Market Review
During the outgoing week, positives related to arrival of USD1.0bn from KSA have been overshadowed by the negatives associated with the inconclusive end of negotiations between IMF and Pakistan regarding a package of financial assistance. As a result, KSE100 index exhibited a decrease of 2%WoW to 40,869pts. Additionally, market participants remained dull during the week as evident from decline in ADT by 26.5%WoW and ADTV by 22.7%WoW. Foreign investors continued to remain net seller, exhibiting an outflow of USD11.6mn.
During the week, as per NEPRA, electricity generation fell by 5.9%YoY to 9,574GWh in Oct’18 as the government shed reliance on furnace oil for power production. Additionally, CCP has been authorized by the high court to start investigation against the allegation on PTCL for being involved in predatory pricing. Furthermore, Pakistan has decided to import over 4.0mn cotton bales, costing ~USD1.5bn, owing to declining production of cotton in the country. Moreover, Pakistan turned down the International Monetary Fund’s demand to raise electricity tariff.
On the macro front, country’s foreign exchange reserves increased to USD14.7bn from USD13.7bn, up 7%WoW post arrival of financial support from KSA. As per SBP, loans to private sector businesses amounted to PKR4.8trn at Oct’18, up 21%YoY, mainly owing to uptick in economic activity.
Outlook
Monetary policy is scheduled to be announced next week where we expect a 75bps hike in interest rates, however, any negative surprise in this regard may dent the dwindling sentiments of the market.
News This Week
Economic highlights & Data points
Forex reserves rise to USD14.7bn (The News): Pakistan’s foreign exchange reserves increased to USD14.7bn after it received USD1.0bn from Saudi Arabia under financial support package, the central bank said on Thursday.
Pakistan rejects IMF’s electricity tariff hike demand (The News): Pakistan turned down the International Monetary Fund’s (IMF) demand to raise electricity tariffs, energy minister said on Tuesday, as a delegation of the Washington-based lender concluded its two-week visit to the country pushing ahead the bailout decision.
First Saudi installment of USD1.0bn arrives in government coffers (The News): The PTI-led government has received USD1.0bn from Saudi Arabia as the first installment out of the total USD3.0bn committed by the kingdom to help Islamabad build its balance of payment support.
Pakistan, IMF extend bailout talks to January (The Nation): Pakistan and IMF could not bridge the gulf on issues of increase in electricity prices, depreciation of currency, hike in interest rate and imposition of new taxes. Talks, which were continuing since November 7, ended inconclusively. However, both the sides agreed to extend the talks until January next year.
Loans to private sector businesses rise 21%YoY to PKR4.8trn (The News): Outstanding loans to private sector businesses amounted to PKR4.8trn at the end of October, 2018, which was 21% up from the same period a year ago, the central bank data showed on Tuesday.
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Sector and Corporate highlights
Electricity generation falls 5.9%YoY in Oct’18 (The News): Electricity generation fell 5.9%YoY to 9,574 GWh in Oct’18 as the government shed reliance on furnace oil for power production.
CCP decides to proceed against PTCL (The Nation): The Competition Commission of Pakistan (CCP) has passed an order assuming its jurisdiction in the matter of show cause notice issued to Pakistan Telecommunication Company Limited (PTCL) for abusing its dominant position in violation of Section 3 of the Competition Act, 2010.
Renault cars, SUVs and LCVs: Al-Futtaim seeks incentives before kickoff (BR): Al-Futtaim Automotive Pakistan (AFAPL) which is planning to set up a brand-new, state-of-the-art Greenfield automotive factory for Renault cars, SUVs and LCVs in Pakistan, has sought confirmation of incentives prior to starting practical work, sources in the EDB told B-Recorder
Sindh sugarcane board fails to fix prices (The News): The Sindh Sugarcane Board has not been able to fix sugarcane price for the year 2018-19 and remained indecisive about the beginning of the cane crushing season.
Pakistan has to import over 4mn cotton bales (BR): Pakistan has to import over 4mn cotton bales that would cost around USD1.5bn, owing to declining production of cotton this season. Officials said imports of such a large quantity would not only increase the country’s import bill.
Volkswagen inks deal for vehicle assembly in Pakistan (Tribune): the world’s largest automobile manufacturer – has entered into an agreement with a local luxury brands dealer for the assembly of vehicles in Pakistan, becoming the second European carmaker that will make inroads to capture the Japanese-dominated market.
| Stock Market Synopsis | |||
|---|---|---|---|
| Last week | This Week | %Change | |
| Mkt. Cap (US $ bn) | 61.5 | 60.4 | -1.7% |
| Avg. Dly T/O (mn. shares) | 213.4 | 156.9 | -26.5% |
| Avg. Dly T/V (US$ mn.) | 72.0 | 55.6 | -22.7% |
| No. of Trading Sessions | 5.0 | 4.0 | -1.0 |
| KSE 100 Index | 41,660.8 | 40,869.3 | -1.9% |
| KSE ALL Share Index | 30,020.0 | 29,500.7 | -1.7% |