Market Review
The benchmark index maintained a negative momentum throughout the week settling down at 43,595pts, a decrease of 2.1%WoW, following Trump’s announcement to pull out from the Iran’s nuclear agreement. However, market participation picked up its pace in this week as evident from ADT and ADTV that increased by 0.9%WoW and 3.2%WoW, respectively. Additionally, foreign investors exhibited a net outflow of USD4.1mn.
During the week, APCMA released cement dispatches for Apr’18 that clocked in at 4.2mn MT, posting a growth of 18%YoY, where the capacity utilization for 10MFY18 clocked in at 98%. Furthermore, ENGRO disclosed its plan to invest PKR2.5bn in Siddiqsons Energy to set up a coal based power plant with an estimated stake of 17%. Also, fertilizer manufacturers jacked up urea prices by PKR100/bag following the withdrawal of subsidy in FY19. Moreover, Supreme Court directed the cement manufacturers in the vicinity of Katas Raj temple to find an alternate source of water in a period of 6 months.
On the macro front, country’s foreign exchange reserves decreased to USD17.29bn, down by 3%WoW, owing to the external debt servicing. On top of this, country’s trade deficit also increased by 14%YoY in 10MFY18 to USD30.25bn compared to USD26.44bn in the corresponding period last year. Additionally, the government plans to finance the budget deficit for FY18 via auction of PKR5.3trn worth of MTB and PIBs in May-Jun’18. Furthermore, the federal government also announced to issue floating rate PIBs to raise PKR150bn to attract long-term investment from the corporate sector.
Outlook
We believe the outcome of MSCI semi-annual review to dictate the direction of market. Furthermore, beginning of ramzan may shrink the activity in the market.
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NEWS THIS WEEK
Economic highlights & Data points
Foreign exchange: SBP’s reserves fall 3% to stand at $11.2b (Tribune): Foreign exchange reserves held by the State Bank of Pakistan (SBP) again came under pressure, shrinking 3% on a weekly basis, according to data released by the central bank on Thursday. The decrease in reserves was attributed to external debt servicing and other official payments.
Trade deficit widens 14% to USD30.25bn in July-April (The News ): Trade deficit widened 14% to USD30.245bn during the first 10 months of the current fiscal year of 2017/18, official data revealed on Thursday, although the government is optimistic that recovery in exports would ease pressure on external sector. Trade deficit amounted to USD26.436bn in the July-April period of the last fiscal year.
SBP to raise PKR5.3trn through MTBs, PIBs in May-July (The News): The central bank will auction PKR5.3trn worth of market treasury bills and Pakistan Investment Bonds (PIBs) in May-July to help the government finance budget deficit, the central bank said on Tuesday.
Government to raise PKR150bn via floating rate-based Pakistan Investment Bonds (The News): Government on Monday decided to issue for the first time floating rate Pakistan Investment Bonds to raise PKR150bn, which analysts said showed its ‘smart’ move to attract long-term debts on the prospects of high interest rates.
Expats send home USD16.257bn in July-April FY18 (The News): The amount of money sent home by Pakistani migrants living abroad increased in 10 months of the current fiscal year by 3.92% versus a year ago, the State Bank of Pakistan figures showed on Thursday. Remittances totaled USD16.257bn in July-April FY18, compared with USD15.643bn in the same period last year. In April, the figure was USD1.650bn. That was 6.9% lower than March 2018.
Sector and Corporate highlights
Cement sales increase to 39mn tons in July-April (The News): Cement sales increased 15.1% to 39mn tons during 10MFY18 as infrastructure uplifts and recovery in exports boosted consumption of the commodity, officials data showed on Saturday.
Engro Corp plans PKR2.5bn investment in Thar coal power project (The News): Engro Corporation decided to invest around PKR2.5bn to acquire an estimated 17% stake in Siddiqsons Energy, which is setting up 330 megawatts of coal-run power plant in Sindh, an analyst said on Monday.
Urea prices jacked up by PKR100/bag (The News): Farmers on Monday expressed serious concerns after fertiliser manufacturers jacked up the price of urea by PKR100/50kg bag, apparently over the government’s failure to clear the unpaid subsidy worth around PKR20bn. This is a single major jump in the price of urea after about a similar but gradual increase of approximately PKR90/bag recorded between October 2017 and April 2018, registering almost 15% rise accumulatively in the cost of this major agriculture input. After the latest increase the urea will now be sold at around PKR1,500/bag.
Cement companies directed to find alternative water resource (Tribune): Analysts have termed the Supreme Court’s decision on Pakistan’s cement companies as a positive outcome, saying that contrary to market expectations, Bestway Cement Co and DG Khan Cement seemed to have escaped a harsher penalty. The comments come after the country’s top court ruled that Bestway Cement and DG Khan Cement will find an alternate source of water. The two companies also deposited Rs2 billion as security deposit, and agreed to pay for the water they use from now on.
Motorbike assemblers raise prices (Dawn): Japanese and Chinese bike assemblers have again increased prices citing falling rupee against the dollar, which has pushed up cost of imported parts. Pak Suzuki Motor Company Ltd (PSMCL) has notified second price hike in various models effective from May 1, while the maker of Yamaha has raised the price first time this year.
| Stock Market Synopsis | |||
|---|---|---|---|
| Last week | This Week | %Change | |
| Mkt. Cap (US $ bn) | 79.4 | 77.6 | -2.3% |
| Avg. Dly T/O (mn. shares) | 165.9 | 167.4 | 0.9% |
| Avg. Dly T/O (US$ mn.) | 55.0 | 56.7 | 3.2% |
| No. of Trading Sessions | 4.0 | 5.0 | 0.0 |
| KSE 100 Index | 44,536.9 | 43,594.8 | -2.1% |
| KSE ALL Share Index | 32,259.2 | 31,586.0 | -2.1% |