MARKET REVIEW
During the week, stock market shed 1,465pts to close at 39,847pts, down by 3.5%WoW on the back of weaker economic indicators coupled with political uncertainty. The market remained lackluster as ADT increased by 4.1%WoW while ADTV depicted a decline of 16.5%WoW, highlighting increased investor appetite for small cap stocks. Valuations have opened up significantly which has attracted foreign investors in the market again and consequently weekly FIPI inflow was recorded at USD38.8mn as against an outflow of USD9.8mn witnessed during the last week.
Major news for the week include the official numbers released by PAMA where passenger cars declined by 15%MoM, trucks and buses declined by 8%MoM, however, tractors observed a growth of 16%MoM. Moreover, NEPRA also raised the end consumer tariff from PKR12.07/unit to PKR12.77/unit for a period of 7 years starting from Jul’16-Jul’23.
Additionally, the outgoing week also disclosed the deregulation of HSD approved by ECC where Petroleum Division recommended an increase in dealer margin by PKR 0.14 for both Petrol and HSD. Meanwhile, GIL also signed an agreement with Thailand based company, Isuzu Motors Company to manufacture and assemble its Isuzu D-MAX pick-up.
On macro front, foreign exchange reserves declined for the fourth week, where SBP’s and banks reserves decreased to USD13.8bn and USD5.9bn, respectively. Additionally, trade deficit surged by 30%YoY in 1QFY18 on the back of higher import growth (22%YoY) that surpassed the export growth (11%YoY). Also, ECC has imposed and increased the regulatory duty on 297 luxury items to control the growing import bill.
OUTLOOK
Deteriorating economic indicators may continue to put pressure on market performance, however, the upcoming result season may induce activity in selective scrips.
ECONOMIC HIGHLIGHTS & DATA POINTS
Fiscal deficit reduced to 0.9% of GDP in July-Sept (The News) Positive: Government managed to bring budget down to 0.9% of GDP deficit in first quarter of the current fiscal year from 1.3% in the same period of the last fiscal. Budget deficit fell 26% to PKR324bn for July-September of FY2018. It amounted to PKR438bn during the corresponding quarter a year ago.
SBP’s foreign exchange reserves continue to drop, stand at USD13.8b (Tribune) Negative: Foreign exchange reserves held by the State Bank of Pakistan (SBP) continued to remain on the path of downward spiral for the fourth consecutive week. The SBP reserves decreased 0.50% on a weekly basis.
Chinese FDI jumps over three-fold since FY15 (The News) Positive: China has emerged as the biggest cross-border investor in Pakistan, with foreign direct investment (FDI) inflows more than tripled from USD319.1mn in the fiscal year 2014/15 to USD1.185bn last year. In FY16 the FDI from China was Usd1.063bn.
Trade deficit widens by 30 % in July-September (Daily Times) Negative: Pakistan’s trade deficit increased to the highest point in three months, as gap between exports and imports in the first quarter of current fiscal year 2017-18 (FY18) widened the balance of trade by 29.75 %. The overall exports in first quarter of FY18 increased by 10.84 %, to USD5.17 bn, as compared to USD4.6 bn exports in corresponding period of previous fiscal year.
Govt projects external financing need at USD18bln in FY18 (The News) Negative: Pakistan will need USD18 bn to meet its gross financing requirements during the current fiscal 2017/18, a finance ministry’s spokesman said on Wednesday, brushing aside external account vulnerability and risk to economic stability.
Prices of 297 items to go high as Regulatory Duty imposed (The News) Positive: The Economic Coordination Committee of the Cabinet (ECC) on Friday imposed and enhanced Regulatory Duty (RD) on around 297 items in a bid to discourage the surge in import bill and slash it down by USD3 to USD5bn during the current fiscal year.
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SECTOR AND CORPORATE HIGHLIGHTS
ECC deregulates margins on HSD for OMCs, dealers (Nation) Positive: The Petroleum Division had recommended an increase of PKR0.14 per litre in margins on petrol and diesel for the OMCs. For the dealers, it proposed an increase of PKR0.19 per litre and PKR0.16 per litre, respectively. The meeting approved a proposal submitted by the commerce ministry to allocate additional quantity of 12mn kilograms of surplus tobacco to all the tobacco companies and dealers on pro-rata basis.
Auto sales race up 27% (Dawn) Positive: According to data released by the Pakistan Automotive Manufacturers Association (Pama), Sales of cars and light commercial vehicles (LCVs), jeeps and vans increased 27% year-on-year to 60,469 units in July-September. Honda Atlas Cars continued to outperform peers with 24% annual growth in September due to the success of its new models, Civic ad BRV.
Nepra ups base tariff of KE by 0.70 per unit (BR) Negative: Nepra has raised the base tariff of K-Electric by 0.70 per unit under Multi-Year Tariff plan. At present, the end-consumer tariff of K-Electric is PKR 12.07 per unit which had been raised to PKR 12.77 per unit effective from July 2016 to 2023.
GIL to launch Isuzu D-Max (Dawn) Positive: GIL has signed a technical assistance agreement with Isuzu Motors Company, Thailand, according to a stock filing on Wednesday. An official said the company will invest PKR500mn in the D-Max project. The new venture will create 500-1,000 direct and indirect jobs.
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 STOCK MARKET SYNOPSIS |
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|---|---|---|---|
| Â LAST WEEK | Â THIS WEEK | Â %CHANGE | |
|
Mkt. Cap (US $ bn) |
82.0 |
78.9 |
-3.7% |
|
Avg. Dly T/O (mn. shares) |
140.0 |
145.8 |
4.1% |
|
Avg. Dly T/O (US$ mn.) |
71.0 |
59.3 |
-16.5% |
|
No. of Trading Sessions |
5.0 |
5.0 |
0.0 |
|
KSE 100 Index |
41,312.6 |
39,846.8 |
-3.5% |
| KSE ALL Share Index | 29,650.6 | 28,697.2 | -3.2% |