Market Review
The outgoing week maintained a dull note where the index closed at 45,259pts, down by 1.8%WoW on the back of weakening economic indicators. The activity during the week remained lackluster as evident from a decline in both ADT and ADTV by 37%WoW and 19%WoW, respectively. However, foreign investors remained net seller, exhibiting a net outflow of USD47.8mn.
During the week, SNGPL announced to invest PKR361bn to expand its network as the utility envisages more than a million new domestic connections within the next 5yrs. Furthermore, government may abolish 5% GST (general sales tax) on locally-manufactured tractors and other agricultural machinery in the upcoming 2019 budget. Moreover, government withdrew the ban imposed on import of furnace oil as gas short fall compelled it to resume the fuel imports for power generation, while approving almost PKR10bn of guarantee for financing of transmission projects. Also, power sector subsidy of PKR189bn is proposed along with PKR30bn for railway for FY19.
On the macro front, country’s foreign exchange reserves declined to USD17.5bn on account of external debt servicing. Moreover, FBR revenue from oil sector rose 38% to PKR108bn during the 9MFY18, amid higher sales tax rates and better corporate earnings. Also, government set a growth target of 6.2% for GDP along with 6% inflation for FY19.
Outlook
All eyes are expected to be on the upcoming budget 2019 in the next week. Thus, till the budget is announced activity is expected to remain low across the board.
NEWS THIS WEEK
Economic highlights & Data points
FBR’s tax revenue collection from oil sector up 38% in July-March | (The News): Federal Board of Revenue’s (FBR) revenue from oil sector rose 38% to PKR108.4bn during the first nine months of the current fiscal year of 2018 due to higher sales tax rates and better corporate earnings, officials said on Friday. FBR collected PKR78.6bn from oil companies in the July-March period of the last fiscal year.
PKR1.76trn development outlay approved by APCC | (BR): The Annual Plan Coordination Committee (APCC) on Monday approved overall development outlay of PKR1.76trn, both for the federal government and provinces, and set GDP growth target for the next fiscal year at 6.2%. However, the APCC recommended the National Economic Council (NEC) that the total development outlay be increased to around PKR2.3trn.
Government sets growth target at 6.2% for 2018/19 | (The News): Government on Monday set 6.2% as growth target for the next fiscal year of 2018/19, while approving the annual macroeconomic framework, betting on the decades-high number of 5.8% during the outgoing fiscal year. Inflation in the remaining months of the current fiscal is expected to touch the lowest ebb, so the base effect will be resulting into pushing up inflationary pressure in the next fiscal year.
FDI rises to USD2.1bn in 9MFY18 | (The News): Foreign direct investment (FDI) into Pakistan rose 4.4%YoY to USD2.1bn in 9MFY18, the central bank data showed on Tuesday. FDI fell to USD152.7mn in March from USD318.3mn in the same month a year earlier, the State Bank of Pakistan (SBP) data showed.
Forex reserves fall to USD17.5bn | (The News): Pakistan’s foreign exchange reserves fell to USD17.5bn during the week ended April 13 from USD17.6bn a week ago, the central bank reported on Thursday. The foreign exchange reserves held by the State Bank of Pakistan (SBP) dropped USD58mn to USD11.4bn.
[ads1]
Sector and Corporate highlights
SNGPL plans PKR361bn investment in network expansion| (The News): State-owned Sui Northern Gas Pipelines Limited (SNGPL) planned to invest PKR361bn to expand its network as the utility envisages more than a million new connections within the next five years, a document said on Thursday.
Government likely to withdraw sales tax on tractors| (The News): Government is mulling withdrawal of 5% sales tax on locally-manufactured tractors and to eliminate subsidies given to farmers on buying of fertilizers, officials said on Wednesday.
Government backtracks on furnace oil import ban, allows PSO to start shipments | (The News): Government on Tuesday backed out a plan to stop import of furnace oil as gas shortfall compelled it to resume the fuel imports for power generation, while approving almost PKR10bn of guarantee for financing of transmission projects.
Subsidies for railways, power sector to swell allocation | (BR): According to official sources, power sector’s subsidy is proposed at around PKR189bn of which PKR135bn will be allocated for Tariff Differential Subsidy (TDS) for power Distribution Companies (Discos) including PKR6bn of GoP equity in Discos through PHPL for payment of DSL of STFF whereas K-Electric will get PKR15bn on this account.
PKR474bn approved for Bhasha dam | (Dawn): The Executive Committee of the National Economic Council (Ecnec) on Tuesday approved PKR474bn for the construction of Diamer-Bhasha Dam to help the country tackle two major issues—water shortage and power generation. The Ecnec meeting, chaired by Prime Minister, approved the much-awaited funding for the project.
| Stock Market Synopsis | |||
|---|---|---|---|
| Last week | This Week | %Change | |
| Mkt. Cap (US $ bn) | 81.7 | 80.7 | -1.2% |
| Avg. Dly T/O (mn. shares) | 247.5 | 155.1 | -37.3% |
| Avg. Dly T/O (US$ mn.) | 80.5 | 65.1 | -19.0% |
| No. of Trading Sessions | 5.0 | 5.0 | 0.0 |
| KSE 100 Index | 46,071.9 | 45,259.3 | -1.8% |
| KSE ALL Share Index | 33,096.9 | 32,748.2 | -1.1% |