MARKET REVIEW
Index spent the week moving sideways due to lack of activity amid Securities and Exchange Commission of Pakistan (SECP) tough tone against the brokers not complying with the regulations. Index closed the week at 49,925pts, marginally up by 0.7% WoW. Foreign Institutions Portfolio Investment (FIPI) registered net inflow of US$5.37mn. Average volume traded increased by 12% WoW while average value traded decreased by 9.6% WoW.
Selective buying was practiced by the investors as cautiousness drove the investors’ mood. Despite political uncertainty not playing a part this week, results and sector specific news were the only triggers this week. Financial sector performed as the excitement builds over the upcoming results season with HBL amongst the top performers of the sector. However, MCB posted a below-expected EPS of PRs19.67 which led the stock into negative territory. National Tariff Commission (NTC) imposing 6-40% duty on galvanized coil spurred activity in the cold-rolled players with ISL, being the prime beneficiary, attracting highest positive movement. On the other hand, news that government plans to make another pipeline to import RLNG pushed SSGC and SNGP to post WoW gains of 10.3% and 6.8%, respectively. Among blue chips, PSO posted an EPS of PRs20.75 for 2QFY17 (beating analyst expectations) while on the other hand, EFERT posted an EPS of PRs6.78 for the year ended CY16. NML was also among investors’ favorites after it announced its plan set up an automobile manufacturing plant in collaboration with Hyundai. Overall, activity remained low in the blue chips while retail activity was mainly witness in the side stocks.
On the macro front, Fitch Ratings affirmed Pakistan’s Long-term foreign and local currency IDR at ‘B’ with stable outlook. On the other hand, Pakistan’s trade deficit rose to US$17.428bn during 7MFY17 (up 28.68% YoY). Export declined by 3.21% YoY to US$11.685bn and imports increased by 13.65% to US$29.113.
OUTLOOK
Going forward, we expect investors to remain cautious as the SECP and PSX continue taking action against brokers not complying with the regulations. However, similar to this week, result season will continue to spur some activity. Investors need to keep an eye over the political activities as Panama Leaks hearing is expected to resume next week (15-Feb-17). Our top picks are PPL, OGDC, UBL, EFERT, BAFL, PSO, PIOC, MUGHAL and DGKC.
NEWS THIS WEEK
ECONOMIC INDICATORS & DATA POINTS
FITCH AFFIRMS PAKISTAN AT ‘B’; OUTLOOK DEEMED STABLE (TRIBUNE): Fitch Ratings affirmed Pakistan’s Long-term foreign and local currency IDR at ‘B’ with stable outlook. The issue ratings on Pakistan’s senior unsecured foreign- and local-currency bonds, Country Ceiling as well as the Short-Term Local- and Foreign-Currency IDRs and are also affirmed at ‘B’.
PAKISTAN SIGNS AN AGREEMENT TO IMPORT PETROLEUM PRODUCTS FROM AZERBAIJAN (TRIBUNE):Pakistan is expected to sign an agreement with Azerbaijan to import petroleum and gas products, to lessen the excessive reliance on Middle Eastern countries. At present, Pakistan is importing oil from Gulf Arab countries including the United Arab Emirates (UAE), Kuwait and Saudi Arabia.
7MFY17 TRADE DEFICIT SOARS TO US$17.43BN (RECORDER): Pakistan’s trade deficit rose to US$17.428bn during 7MFY17 (up 28.68% YoY). Export declined by 3.21% YoY to US$11.685bn and imports increased by 13.65% to US$29.113.
PSX TO PROBE OFFICIALS’ NEGLIGENCE AFTER BROKER’S FLIGHT (DAWN): SECP on Wednesday called an urgent meeting with PSX’s board of directors to know about the steps taken to protect investors of M.R. Securities.
SECP CHIEF ASKS PSX TO COMPLETE PROBE BY FEB 13TH (RECORDER): PSX has assured the SECP that it would complete investigation into the matter of MR Securities by Feb 13th and give its report by Feb 14th.
SECTOR AND CORPORATE HIGHLIGHTS
NML TO SET UP A PLANT WITH HYUNDAI (TRIBUNE): Nishat Mills Limited (NML), on Friday, notified that it has entered into a Memorandum of Association (MoU) with Hyundai Motor Corporation (HMC) to set up a green field plant to assemble Hyundai vehicles in Pakistan. The joint venture will produce HMC passenger cars and 1-ton range commercial vehicles in Pakistan.
SUI FIELD TO PRODUCE GAS ONLY TILL 2025 (BR): A parliamentary committee was informed on Monday that Sui gas field will only be able to supply gas up till 2025. The current output of the gas field stands at 430mmcfd against 900mmcfd from decade ago. Officials from Pakistan Petroleum Limited (PPL) also notified of gas being stolen in Karak district of Khyber-Pakhtunkhwa (KPK) which is costing PPL PRs20mn a day.
FAUJI POWER PLANT INAUGURATED (DAWN): President Mamnoon Hussain on Monday inaugurated the 118 MW coal-based power plant of FFBL Power Company (FPCL) at Bin Qasim.
RESOLVING ISSUES: GOVT URGED TO ADDRESS CONCERNS OVER KAPCO’S PRIVATIZATION (TRIBUNE):The Privatization Division said financial advisors had highlighted key issues to be resolved by the Pakistani government to attract investor interest. The advisor proposed assurances from the government on the renewal and extension of major agreements expiring in 2021 including Power Purchase Agreement (PPA), generation license, gas supply agreement, fuel supply agreement and facilitation agreement.
PAK SUZUKI UNVEILS ANOTHER IMPORTED VEHICLE – THIS TIME THE 1.4L CIAZ (TRIBUNE): On Wednesday, the company unveiled Suzuki Ciaz, a 1.4-litre sedan in Lahore. The company said they have seen a huge demand from the Suzuki customer base and dealers for a sedan car.
PSO’S WOES DEEPEN AS RECEIVABLES RISE TO PRS.277BN (TRIBUNE): Payables of Power sector owned PSO swelled PRs.18.5bn in past one month taking the total PRs.246.7bn. Power companies owe PRs.186.5bn to Pakistan State Oil.
KE TO INITIATE CONSTRUCTION OF PORT QASIM GRID (DAWN): K-Electric (KE) on Thursday initiated construction of Port Qasim Grid Station and transmission lines with an estimated investment of US$71mn. The grid station is expected to commence commercial operations by 1QDY19 and is a part of US$450mn project TP-1000 (Transmission Enhancement Plan).
[ads1]
|
STOCK MARKET SYNOPSIS
|
|||
|---|---|---|---|
|
LAST WEEK
|
THIS WEEK
|
% CHANGE
|
|
|
Mkt. Cap (US$bn)
|
94.2
|
94.3
|
0.1%
|
|
Avg. Dly T/O (mn. shares)
|
369.6
|
414.1
|
12.0%
|
|
Avg. Dly T/O (US$ mn.)
|
196.2
|
177.4
|
-9.6%
|
|
No. of Trading Sessions
|
5.0
|
5.0
|
–
|
|
KSE 100 Index
|
49,555.8
|
49,925.1
|
0.7%
|
|
KSE ALL Share Index
|
33,677.2
|
33,732.4
|
0.2%
|