Stock market at a glance

Market Review

The benchmark index remained under pressure during the week on the back of geopolitical tensions and lack of triggers to entice investors. The index posted decline of 2%WoW to close at 41,961pts. During the week market participation remained lackluster as evident from ADT and ADTV that declined by 11.9%WoW and 0.6%WoW, respectively. Foreign investors also exhibited a net outflow of USD9.5mn.

During the week, PAMA released the latest figures for auto industry whereby overall sales of locally assembled cars, light commercial vehicles, vans and jeeps grew by 9%YoY to 21,344 units during the 1MFY19 as a result of strong backlog of orders during last few months which were supported by cheap financing and economic expansion. Moreover, power sector’s receivables rose by 23%YoY to PKR896bn from PKR730bn during FY18, a key reason for the continuous hike in circular debt and borrowing from commercial banks by slapping surcharges on consumers. Also, fourth and last unit of the Neelum-Jhelum Hydropower Project (NJHP) was synchronized with national grid on Monday after it started generating over 200MW on a trial basis.

On the macro front, foreign exchange reserves of central bank declined to USD10.2bn, down by USD216mn owing to external debt repayments. Furthermore, Pakistan’s debt and liabilities rose sharply to nearly PKR30trn or 87% of total size of the economy at the end of previous fiscal year, largely due to the last government’s expansionary fiscal policies and its failure to reform tax administration. In addition to this, Pakistan’s trade balance recorded a deficit of 16.2% to USD3.19bnMoM in the 1MFY19. Exports for Jul’18 increased 1.2%YoY and imports for the same period registered a 0.6%YoY rise.

Outlook

With lower trading days in the upcoming week on account of Eid holidays, market participation is likely to remain subdued. Furthermore, market is likely to track developments in global and regional indices.

News This Week

Economic highlights & Data points

Forex reserves fall to USD16.71bn (The News): Pakistan’s foreign exchange reserves fell to USD16.71bn during the week ended August 10 from USD17.01bn in the previous week, the central bank reported on Thursday. The foreign exchange reserves held by the State Bank of Pakistan decreased USD216mn to USD10.15bn due to external debt servicing and other official payments, it said.

FATF delegation arrives (The News): In order to evaluate the performance of Pakistan for placing mechanism to counter money laundering and terror financing, a six-member visiting delegation of the Asia Pacific Group (APG) has asked Pakistan to strengthen the legal framework by maximizing penalty and imprisonment period for those proven to be involved in such offences.

Remittances jump 25% in July (Dawn): : In a positive development, remittances posted their biggest jump in years for the month of July, rising by 25% compared to the same month last year despite the raging uncertainty that prevailed in the run-up to the elections. The State Bank of Pakistan (SBP) reported on Friday that the overseas Pakistani workers remitted USD1.93bn in the first month of 2018-19 as compared to USD1.54bn received last July.

Foreign exchange deposits: Pakistan gets assurance from China, Saudi Arabia (The News): In a last ditch effort to avoid going back to the IMF, Pakistan has received assurances from China and Saudi Arabia for solving its foreign exchange crisis but first the incoming PTI-led government will have to take ‘tough corrective measures’ on front, reducing imports and slashing the budget deficit in a big way. Pakistan had requested Saudi Arabia to provide USD5bn for deposits to keep into foreign exchange reserves and Pakistan can pay them well on these deposits in our central bank

Trade deficit in July shrinks to 16.2% month-on-month as imports drop (The News): Pakistan’s trade balance recorded a deficit of 16.2% to USD3.19bn month-on-month in the new financial year starting July, though import showed a sign of depression due largely to volatility in rupee value in recent months. During the period dollar appreciated 4.8% against the rupee. Exports on year-on-year for July 2018 increased 1.2% and imports for the same period registered a 0.6% rise.

[ads1]

 

Sector and Corporate highlights

Auto sales climb 9% (Dawn): The overall sales of locally assembled cars, light commercial vehicles, vans and jeeps grew by 9% year-on-year to 21,344 units during the first month of this fiscal year. With further interest rate hike and rupee devaluation on the cards along with the ban on non-filers to register new cars, this growth momentum may lose steam in coming months.

Power sector receivables soar to PKR896bn (BR): The power sector’s receivables rose by 23% to PKR896bn from PKR730bn during 2017-18, a key reason for the continuous hike in circular debt and borrowing from commercial banks by slapping surcharges on consumers, well informed sources told Business Recorder. The main contribution in receivables was liabilities of private sector which rose from PKR555bn to PKR671bn.

MIGA issues USD66mn worth of guarantees for Hyundai-Nishat Motors Assembly Plant (DT): MIGA, a member of the World Bank Group, has issued guarantees worth USD66mn in support of the design, construction and operation of the Hyundai-Nishat Motor vehicle assembly plantin M3 Industrial City, Faisalabad.

4th Neelum-Jhelum Hydropower Project unit begins operation (Dawn): The fourth and last unit of the Neelum-Jhelum Hydropower Project (NJHP) was synchronised with national grid on Monday after it started generating over 200 megawatts on a trial basis. During the project’s trial run, the unit will be tested on various loads ranging up to 242MW.

Stock Market Synopsis
	Last week	This Week	%Change
Mkt. Cap (US $ bn)	70.7	69.8	-1.3%
Avg. Dly T/O (mn. shares)	198.8	175.2	-11.9%
Avg. Dly T/O (US$ mn.)	73.3	72.9	-0.6%
No. of Trading Sessions	5.0	4.0	-1.0
KSE 100 Index	42,924.0	41,960.8	-2.2%
KSE ALL Share Index	30,944.7	30,422.0	-1.7%