Market review
The outgoing week remained volatile where benchmark index closed flat at 38,586pts. The news pertaining to inflow of second tranche worth USD1.0bn from KSA provided a much needed breather to support the market in the last trading session. The market participation remained dull during the week as evident from decline in ADT and ADTV by 25.7%WoW and 30.6%WoW, respectively. Foreign investors continued to remain net seller, exhibiting an outflow of USD12.8mn. During the week, PAMA released automobiles data wherein auto sales fell by 4%YoY to 101k units in the 5MFY19 as compared to 105k units in the same period last year as demand from ride-hailing services tapered off during the period. On the other hand, pharmaceutical industry warned that it would raise prices of medicines up to 40% if the government drags feet over new drugs pricing structure. Increase in manufacturing cost of medicines by 60% given record high devaluation of PKR and increase in duties and taxes are adding to the woes of the industry. Moreover, government is planning to raise PKR200-PKR300bn via 10yr privately placed sukuk bonds to fund staggering circular debt in the power sector. On the macro front, country’s foreign exchange reserves decreased to USD13.8bn from USD14.0bn, down by USD242mn, owing to external debt repayments. Trade deficit narrowed by 2%YoY to USD14.5bn during the 5MFY19 as exports inched up, while imports remained flat during the period. During the same period, remittances swelled by 13%YoY to USD9.0bn over the corresponding period last year, continuing to give relief to ailing balance of payment position afflicted by swelling imports and debt payments. Furthermore, Moody’s reaffirmed credit rating with B3 negative for Pakistan while expressing concern over falling reserves and rising debt.
Outlook
As investors await clarity on economic reforms and external account situation, prospective inflow from friendly countries and progress on a bailout package from the IMF would be a key confidence builder for the investors.
News This Week
Economic highlights & data points
Forex reserves decline by USD242mn (BR): The country’s total liquid forex exchange reserves declined by USD242mn in the first week of December mainly due to foreign debt payment. According to weekly forex report issued by the State Bank of Pakistan (SBP) on Thursday the total liquid foreign reserves held by the country stood at USD13.8bn.
ADB pledges USD7.5bn in loan financing over three years (The News): The Asian Development Bank (ADB) will provide USD7.5bn in loan financing and grants to Pakistan over the next three years for energy and transport infrastructure uplifts as well as domestic resources mobilization.
Trade deficit narrows 2% to USD14.5bn in five months (The News): Trade deficit slightly narrowed 2% to USD14.5bn during 5MFY19 as exports inched up, while imports remained flat during the period, official data revealed on Tuesday. Pakistan Bureau of Statistics (PBS) data showed that trade deficit amounted to USD14.8bn in the July-November period of the last fiscal year.
Remittances up 12.6% to USD9.03bn in July-November (The News): Overseas Pakistanis sent USD9.03bn in remittances to the country during 5MFY19, up around 13% over the corresponding period a year earlier, continuing to give relief to ailing balance of payment position afflicted by swelling import and debt payments.
Moody’s warns of growing debt risks, reaffirms rating of B3 negative (Dawn): The New York-based Moody’s rating agency on Thursday expressed concern over Pakistan’s falling reserves and rising debt. The long-term outlook remains “robust”, though, due to improved power supply and infrastructure and better security.
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Sector and Corporate highlights
Auto sales down 4% in July-Nov (The News): : Auto sales fell 4% to 100,643 units in 5MFY19 as demand from ride-hailing services tapered off during the period. Auto sales stood at 104,901 units in 5MFY18.
Pharmaceutical industry warns 40% price hike on delayed pricing policy (The News): Pharmaceutical industry on Saturday warned that it would raise prices of medicines up to 40% by itself if the government drags feet over new drugs pricing structure. Zahid Saeed, central chairman of Pakistan Pharmaceutical Manufacturers’ Association (PPMA), said it will be compelled to increase prices of medicines manufactured in the country by 40% if the present government takes no step to provide much-needed relief to the local drugs’ producers in view of massive rupee devaluation and pressing fiscal factors.
Govt to raise up to PKR300bn via 10-year sukuk (The News): The government plans to raise PKR200bn-PKR300bn via 10-year privately placed sukuk bonds to fund staggering circular debt in the power sector, sources familiar with the matter said on Tuesday.
ECC asks ministry to offload urea shipments (BR): The Economic Coordination Committee (ECC) of the Cabinet has directed the Ministry of Industries to offload shipments of imported urea immediately and start its supply to the market for easing the difficulties of farmers.
| Stock Market Synopsis | |||
|---|---|---|---|
| Last week | This Week | Change | |
| Mkt. Cap (US $ bn) | 56.0 | 55.9 | -0.3% |
| Avg. Dly T/O (mn. shares) | 163.3 | 121.3 | -25.7% |
| Avg. Dly T/V (US$ mn.) | 58.1 | 40.3 | -30.6% |
| No. of Trading Sessions | 5.0 | 5.0 | 0.0 |
| KSE 100 Index | 38,562.1 | 38,585.7 | 0.1% |
| KSE ALL Share Index | 28,331.5 | 28,327.0 | 0.0% |