MARKET REVIEW
The week started with a steep decline which was later arrested by some support being provided by big sectors on the back of positive news. Index closed the week at 49,556pts, down marginally by 0.8% WoW. Foreign Institutions Portfolio Investment (FIPI) registered net outflow of US$15.3mn. Average volume traded decreased massively by 29.4% WoW while average value traded decreased by 20% WoW.
As the result season continued the index remained range bound and failed to breach the 50,000 barrier. After witnessed a correction of nearly 1,000 points in the first session of the week, some support was provided by the mainboards. With Brent oil surging 2.8%WoW, oil and gas sector performed. OGDC came out as the star performer as increase in oil prices was complemented by news of government postponing its plan to divest its stake in the company. State Bank of Pakistan (SBP), as expected, maintained status quo in the monetary policy meeting. Overall, selective buying was witnessed by the investors. In the fertilizer sector, both FFBL and FFC posted above expected results for CY16 results which lead to some positive activity in the stocks. On the other hand, ISL announced another capacity expansion which would allow the company to have a total CRC capacity of around 1mn tons, after which the scrip closed last three sessions on upper circuit. During the last session of the week, EFOODS announced a surprise dividend of PRs10/sh, along with an EPS of 3.11, citing the reason of maintaining company’s long term target capital structure.
On the macro front, Pakistan’s total external debt liabilities swelled by 14.6% to US$74.6bn till Sept-16 as compared to US$61.4bn in Jun- 15. Moreover, FBR’s tax collection increased by 7% YoY to approximately PRs1.7trn in 7MFY17, falling short of the target by ~ PRs140bn. Lastly, Government sold treasury bills worth Rs604 billion but the cut-off yields recorded no significant change.
OUTLOOK
Going forward, we expect results to drive the activity with results of some blue chips like INDU, EFERT, PSO, FCCL expected in the coming week. On the political side, we see stability to return as the hearing on Panama Leaks case has been postponed indefinitely. Our top picks are PPL, OGDC, UBL, EFERT, BAFL, PSO, PIOC, MUGHAL and DGKC.
NEWS THIS WEEK
ECONOMIC INDICATORS & DATA POINTS
OGRA GRANTS 21 LICENSES FOR OMCS (BR): Oil and Gas Regulatory Authority (OGRA) has granted 21 licenses for establishment of Oil Marketing Companies during 1HFY17. Hi-Tech Lubricants was among the 21 companies along with several others.
SBP KEEPS THE RATE UNCHANGED (DAWN, ANALYST COMMENTS): In line with our expectations, State Bank of Pakistan kept the discount rate unchanged at5.75% for the next two months, citing lower than projected inflation in 1HFY17 (3.9%) but mentioned foreseeable risks to external sector.
PAKISTAN EXTERNAL DEBT RISING FASTER THAN FOREIGN CURRENCY EARNINGS (TRIBUNE): Total external debt liabilities swell 14.6% to US$74.6bn by Sept-16 as compare to US$61.4bn in Jun-15. In result, the external debt-to-GDP ratio weakened from 18.8% to 20.4%.
REGULATOR ADVOCATES STEEP HIKE IN FUEL RATES (DAWN): In a summary sent to the government, Ogra has recommended 6.11% increase in the price of petrol, 5.55% in high speed diesel (HSD) and 38.63% kerosene.
GOVT MISSES THE TAX COLLECTION TARGET BY PRS140BN (TRIBUNE): FBR’s tax collection increased by 7% YoY to approximately PRs1.7trn in 7MFY17, falling short of the target by ~ PRs140bn.
PETROL, DIESEL PRICES UP INCREASED (TRIBUNE): Government has increased the price of petrol and diesel by PRs2.25 and PRs2.26/ liter as of February 1st.
GOVT COMMENCES THE PROCESS TO LEASE PSM (TRIBUNE): Government has started the proceedings to lease out Pakistan Steel Mills (PSM) to private entities.
SECTOR AND CORPORATE HIGHLIGHTS
GOVT TO FLOAT SHARES OF PROFITABLE POWER COMPANY (TRIBUNE): The cabinet committee on Privatization (CCOP) which met of Friday decided to float shares of Gujranwala power distribution company. It also approved for selling remaining stake of 18.3% in Mari Petroleum Company Limited (MPCL) either through joint venture partners Fauji Foundation and OGDC or the domestic exchange.
KAPCO SELL-OFF PLAN FACES DELAY (RECORDER): Kapco privatization faces delay as issues of required comfort letter for the extension of PPA and others remain unsettled.
OUTSTANDING BILLS: RECEIVABLES OF OIL, GAS FIRMS SWELL PRS338BN (TRIBUNE): The Ministry of Petroleum and Natural Resources has sought intervention of Prime Minister as their receivables from power producers swelled to PRs338bn sparking fear of disruption to the entire supply chain. Out of total, PSO’s receivables from the power companies stand at PRs228bn.
FRIESLANDCAMPINA WANTS PAKISTAN TO REVIEW DUTY STRUCTURE (TRIBUNE): FrieslandCampina has urged Pakistan to review its decision of charging 45% import duty on dairy products, which it said has put some players at a competitive disadvantage.
PAKISTAN’S FIRST DRY BULK TERMINAL TO OPEN NEXT MONTH (DAWN): Pakistan’s first dry bulk terminal is expected to open next month. The terminal is expected to handle 3mn tons per year of coal imports, which will rise over to 20m tons in next five years.
PSMCL STOPPED BOOKING ORDERS FOR SUZUKI CULTUS (DAWN): Company plans to launch in April a new model, which will be called the new Cultus, and not Celerio as previously thought. The company has informed its authorized dealers that all pending orders of the previous model will be served as per its commitment.
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STOCK MARKET SYNOPSIS
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LAST WEEK
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THIS WEEK
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% CHANGE
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Mkt. Cap (US$bn)
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94.9
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94.2
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-0.7%
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Avg. Dly T/O (mn. shares)
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523.4
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369.6
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-29.4%
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Avg. Dly T/O (US$ mn.)
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245.4
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196.2
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-20.0%
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No. of Trading Sessions
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5.0
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5.0
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–
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KSE 100 Index
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49,963.8
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49,555.8
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-0.8%
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KSE ALL Share Index
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33,934.1
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33,677.2
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-0.8%
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