Market review
The benchmark KSE-100 index increased by 3% on WoW basis, gaining 1,244 points in this week, thereby closing at 44,178 points mainly due to foreign inflows of USD33.11mn. ADT and ADTV witnessed a decrease of 33.4%WoW and 27.6%WoW, respectively as market has posted 5th consecutive weekly gains and investors are now getting cautious of a prospective correction.
During the week, Prime Minister is likely to announce an export package comprising a reduction in industrial and gas tariffs for the industry. The government is also considering imposing penalties on Thar-based IPPs due to the slow pace of development of these projects. Cement sector was in limelight with the recent proposal to ban new cement plants in Punjab due to environmental concerns while Maple Leaf Cement received a favorable ruling from Lahore High Court in regards to its PKR2.3bn clinker project which was put on hold due to environmental concerns.
On the macro front, as a result of weakening macroeconomic indicators World Bank has put a USD250mn policy loan on hold. Moreover, country’s foreign exchange reserves have declined by USD249mnWoW. Also, during 1HFY18 FDI decreased by 3% mainly as a result of political uncertainty. Furthermore, due to recent political uncertainty further investments in CPEC projects have also been put on hold.
Outlook
Given result season will officially kick off in the next week, foreign as well as local participation is expected to remain upbeat. However, direction of FIPI flow and strength of corporate results will dictate the market performance.
NEWS THIS WEEK
Economic highlights & data points
Forex reserves slip to USD19.77bn| (The News): The liquid foreign exchange reserves of the country declined USD249mn during the week, owing to external debt servicing, the State Bank of Pakistan (SBP) said on Thursday. The foreign exchange reserves of the country slipped to USD19.77bn by the week ended January 12, 2018 as compared to USD20.02bn on January 5, 2018.
CDWP approves 20 development projects worth PKR80.6bn| (The News): The Central Development Working Party (CDWP) on Monday approved 20 projects worth PKR80.6bn and of which five projects with an estimated cost of PKR60.9bn were referred to Executive Committee of National Economic Council (ECNEC) for further approval.
First half FDI down 3%| (BR): Foreign Direct Investment (FDI) presented a dismal performance, posting some 3% decline during first half (July-Dec) of this fiscal year (FY18). Economists said the ongoing political uncertainty is a major contributor to the lower foreign investment in Pakistan. Foreign investors are reluctant to invest due to rumors of premature elections. They have adopted a wait and see policy, they added.
World Bank puts USD250mn policy loan for Pakistan on hold| (Tribune): Amid Pakistan’s weakening macroeconomic situation, the World Bank has put on hold a USD250mn policy loan, which the lender till recently was ready to give for disaster risk management.
Political uncertainty clouds CPEC| (The News): China is understood to be on the verge of putting on hold further investments under CPEC beyond what has already been done – a decision linked to the prevalent uncertain political situation in Pakistan and surging fears of turmoil in the months ahead. The Chinese have conveyed that the CPEC would be on the back burner until the uncertainty goes and the next government is in place as a result of the elections.
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Sector and corporate highlights
PM Abbasi may soon unveil new exports package| (The News): Prime Minister Shahid Khaqan Abbasi is likely to unveil new exports package comprising reduction in industrial electricity and gas tariffs and other incentives during his possible visit to the city this week, industry officials said on Tuesday.
Govt mulls imposing penalties on Thar-based IPPs| (Dawn): The government is likely to impose liquidated damages on slow-moving coal-based power projects and re-adjust completion timelines of others to minimize expected capacity payments to Chinese contractors of the USD2.1bn Matiari-Lahore Transmission Line.
Maple Leaf Cement seen adding 2.2mn tons capacity| (The News): Maple Leaf Cement on Thursday got a favorable ruling from a court on environmental concerns on its PKR23bn clinker project and could restart work soon but may face tough conditions on how it proceed after the last month construction halt.
Cabinet body proposes ban on new cement plants in Punjab| (Nation): The Standing Committee of the cabinet on legislative business has recommended the inclusion of the cement industry in schedule-C of the industrial location policy 2002.Punjab Chief Minister Shehbaz Sharif has already approved the summary for the imposition of ban on installation of new cement plants in the entire province. Moreover, the matter may be placed before the cabinet sub-committee on legislation for appropriate recommendations to the cabinet.
| Stock Market Synopsis | |||
|---|---|---|---|
| Last week | This Week | %Change | |
| Mkt. Cap (US $ bn) | 80.6 | 82.3 | 2.1% |
| Avg. Dly T/O (mn. shares) | 276.4 | 184.1 | -33.4% |
| Avg. Dly T/O (US$ mn.) | 110.3 | 79.8 | -27.6% |
| No. of Trading Sessions | 5.0 | 5.0 | 0.0 |
| KSE 100 Index | 42,933.7 | 44,178.8 | 2.9% |
| KSE ALL Share Index | 30,932.1 | 31,595.4 | 2.1% |