Market Review
The stock market managed to close in green at 45,560pts during the week, exhibiting an increase of 530pts (1.2%WoW). The outgoing week recorded a high of 45,605 level amid optimism over investor friendly proposals for Budget FY19. Therefore, local participation picked up as witnessed by a rise of 24% and 13% in ADT and ADTV, respectively. Additionally, foreign participation also exhibited net inflow of USD1.9mn.
During the week, Ghandhara Nissan announced its green-field investment to launch Datsun cars in Pakistan with an investment of PKR4.5bn over the next 4 years. Also, Sazgar Engineering was awarded a green-field status to set up a car manufacturing unit in alliance with a Chinese company. Moreover, in light of currency depreciation HCAR increased prices for Civic and City by PKR100,000 each and PKR20,000 for BRV. Additionally, in the backdrop of low interest rate environment, private sector credit made an all-time high of PKR4.9trn.
On the macro front, Pakistan’s foreign exchange reserves continued their downward trajectory where they currently stand at USD17.95b, a decrease of 0.7%WoW on account of external debt servicing. In view of depleting foreign exchange reserves, the government is planning to obtain a commercial loan worth USD1-1.5bn from China. Additionally, government is likely to miss the revenue collection target by PKR100bn in FY18. Furthermore, foreign repatriation increased by 21%YoY in 8MFY18 where the largest repatriation was exhibited by financial sector.
Outlook
With the announcement of status-quo in the monetary policy, against a partial expectation of 25bps hike, the market may gain slight momentum in the coming week. Additionally, with the end of 3QFY18, anticipation of quarterly results will dictate the direction of the market.
NEWS THIS WEEK
Economic highlights & Data points
Forex reserves fall to USD17.95bn (The News): The foreign exchange reserves of the country fell to USD17.95bn during the week ended March 22 from USD18.08bn a week ago, the central bank said on Thursday. The foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased by USD168mn. The State Bank of Pakistan’s forex reserves stood at USD11.78bn as compared to USD11.94bn in the previous week.
Govt to secure USD1.5bn commercial loan in April to shore up reserves (The News): The government is all set to secure commercial loan of USD1bn to USD1.5bn from Chinese banks within the next two weeks to shore up the depleting foreign currency reserves, senior officials said on Tuesday.
FBR to miss annual tax target by PKR100bn (Nation): Despite showing healthy growth of over 17% in tax collection during eight months, the Federal Board of Revenue (FBR) would miss its annual target by around PKR100bn during current fiscal year.
Foreign firms repatriate USD1.46bn profit in July-February (The News): Multinational firms profit repatriation jumped 20.8% to USD1.46bn in last eight months of the current fiscal year of 2017/18, the central bank data showed on Monday. In February 2018, profit and dividend repatriation on foreign direct investment (FDI) stood at USD116.1mn. A largest repatriation was seen in the financial sector, followed by power and communications businesses.
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Sector and Corporate highlights
Nissan to roll out Datsun cars in Pakistan next year (The News): Ghandhara Nissan Ltd on Wednesday said it was launching production of Datsun model cars in Pakistan with an investment of PKR4.5bn over the next four years, while sales of the first locally built vehicles were expected to begin within next fiscal year.
Circular debt settlement plan hits snags (BR): Power Division’s circular debt settlement plan has reportedly hit snags as the Auditor General of Pakistan (AGP) is reluctant to conduct pre-audit of IPPs invoices make payment of PKR80bn, well informed sources told Business Recorder.
Rickshaw maker Sazgar gets approval for car manufacturing plant (Tribune): Sazgar Engineering Works, the auto rickshaw maker, has been allowed to set up a new car manufacturing plant in Pakistan in partnership with a Chinese company, according to a notice to the Pakistan Stock Exchange (PSX) on Wednesday.
Carmakers raise prices despite higher localisation (Dawn): Honda Atlas Cars Ltd (HACL) on Tuesday raised the prices of Honda Civic and City by PKR100,000 and BRV by PKR20,000 following devaluation of the rupee against the dollar. It had raised prices in January by PKR50,000-60,000.
Private sector loans reach all-time high of PKR4.89trn in Feb’18 (The News): Lending to private sector, including loans to consumers and companies, hit an all-time high of PKR4.89trn in February, up around 18% as compared to the same month a year earlier, the central bank data showed on Thursday, as decades-low interest rate cut the borrowing costs.
| Stock Market Synopsis | |||
|---|---|---|---|
| Last week | This Week | %Change | |
| Mkt. Cap (US $ bn) | 80.2 | 81.1 | 1.1% |
| Avg. Dly T/O (mn. shares) | 192.8 | 239.7 | 24.3% |
| Avg. Dly T/O (US$ mn.) | 75.8 | 85.5 | 12.8% |
| No. of Trading Sessions | 4.0 | 5.0 | 0.0 |
| KSE 100 Index | 45,030.2 | 45,560.3 | 1.2% |
| KSE ALL Share Index | 32,343.4 | 32,727.2 | 1.2% |