Market Review
The outgoing week remained green where benchmark index closed at 40,265pts, exhibiting an increase of 2.4%WoW. Market participation increased post announcement of ‘Economic Reform Package’ that focused on boosting investor’s confidence in the market. This is evident from an increase in ADT and ADTV by 43%WoW and 22%WoW, respectively. Foreign investors were net buyers, exhibiting an inflow of USD17.0mn. During the week, the government in its ‘Economic Reform Package’ abolished super tax for non banking sectors, relaxed tax on intercorporate dividend and removed 0.02% WHT on stock market transactions. Furthermore, the decision of lifting ban on the purchase of vehicles up to 1300cc by non-filers was hailed by auto assemblers. Also, the cabinet approved 50% waiver in GIDC to settle outstanding dues. Moreover, World Bank rated the progress of Dasu Dam project as ‘moderately unsatisfactory’ as the country could not resolve the issue of land acquisition which would delay the inauguration of first phase beyond 2021. Additionally, IMF lowered the growth forecast for Middle East, North Africa, Afghanistan and Pakistan by 0.3% to 2.4% for 2019 and recovering to 3.0% in 2020. On the macro front, foreign exchange reserves of the SBP dropped by USD265mn to USD6.63bn owing to debt repayment. Also, the country received USD1.0bn each from KSA and UAE to help boost the country’s declining foreign exchange reserves. Additionally, the Finance Minister revealed that a support package from China is also in progress and would be finalized in the next 2 weeks to bring the country out of balance of payment crisis.
Outlook
Monetary policy is due in the upcoming week where we expect status quo, however, negative surprise would dampen the market participation. Additionally, the commencement of result season would play an important role in dictating the direction of individual stocks.
News This Week
Economic highlights & data points
Foreign exchange: SBP reserves dip 3.84%, stand at USD6.6bn (Tribune): The foreign exchange reserves, held by the central bank, continued to descend for the fifth consecutive week, dropping 3.84% on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.
SBP says USD1bn support fund received from UAE (The News): State Bank of Pakistan (SBP) said on Thursday it had received USD1bn from United Arab Emirates (UAE) as part of a USD3bn support package to help boost the country’s dwindling liquid foreign currency reserves.
No panic over IMF bailout package: Asad (Dawn): Finance Minister Asad Umar on Thursday said there was no panic in Pakistan over a bailout package from the International Monetary Fund (IMF) and the country would neither go down on its knees and surrender before anybody nor would it take dictation for economic support.
Pakistan receives third tranche of USD1.0bn from Saudi Arabia- (The News): Pakistan has received third tranche of USD1.0bn from Saudi Arabia, State Bank of Pakistan has confirmed.
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Sector and Corporate highlights
Mini-budget packs impetus for equities- (The News): Measures announced in the mini-budget pack an impetus for the capital market that is likely to see a strong surge after the abolition of taxes on buying and selling of shares and dividends for group companies.
Auto industry hails decision of lifting ban- (BR): Auto industry has welcomed the decision to lift ban on purchasing of vehicles from non-filers proposed in mini budget 2018-19. According to the Pakistan Suzuki Motor Company Limited, the decision to lift ban on purchasing of vehicles from non-filers are welcoming as it would increase the production and sales of local manufactured vehicles.
50% waiver in GIDC to settle outstanding dues approved- (BR): The cabinet has approved Gas Infrastructure Development Cess settlement mechanism for the companies with reduction in rate of GIDC that is subject to settlement of outstanding dues. In a press briefing here on Thursday, Minister for Finance Asad Umar said that cabinet had approved 50% waiver in GIDC for companies to settle their outstanding dues.
World Bank rates progress on Dasu project as ‘moderately unsatisfactory’- (Tribune): The World Bank has lowered the 2,160MW Dasu hydropower project’s rating to ‘moderately unsatisfactory’ after Pakistan could not resolve outstanding issues in the past over two years, which will now push the completion period beyond 2021.
IMF lowers growth forecast for Pakistan, region- (The News): The International Monetary Fund on Monday lowered its 2019 economic growth forecast for Pakistan and the region by 0.3% to 2.4%. “Growth in the Middle East, North Africa, Afghanistan, and Pakistan region is expected to remain subdued at 2.4% in 2019 before recovering to about 3% in 2020,” the global lender said in its World Economic Outlook update for January.
Fitch says SBP likely to devalue rupee in coming months- (The News): Fitch Solutions on Monday said the State Bank of Pakistan (SBP) is expected to devalue rupee against US dollar again in the coming months, as the currency will remain under depreciatory pressures with weaker external finances.
| Stock Market Synopsis | |||
|---|---|---|---|
| Last week | This Week | Change | |
| Mkt. Cap (US $ bn) | 57.1 | 58.0 | 1.6% |
| Avg. Dly T/O (mn. shares) | 118.0 | 168.5 | 42.8% |
| Avg. Dly T/V (US$ mn.) | 39.7 | 52.5 | 32.1% |
| No. of Trading Sessions | 5.0 | 5.0 | 0.0 |
| KSE 100 Index | 39,306.5 | 40,264.8 | 2.4% |
| KSE ALL Share Index | 28,917.8 | 29,367.7 | 1.6% |