Market Review
The benchmark index remained bearish throughout the week where KSE100 index declined by 4.4%WoW to 37,518pts. The volatility in KSE100 index remained heightened as wide swings tracked regional indices and governments decision to enter the IMF program. During the week, market participation improved as evident from ADT and ADTV which surged by 55%WoW and 48%WoW, respectively. Foreign investors remained net seller, exhibiting an outflow of USD32.6mn.
During the week, PAMA released automobiles data for 1QFY19 wherein auto sales came down by 4%YoY to 58,351 units. However, sales grew by 3%YoY in Sept’18 to 19,345 units, up by 10%MoM. Also, APCMA released cement offtake for the month of Sept’18 where domestic cement consumption bounced back in Sept’18 after two months of lacklustre growth. Cement consumption increased by 19%YoY to 3.8mn tons in as compared to 3.2mn tons in SPLY. Moreover, urea manufacturers raised prices by around PKR130/bag in an attempt to pass the impact of gas price hike onto consumers.
On the macro front, SBP foreign exchange reserves declined by USD100mn during the week to USD8.3bn owing to external debt servicing. Moreover, trade deficit narrowed 1.6%YoY to USD8.9bn in the 1QFY19 as compared to USD9.0bn in the corresponding period last year. During 1QFY19, exports increased by 4.6%YoY to USD5.4bn while imports inched up 0.63%YoY to USD14.3bn. Remittances, during the same period, jumped by 13%YoY indicating inflows were higher from all sources except GCC countries. Furthermore, Asian Development Bank (ADB) plans to provide USD7.1bn in financing to help Pakistan achieve inclusive and sustainable growth over the next three years.
Outlook
With the government approaching the IMF in the upcoming weeks, investors will track the developments on conditions associated with entering the program. Additionally, the ongoing result season would also play its role in dictating the direction of individual stocks.
News This Week
Economic highlights & Data points
Forex reserves fall USD100mn (The News): Pakistan’s official foreign exchange reserves fell USD100mn to USD8.3bn in the week ended. The State Bank of Pakistan’s (SBP) foreign exchange reserves stood at USD8.4bn during the preceding week.
Exports grow by 4.6% (Dawn): Exports grew by 4.6% during the first quarter of the current fiscal year despite government’s efforts to bring double-digit growth.
Remittances up 13% to USD5.4bn (Dawn): The country received 13% more remittances in the first quarter of the current fiscal, indicating inflows were higher from almost all sources except the Gulf Cooperation Council (GCC) countries. Overseas Pakistanis remitted USD5.4bn in the first quarter of FY19; 13.1% higher than the same period of last year.
ADB set to provide Pakistan USD7.1bn for inclusive growth (The News): Asian Development Bank (ADB) will provide USD7.1bn in financing to help Pakistan achieve inclusive and sustainable growth over the next three years, its senior official said.
Government set to approach IMF for USD8bn to USD10bn package (The News): After weeks of dithering, Pakistan has decided to approach the International Monetary Fund (IMF) for USD8bn to USD10bn program to overcome the acute financial problems and improve its credibility at the international level.
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Sector and Corporate highlights
Auto sales fall (Dawn): Auto sales came down by 4%YoY during the first quarter of this fiscal year to 58,351 units. However, sales grew by 3% in Sept’18 to 19,345 units, an increase of 10%MoM.
Cement sales post 18.9% growth in Sept (The News): Domestic cement consumption bounced back in Sep’18 after two months of lackluster growth, registering a double digit increase compared with domestic consumption in the corresponding period of last year. Sales grew 18.9% to 3.81mn tons in Sep’18, as compared to 3.20mn tons in Sep’17.
Govt approves USD40.66/ton tariff for coal mining project (The News): Thar Coal and Energy Board (TCEB) approved USD40.66/ton as tariff for the public-private coal mining project of 7.6mn tons, around 13% lower than the request. The board determined the coal tariff for Sindh Engro Coal Mining Company (SECMC) for 30 years as opposed to the petitioned tariff of USD46.84/ton.
Urea prices increased by PKR130 per bag (Tribune): Urea manufacturers have raised prices by around PKR130 per bag in an attempt to pass the impact of gas price hike on to consumers despite government assurances that the state will pay subsidy to them.
Five IPPs shut, 17 running at half-capacity as govt juggles with circular debt (The News): Five independent power producers (IPPs) have suspended electricity generation and 17 others are operating at just 46% of installed capacity because of the liquidity crisis brought about by the PKR1.3trn circular debt, a senior Power Division official disclosed.
| Stock Market Synopsis | |||
|---|---|---|---|
| Last week | This Week | %Change | |
| Mkt. Cap (US $ bn) | 64.9 | 58.4 | -10.0% |
| Avg. Dly T/O (mn. shares) | 113.5 | 176.1 | 55.2% |
| Avg. Dly T/O (US$ mn.) | 35.0 | 51.8 | 48.0% |
| No. of Trading Sessions | 5.0 | 5.0 | 0.0 |
| KSE 100 Index | 39,226.4 | 37,517.9 | -4.4% |
| KSE ALL Share Index | 28,796.0 | 27,767.5 | -3.6% |