Market Review
Benchmark index remained bullish throughout the week where the index closed at 39,049pts, exhibiting an increase of 3.9%WoW. The news pertaining to finalization of the terms of USD6.2bn support package from UAE provided a much needed breather to support the market. Market participation increased throughout the week as evident from increase in ADT and ADTV by 26%WoW and 28%WoW, respectively. Foreign investors were net buyers, exhibiting an inflow of USD0.60mn. During the week, PAMA released automobile data wherein auto sales fell by 3%YoY to 120k units in 1HFY19 on the back of restriction on the purchase of vehicles by non-filers. On the flip side as per the latest APCMA report, cement sales during Dec’18 exhibited an increase of 4%YoY, where 81%YoY increase in exports offset the decline in local dispatches. Additionally, power division issued a notification for supply of electricity to zero-rated industrial sectors at USC7.5/kwh. Furthermore, the government notified an immediate ban on the import of furnace oil and ordered all refineries to upgrade their refining facilities. Moreover, Drug Regulatory Authority of Pakistan (DRAP) approved an increase in price of medicines by 9% and life-saving drugs by 15% across the country. On the macro front, foreign exchange reserves of SBP dropped by USD239mn to USD7.0bn owing to debt repayment. Trade deficit narrowed by 5.8%YoY to USD16.9bn during the 1HFY19 as exports inched up 1.7%, while imports eased 3% during the period. During the same period, remittances swelled by 10%YoY to USD10.7bn over the corresponding period last year, continuing to give relief to ailing balance of payment position afflicted by swelling imports and debt payments. International credit ratings company, Moody’s expressed doubts regarding Pakistan’s debt repayment outlook given low foreign exchange reserves and increasing gross borrowing requirements.
Outlook
Investors will closely track developments regarding new budgetary measures taken in the mini budget, expected in the upcoming week. Hence, any negative budgetary measures to contain fiscal deficit will dampen investor sentiments and market performance.
News This Week
Economic highlights & data points
Forex reserves fall to USD13.6bn (The News): Pakistan’s foreign exchange reserves dropped 1.74%, or USD240mn, during the week ended January 4, the central bank reported on Thursday.
Trade deficit shrinks 5.8% in first half (The News): Pakistan’s trade deficit for 1HFY19 narrowed 5.8% or ~USD1.0bn to settle down at USD16.9bn over USD17.9bn recorded in the same period of the last fiscal, Pakistan Bureau of Statistics (PBS) data showed on Thursday.
USD3.0bn financial assistance sealed as Abu Dhabi Crown Prince meets PM Khan (Dawn): Abu Dhabi Crown Prince Sheikh paid a quick visit to Islamabad on Sunday and met the prime minister and other top officials as both countries seek to capitalize on the fresh momentum in ties due to a flurry of recent contacts at the leadership level.
PTI targets average GDP growth of 5.8% in Five Year Plan (The News): The PTI-led government has prepared a draft of 12th Five Year Plan by envisaging average GDP growth rate of 5.8% in the next five years from FY19 to FY23.
‘Mini-budget’ this month (BR): The Pakistan Tehreek-e-Insaf (PTI) government is going to present another ‘Finance Supplementary (Amendment) Bill, 2019,’ envisaging taxation measures of around PKR150bn, in the coming session of the National Assembly to be held on January 14 to address the economic challenges of the country, it is learnt.
Moody’s doubts Pakistan’s debt repayment outlook (The News): Moody’s on Thursday said Pakistan’s ability to refinance its foreign debt and fund its growing deficits is at stake given low foreign exchange reserves and gross borrowing requirements.
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Sector and Corporate highlights
Passenger car sales up 0.5%YoY in 1HFY19 (The News): Passenger car sales clocked in at 104,038 units in 1HFY19, slightly higher by 0.58% than 103,432 units in the corresponding period last fiscal year, Pakistan Automotive Manufacturers Association (PAMA) data revealed on Thursday.
Zero-rated industrial sectors Power tariff notification issued (BR): Power Division has issued a notification for supply of electricity to zero-rated industrial sectors at 7.5 cents per unit, after completing all codal formalities.
Government notifies ban on import of fuel oil (The News): The government on Tuesday formally notified an immediate ban on import of furnace oil (FO) and ordered all the refineries to utilise billions of rupees in annual deemed duty collected on petroleum products to upgrade their refining facilities.
Cement exports surge, domestic dispatches fall (Dawn): Cement dispatches fell marginally by 0.28 MT in 1HFY19. Though the drop is a small one, it is the first time in 9 years that cement dispatches have actually dropped in the first half of the fiscal year.
OGRA reduces RLNG prices (The News): The Oil and Gas Regulatory Authority (Ogra) has reduced the prices of re-gasified liquefied natural gas (RLNG) for the consumers of Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company for January 2019.
| Stock Market Synopsis | |||
|---|---|---|---|
| Last week | This Week | Change | |
| Mkt. Cap (US $ bn) | 56.0 | 56.7 | 1.3% |
| Avg. Dly T/O (mn. shares) | 110.4 | 138.7 | 25.7% |
| Avg. Dly T/V (US$ mn.) | 35.9 | 46.0 | 28.1% |
| No. of Trading Sessions | 5.0 | 5.0 | 0.0 |
| KSE 100 Index | 37,583.6 | 39,049.1 | 3.9% |
| KSE ALL Share Index | 28,001.3 | 28,739.0 | 2.6% |