KSE100 index remained bearish amid lack of triggers and in anticipation of higher inflation ahead, thereby closing at 38,306pts, a decrease of 1.6%WoW. Market participation remained dull as evident from decrease in ADT and ADTV by 18.3%WoW and 20.6%WoW, respectively. Foreign investors were net sellers, exhibiting an outflow of USD15.6mn. During the week, as per PAMA, auto industry posted a volumetric decline of 13.1%YoY to 19.7k units, taking the cumulative sales to 162.6k units for 8MFY19, down 4.6%YoY. Furthermore, the IMF projected Pakistan’s financing gap to reach to USD19bn in the incumbent government’s tenure of 5yrs. Additionally, the Finance Minister stated that the country would receive an inflow USD4.1bn within 2 weeks from China and UAE, out of which USD1.0bn was received from UAE this week. Furthermore, State Bank issued a circular to all banks and DFIs and announced a low cost housing scheme in the country. Also, the FATF added 3 new conditions for the country to avoid being black listed. On the macro front, foreign exchange reserves held by SBP increased marginally by USD6.0mn to USD8.1bn. Additionally, the LSM sector posted a decline of 2.3%YoY in 7MFY19 on the back of decrease in foods, beverages and tobacco products. Moreover, as per Fitch Solutions, Pakistan’s GDP growth rate is expected to decrease to 4.0% and 4.1% for FY19 and FY20, respectively. Also, trade deficit narrowed by 11%YoY to USD21.5bn for 8MFY19 where exports rose by 1.8%YoY and imports decreased by 6.1%YoY. Furthermore, remittances increased by 12%YoY to USD14.3bn in 8MFY19 where Saudi Arabia was the major source of remittances inflow, exhibiting an increase of 2.4%YoY.

Outlook

The country awaits remaining USD inflows worth USD3.1bn from China and UAE, expected in the upcoming week, which would provide support to the country’s foreign exchange reserves. Additionally, the direction of market remains contingent upon any economic development from office holders.

News This Week
Economic highlights & data points

LSM posts 2.3% decline in 7MFY19 (The News): LSM sector posted a 2.3% decline in 7MFY19, official data showed on Thursday, as industrial output continued to scale down on growing cost of production. PBS said LSM output fell 4.6%YoY in Jan’19, but it rose 20.8%MoM.

Forex reserves rise to USD14.97bn (The News): Pakistan’s foreign exchange reserves increased to USD14.97bn as of March 8. The foreign exchange reserves held by SBP rises by USD6.0mn to USD8.1bn. Net foreign exchange reserves held by commercial banks also went slightly up to USD6.8bn.

Fitch Solutions sees growth down at 4.1% in FY20 (The News): Pakistan’s growth is expected to scale further down to near four percent in the next fiscal year as rise in oil prices and economic imbalances continue to exert pressure on the real GDP, but expected IMF-powered reforms would bring the economy back on track and revive investor confidence, a research arm of Fitch Ratings said.

Trade deficit narrows 11% to USD21.5bn in 8MFY19 (The News): Pakistan’s trade deficit narrowed 11% to USD21.5bn in 8MFY19 as exports marginally rose, whereas imports continued to scale down during the period, official data revealed on Tuesday.

Remittances scale up 12% to USD14.3bn in 8MFY19 (The news): Foreign remittances grew around 12% to USD14.3bn in 8MFY19 with Saudi Arab still the biggest source of inflows from overseas Pakistanis despite labour market troubles, the central bank’s data revealed on Monday.

 

Sector and Corporate highlights

IMF projects USD19bn net financing gap in PTI era (The News): The International Monetary Fund (IMF) has projected cumulative net financing gap of USD19bn on external front in five years period under PTI led regime, making it quite obvious that Islamabad is left with no other option but to seek fresh bailout package from the IMF.

Another USD1bn from UAE lands (Dawn): Pakistan has received another USD1bn from the United Arab Emirates on Tuesday, said the State Bank of Pakistan. This was second tranche of USD3bn promised by the Emirates.

State Bank announces Islamic financing for low-cost housing (Dawn): The State Bank of Pakistan (SBP) in a circular issued to all banks and Development Finance Institutions (DFIs) on Tuesday announced Islamic financing for low-cost housing in the country.

USD4.1bn inflow in next two weeks, says Asad Umar (Dawn): Finance Minister Asad Umar said on Saturday that there will be an inflow of around USD4.1bn in the next two weeks after which the State Bank of Pakistan’s foreign exchange reserves will swell to over USD12bn.

External debt raises PKR1.3trn to PKR9.1trn till Jan (The News): Government’s external debt value increased PKR1.3trn to PKR9.096 trillion as of January 31 from PKR7.8trn in June-end due to rupee depreciation against the US dollar, the finance ministry said on Friday.

FATF adds three more conditions for Pakistan to comply with (The News): Pakistan will have to demonstrate its compliance on 15 major conditions of the Financial Action Task Force (FATF) till May 2019 in order to avoid falling into blacklist which includes i) revising/updating Pakistan’s national risk assessment on terror financing, ii) improving FBR’s customs report on cash couriers to curb currency smuggling and iii) placing inter agency cooperation mechanism among law enforcing agencies at federal and provincial levels.

Stock Market Synopsis
Last week This Week Change
Mkt. Cap (US $ bn) 57.6 56.5 -1.9%
Avg. Dly T/O (mn. shares) 114.2 93.3 -18.3%
Avg. Dly T/V (US$ mn.) 33.5 26.6 -20.6%
No. of Trading Sessions 5.0 5.0 0.0
KSE 100 Index 38,950.2 38,307.0 -1.7%
KSE ALL Share Index 28,520.2 28,174.0 -1.2%

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