Market Review
During the outgoing week, KSE100 index remained bearish amid lack of triggers, resultantly index lost 600pts closing at 38,950pts. Market participation remained dull as evident from decrease in ADT and ADTV by 28.7%WoW and 34.8%WoW, respectively. Foreign investors were net sellers, exhibiting an outflow of USD3.5mn. During the week, as per APCMA, cement sector posted a double digit decline of 19%YoY in Feb’19 compared with SPLY where the dispatches settled at 3.3mnMT. Furthermore, the government has scrapped the restriction on the purchase of vehicle by non-filers, however, it also levied 10% FED on the vehicle with engine capacity of 1700cc or more. Additionally, the local bike assemblers increased bike prices to pass on the rising cost impact of imported parts and accessories to the consumers. Furthermore, the Ministry of Energy floated PKR200bn worth Sukuk to partially pay off the circular debt owed to power producers as well as oil and gas utility firms. Also, the government is planning to introduce another amnesty scheme to bring the undocumented money into the industrial sector. On the macro front, foreign exchange reserves held by SBP increased marginally by USD80mn to USD8.1bn. Additionally, Pakistan received USD2.3bn of budgeted foreign assistance in 1HFY19 as compared to USD5.9bn, down 61%YoY. As per the SBP, public debt swelled around 12% to PKR27trn in Jan’19 as against PKR23trn during the same period last year. Furthermore, government has decided to privatize 8 government-owned organizations by the end of CY19 to generate revenue to support liquidity crunch.
Outlook
With the end of result season, focus will again shift to the performance of individual companies fundamentals. Additionally, monetary policy is due in a couple of weeks where we expect 50bps hike, however, any negative surprise would dampen the market sentiments.
News This Week
Economic highlights & data points
Forex reserves rise to USD14.96bn (The News): Pakistan’s foreign exchange reserves roseUSD141mn, or 0.95%, to USD14.96bn during the week ended March 1, the central bank said on Thursday. The foreign exchange reserves held by the State Bank of Pakistan increased USD80mn to USD8.12bn.
Foreign funding dips to USD2.32bn amid IMF delay (Dawn): Despite significantly higher needs, Pakistan received a paltry USD2.32bn of budgeted foreign assistance in 1HFY19, apparently due to the inability of the PTI government to secure an umbrella support from the International Monetary Fund (IMF).
Public debt swells 11.8% to PKR27trn till January-end (The News) : Pakistan’s public debt swelled around 12% to PKR27.07trn as of January 31 compared with PKR24.21trn in June-end last year, the central bank’s data revealed on Wednesday, as the government tapped fund sources to offset stunted revenue collection and meet expenditures.
FBR collects PKR455mn withholding tax on foreign transactions in 7MFY19 (The News): FBR has collected PKR455mn during 7MFY19 as withholding tax imposed on foreign transactions through payment cards.
Government plans new amnesty scheme to boost industrial sector (The News): Government is planning another amnesty scheme to bring the undocumented money, present in the country, into the industrial sector rather than boosting revenue collection, an industry official said on Tuesday.
Cotton production down 6.8% (Dawn): Adversely affected by the decrease in area under cultivation coupled with the use of poor quality seed and pesticides, cotton production as of 1st March 2019 clocked in at 10.47mn bales down 6.8% over the corresponding period last year.
Govt plans to privatise at least 8 entities by year end’ (Tribune): A parliamentary panel was told on Wednesday that the government has planned to privatise at least eight government-owned organizations by the end of the current year in order to generate revenue to ‘pay off loans and end poverty’.
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Sector and Corporate highlights
3.48mn tons dispatched: Cement sector posts 19.1% decline in February (BR): Cement sector posted a double digit decline of 19.1% in the month of February compared with corresponding month last year. According to data released by the All Pakistan Cement Manufacturers Association (APCMA), the cement industry dispatched 3.33mn tons in February 2019 against dispatches of 3.48mn tons in February 2018.
PKR200bn Sukuk issued to reduce circular debt (Tribune): The Ministry of Energy has floated Sukuk (Islamic bonds) worth PKR200bn for Islamic banks in order to partially pay off the circular debt owed to independent power producers (IPPs) and oil and gas utility firms in Pakistan
Govt likely to remove 4% super tax levied on banks (Tribune): The federal government is likely to withdraw 4% super tax imposed on banking companies for tax year 2018. Earlier, the banks had asked the government to withdraw the tax in the second supplementary finance bill unveiled in the third week of January.
Oil sales drop 28%YoY in 8MFY19 (The News): Sales of oil marketing companies declined by 28%YoY in 8MFY19, with a 61%YoY decline in furnace oil (FO) offtake due to lower consumption in power generation.
Financing schemes launched for energy, agri projects (Dawn): The State Bank of Pakistan (SBP) has launched three Shariah Compliant Refinance Schemes for investments in the renewable energy and agri-related projects to provide level playing field to Islamic banking system, according to a press release issued on Friday.
Bike makers jack up prices| (Dawn): Atlas Honda Limited made its third price jump in various two-wheeler models by PKR600-2,000 from Mar’19. The new price of CD70, CD Dream, Pridor 100cc, CG125 and CB150F have been fixed at PKR70,500, PKR74,500, PKR96,500, PKR116,500 and PKR191,900, respectively.
| Stock Market Synopsis | |||
|---|---|---|---|
| Last week | This Week | Change | |
| Mkt. Cap (US $ bn) | 58.4 | 57.6 | -1.2% |
| Avg. Dly T/O (mn. shares) | 160.0 | 114.2 | -28.7% |
| Avg. Dly T/V (US$ mn.) | 51.3 | 33.5 | -34.8% |
| No. of Trading Sessions | 5.0 | 5.0 | 0.0 |
| KSE 100 Index | 39,539.0 | 38,950.2 | -1.5% |
| KSE ALL Share Index | 28,852.0 | 28,520.2 | -1.2% |