Market Review
Border tensions between Pakistan and India remained on the forefront during the week resulting in a volatility for the benchmark index. The market recovered slightly on the last day of the week as Pakistan agreed to release the Indian pilot to de-escalate tensions. The benchmark index closed at 39,539pts, down 1.2%WoW. Market participation increased as evident from decrease in ADT and ADTV by 51.9%WoW and 33.1%WoW, respectively. Foreign investors were net sellers, exhibiting an outflow of USD1.3mn. During the week, the government increased the prices of petroleum products, where prices of petrol and HSD were increased by PKR2.5/litre and PKR4.75/litre, respectively. Additionally, SBP 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. Furthermore, Cargill, the US-based company with global outreach is expanding its footprint in Pakistan by diversifying operations mainly into port infrastructure. Also, Matiari-Lahore HVDC transmission line project achieved financial close and will be fully operational by Mar’21. On the macro front, foreign exchange reserves held by SBP declined marginally by USD6.0mn to USD6.8bn. Additionally, the government acknowledged that the GDP growth target would be missed by 2% as a result of stabilization efforts. Furthermore, according to Fitch Solutions, Pakistan and IMF will soon reach a bailout deal with a potential size of USD12bn but the country is expected to have an increasing pressure to improve fiscal consolidation through austerity measures. During 8MFY19, FBR missed the revenue collection target by PKR235bn as total revenue collections clocked in at PKR2.3trn. Moreover, foreign assistance in 7MFY19 decreased by 60%YoY to USD2.7bn as against USD6.9bn received SPLY.
Outlook
The market would await India’s response to Pakistan’s peace gesture, where any negative response from India would dampen market sentiments.
News This Week
Economic highlights & data points
Reserves edge lower (Dawn): Reserves held by the State Bank of Pakistan decreased by a marginal USD6.0mn to USD8.0bn during the week ended on Feb 22. Holdings of the commercial banks were recorded at USD6.8bn while total liquid reserves of the country stood at USD14.8bn.
FBR misses collection target by PKR235bn for 8MFY19 (Dawn): The Federal Board of Revenue (FBR) missed collections target by PKR235bn during 8MFY19, according to provisional figures released on Thursday.
Stabilization to lower growth rate to 4.2% (BR): The government on Tuesday acknowledged that GDP growth target for the current fiscal year will be missed by a whooping 2% and would remain 4.2% and attributed the slowdown to stabilization. “The GDP growth would remain 4.2% for the current fiscal year,” said Minister of State for Revenue Hammad Azhar during a meeting of the National Assembly Standing Committee on Finance.
USD2.7bn foreign aid received in 7MFY19 (BR): The country provisionally received USD2.7bn foreign assistance in 7MFY19 against USD6.9bn during the same period of last year (2017-18), showing a reduction of about 60%.
IMF, Pakistan to soon reach USD12bn bailout deal: Fitch (The News): Pakistan and the International Monetary Fund (IMF) will soon reach a bailout deal with a potential size of USD12bn, but the South Asian country is expected to have an increasing pressure to improve fiscal consolidation through austerity measures, Fitch Solutions said.
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Sector and Corporate highlights
Partial increase in all prices of POL products (BR): The federal government on Thursday notified partial increase in the prices of all petroleum products for the month of March. In monthly review, the government has increased the price of motor spirit (MS) by PKR2.50/litre. The price of high speed diesel (HSD) has also been increased by PKR4.75/litre.
US-based Cargill to invest in port infrastructure (Tribune): Cargill, the US-based company with global outreach, which is operating for over three decades in Pakistan, is expanding its footprint in the country by diversifying operations mainly into port infrastructure.
Matiari-Lahore HVDC transmission line project achieves financial close (Dawn): Matiari-Lahore high-voltage direct current (HVDC) transmission line project with an estimated cost of USD1.65bn has secured financing and will be fully operational in March 2021, the developer said on Wednesday.
Govt likely to allow private sector to import LNG: minister (BR): Allowing the private sector to import liquefied natural gas (LNG) is under serious consideration by the Petroleum Division. Private-sector players have approached the government seeking permission to import gas to meet idle capacity of LNG terminals at competitive rates.
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.
| Stock Market Synopsis | |||
|---|---|---|---|
| Last week | This Week | Change | |
| Mkt. Cap (US $ bn) | 57.4 | 58.4 | 1.7% |
| Avg. Dly T/O (mn. shares) | 105.3 | 160.0 | 51.9% |
| Avg. Dly T/V (US$ mn.) | 38.6 | 51.3 | 33.1% |
| No. of Trading Sessions | 5.0 | 5.0 | 0.0 |
| KSE 100 Index | 40,016.1 | 39,539.0 | -1.2% |
| KSE ALL Share Index | 29,016.8 | 28,852.0 | -0.6% |