Markets to perform choppy; cements and banks in the limelight The week ended 7th December 2018 was another difficult one as the benchmark Index of Pakistan Stock Exchange (PSX) closed at 38,562 points, down 4.8%WoW. Unexpected interest rate hike of 150bps to 10.0% by the central bank caught investors off guard and coupled with Rupee depreciation triggered across the board selling. Oil prices receded 2.4%WoW in the run-up to the OPEC’s meeting as non-OPEC producers expand production, with pressure being exerted by OPEC’s decision to delay a final decision on output cuts, awaiting support from non-OPEC heavyweight Russia. Consequently, Oil…
Author: Shabbir Kazmi
The grand ceremony held in Islamabad to mark completion of 100 days of Prime Minister Imran Khan’s government may have been illustrious, but certainly fall short in proving that much has been achieved. During election campaign and soon after attaining majority to form the government, Pakistan Tehreek-e-Insaf (PTI) leader Imran Khan painted a canvas that was too large, faced hostile domestic opposition and unfriendly attitude of United States and India, keen in establishing their hegemony in the region. Sole surviving super power and over-ambitious regional super power seem adamant at derailing Khan’s plan because of the attention Pakistan has started…
Both Pakistan and India are nuclear power, have fought various wars and constantly live in state of war ever since they got independence from British Raj in 1947. Economists are of the consensus that had the two countries live like peaceful neighbors, abstained from spending billions of dollars annually on procurement of lethal arsenal and invested money on the development; these would have been the most prosperous economies of the world. It would not be wrong to say that the British Raj left a thorn, Kashmir, which has been constantly exploited by the United States. Let the readers keep one…
Bears rule and market will be range-bound on ambiguity of external funding The benchmark index of Pakistan Stock Exchange (PSX) lost another 373 points during the week ended 30th November 2018 to close at 40,496, down 0.91%WoW. Lack of clarity on external funding amidst foreign selling post MSCI rebalancing kept the market under pressure. Market activity remained lackluster with average daily turnover declining to about 152 million shares, down 3.1% WoW. Key news flows impacting the market during the week included: 1) rupee losing another 2.5% against dollar, with PKR/US$ parity settling at Rs136.75 after touching intra-day high of Rs143,…
Faced with an immediate balance of payment (BoP) crisis, the incumbent government headed by Imran Khan is working on a multi-pronged strategy, simultaneously approaching both friendly countries and International Monetary Fund (IMF) for BoP support. While initially sparking a wave of uncertainty due to lack of clarity, the Government of Pakistan’s strategy has worked well so far, considering the assurance of support from two friendly countries, Saudi Arabia and China. In this regard, Saudi- Arabia has committed US$6 billion package, with deposits of US$3 billion for BoP and deferred oil facility up to US$3 billion, while China has also assured…
Historically, textiles and clothing sector of Pakistan has been the biggest foreign exchange earner as the successive governments have been offering it incentives. While it may be true that the sector is the largest earner of foreign exchange, it is also a fact that the sector has not learnt to live without the crutches of government support. This could be best understood from a fact that Pakistan is among the top five largest cotton countries of the world, but its share in global textile trade has not gone beyond 3 percent. The prevailing situation demands complete refurbishing of obsolete/outdated plants…
Inconclusive IMF talks have extended market uncertainty, but a lack of definitive bearish movement indicates money managers are paying due attention to eventual money inflows from different avenues, Saudi Arabia, China and International Monetary Fund (IMF).The timing of fund flows is crucial and holds the key to market direction where negative narrative on fund flow is being countered by positive narrative on eventuality of the same as well as economic benefit of current low oil price. Historical average returns post an IMF program have been slight positive in the 60 and 90 days prior to entry. Current economic situation somewhat…
Sentiment leans to favor bears over delay in IMF talks and funding from ‘friendly countries’ Pakistan equity market remained under pressure due to inconclusive meeting with International Monetary Fund (IMF) and delay in funds transfer from Saudi Arabia. The benchmark index of Pakistan Stock Exchange declined by almost 2.00%WoW for the week ended 23rd November 2018 at 40,869 points. With the first round of negotiations between the IMF and Pakistani authorities being inconclusive over fundamental differences on measures to address fiscal imbalances, and Government of Pakistan (GoP) expectations of funding from ‘friendly countries’ failing to materialize, sentiment leaned to favor…
The benchmark index of Pakistan Stock Exchange (PSX) posted 1.6%MoM gain during October 2018 and closed at nearly 41,650 points, after posting decline for two consecutive months. This reversal, though of a smaller magnitude can be attributed to the successful diplomacy of Prime Minister, Imran Khan in Saudi Arabia that resulted in Saudis approving US$6billion package and expectation of packages from China and United Arab Emirates (UAE). During near term performance will depend on actual transfer of funds, and signing of a package with International Monetary Fund (IMF). Though, prospects of Pakistan’s entry into an IMF program are bright, imposition…
Commercial banks are the core providers of liquidity to the private sector and the biggest investors in government securities (Treasury Bills, Pakistan Investment Bonds and Sovereign Sukuk). These are also the biggest investors in the shares of public limited companies (through investment portfolio and fully owned asset management companies). For considerably long time experts have been saying that banks have to redefine their business model. A review of the third quarter of CY18 performance of banks is likely to prompt the investors to reduce their exposures in banks. Two out of big five banks were imposed huge penalties in the…
Healthy volume witnessed, support packages from China and UAE in spotlight For the week ended 2nd November 2018, the benchmark Index of Pakistan Stock Exchange (PSX) closed above 42,000 points, up 3.57%WoW. Investors awaited details of support packages from China and UAE, while closely watching the on-going country-wide protests. Moreover, healthy volumes were witnessed at the bourse with average daily trading volume rising by 7.07%WoW to 322.32 million. Volume leaders included: BOP, KEL, PAEL, LOTCHEM and PIBTL. The key news flows impacting the market sentiments included: 1) Advisor to Prime Minister on Commerce asking cement manufacturers to be ready for…
Reportedly, Saudi Arabia has finally agreed to offer Pakistan a US$6 billion support package to overcome its prevailing precarious current account deficit crisis. According to the details the Kingdom will transfer US$3 billion directly to Pakistan, while another one-year deferred payment facility of up to US$3 billion for oil import will be made available. This arrangement will be in place for three years, which will be reviewed thereafter. During the election campaign and even after taking oath as Prime Minister of Pakistan, Imran Khan has been expressing reluctance in approaching International Monetary Fund (IMF). Ever since coming to power, Khan…
Bulls back in the ring as stocks likely to maintain positive atmosphere During the week ended 26th October 2018 the benchmark Index of Pakistan Stock Exchange (PSX) closed at 40,556 points, up 5.5%WoW. The reversal in trend was prompted by the promise by Saudi Arabia to extend a bailout package for Pakistan, estimated around US$6 billion. It is likely to pave way for additional bilateral assistance from other friendly countries and ease pressure while negotiating a facility with the International Monetary Fund (IMF). Key news flows moving the market included: 1) second visit of Prime Minister, Imran Khan to Saudi…
The manufacturing sector in Pakistan suffers from some contentious issues. It was expected that the incumbent government would be able to address some of the contentious issue. However, many of the U-turns have added to the concerns rather than providing sustainable solutions. PTI government received the embrace for bringing the change for the good, but ground realities show the contrary. Let the story begin with approaching International Monetary Fund (IMF). Even while the election campaign was at its peak and political parties were making all sorts of absurd promises, PTI also failed in having a complete comprehension of the ground…
Meeting external woes brings back normalcy; investors see corrective measures During the week ended 19th October 2018, the benchmark index of Pakistan Stock Exchange (PSX) posted modest recovery, gained 912 points to close at 38,430 level, up 2.4%WoW. The average daily trading volume rose to 199 million shares, up 6%WoW. Investors gained confidence amid government’s efforts to address the external woes. The government’s intention to rationalize the taxation regime for the capital market has been greeted with a great optimism. Key news flows impacting the market included: 1) Finance Minister announcing that the IMF team would visit Pakistan during first…
The critics of Prime Minister Imran Khan are firing all sorts of shots at him. The biggest blame is that the person who didn’t want to approach International Monetary Fund (IMF) has conveniently bowed down rather than making an effort to live without the crutched of lender of last resort. Khan has been critical of borrowing during his election campaign, might be that he failed in understanding the gravity of situation. Let everyone try to find a logical reply to the basic question, will abstaining from borrowing from IMF save Pakistan from committing default? The immediate and logical reply is…
Fragile economic view keeps market under pressure as index down 1,700 points Due to likely harsh conditions emanating from entering into yet another program with International Monetary Fund (IMF), the benchmark index of Pakistan Stock Exchange (PSX) lost about 1,700 points (down 4.36%WoW) during the week ended 12th October 2018. In the earlier week the index had lost 1,772 point due to the fragile economic outlook and the ongoing foreign sell-off. This made investors jittery and plunged the index to 37,518 points (119-week low). The selloff was driven by: 1) fragile economic outlook and rising interest rates as investors look…
Market lacks direction, index performance to remain under pressure During the week ended 5th October 2018, the benchmark index of Pakistan Stock Exchange (PSX) eroded by 4.32%WoW and closed 39,226 points. Having lost 911 points during the first four trading days, Shahbaz Sharif’s arrest by National Accountability Bureau (NAB) in the Ashiana Housing case on Friday afternoon came as a final nail in the coffin. Deferment of electricity rate hike and lack of direction on potential entry in to the IMF program kept investors on the sidelines, shrinking average trading volume to 113.5 million shares as compared to 124.4 million…
The economists and analysts seem to be clearly divided into two groups, one demanding immediate negotiations with the lender of last resort and other still living under the illusion that Pakistan can live without the crutched of IMF. While the new Finance Minister is still working hard to negotiate a deal with the IMF, that can give him enough space to carve a home grown plan that could help the ruling coalition in implementation of the political manifesto. To remain a sovereign country, achieving financial stability is a must, offering the right policies to contain fiscal and current account deficit…
Market ends smidgen lower, sufficient financing policy may lure buyers Lack of coherent policy direction to address the macro-economic woes continued to weigh on stock market performance. During the week ended 28th September 2018, the benchmark index of Pakistan Stock Exchange (PSX) closed at 40,999, about half a percent low as compared to a week ago. NEPRA’s proposal to increase the electricity tariffs, which was later deferred by ECC until next week, dampened the market sentiment. Average daily trading volume declined by whopping 20% to 124 million shares. The volume leaders of the week were: UNITY, DCR, TRG, KEL and…
In an attempt to usher change in the way economy of Pakistan is managed, the incumbent government headed by Imran Khan has submitted some proposals to make some ‘desirable and people friendly changes in the budget 2018-19’ before the parliament for its formal approval. One must accept with open heart the effort being made by Asad Umar holding the office of Finance Minister to mobilize funds to contain budget and current account deficits. However, it has become imperative for all the political parties and every Pakistani to contribute its share to fine tune the proposals to come up with a…
Mini budget brings bull rule as index gains 400 points; auto sector in the limelight During the week ended 21st September 2018 trading at Pakistan Stock Exchange (PSX) was reduced to three days, on account of Ashura holiday on Thursday and Friday. During the three days trading, the benchmark Index gained 400 points, up 0.98% WoW. The major contribution in this gain came after the announcement of Mini Budget by the incumbent government; the Index gained 718 points in a single trading session. Much of the Index gain was contributed by automobile assemblers and automobile parts and accessories manufacturers. The…
Islamic banking was re-launched in Pakistan with the commencement of operations by Meezan Bank, as a full service Islamic bank more than two decades ago. To avoid the fallout of making an attempt to shift to Shariah-compliant banking from Riba-based banking, the State Bank of Pakistan and other market participants agreed to let the conventional as well as Islamic banks operate in parallel in the country. The logic put forward by the proponents of conventional banking was, “we want to give customers a chance to make a selection, rather than forcing them to shift to Islamic banking”. The result is…
Market range-bound in hope of economic events; blue-chips in spotlight The benchmark index of Pakistan Stock Exchange (PSX) closed almost flat during the week ended 14th September 2018. Market remained range-bound in anticipation of the key economic measures to be taken by the incumbent government. At the start of the week, market came under pressure on the news of likely increase in gas price. Oil & Gas Exploration Companies and Fertilizer manufacturers remained in limelight due to increase in international oil prices and the government deciding not to increase price of gas being supplied to fertilizer sector. Commercial banks came…
It is believed that the Economic Advisory Committee (EAC) constituted by Prime Minister Imran Khan has been signing a mantra that some unpopular decisions have to be made by the incumbent government to put the economy of the country back on track. Reportedly, Prime Minister has given a go-ahead for increasing natural gas rates by an average of 46 percent as determined by the Oil and Gas Regulatory Authority (Ogra) in June and ordered steps to control annual gas theft of Rs50 billion. While one does not doubt the sincerity of Khan, it may be said without mincing the words…
Index keep falling; upcoming policy decisions may snare bulls With a modest recovery in the first couple of days, the benchmark Index of Pakistan Stock Exchange (PSX), lost most of the gains posted recently. The week ended 7th September closed at 40,855 points, down 2.1%WoW. Showcasing all the tell-tale signs of a highly volatile, illiquid (average weekly daily trading volume shrinking 22%WoW) and dampened near term outlook, investors remained cautious. The news impacting the market included: 1) a number of crucial and time sensitive decisions for the new government where clarity is awaited and 2) growing risk of a cyclical…
The newly installed government in Pakistan faces a mammoth task of reinvigorating capital market of the country. This should be among the top five most important items of the economic agenda. The fiscal consolidation requires some other unpopular measures that include: 1) improving tax collection to bridge budget deficit, 2) containing extravaganzas for spending more on development, 3) boosting exports by making Pakistani manufacturers/exporters competitive in the global markets and 4) privatizing state own enterprises to save one trillion rupees, which these units swallow annually.Since the role of the government is to facilitate the business community in making fresh investment…
Amongst the key challenges facing the newly formed government headed by Imran Khan the two most important are: 1) declining foreign exchange reserves and 2) mounting fiscal deficit. His government has embarked upon austerity drive, but curtailing expenses is not an easy job because of presence of groups having vested interest in the parliament and bureaucracy. Those used to lavish spending and following the IMF recipe are advising boosting revenue collection through introduction of new taxes and/or increasing tax rates. The two unavoidable or inevitable expenses are debt servicing and defense spending. Fiscal deficit has already surpassed the record high…
Investment in the listed companies a focal point of the agenda PSX assures to provide conducive investment environment to the potential investors A Chinese delegation representing Beijing Investment Group in association with AKD Securities and He Nan LvRui Jin Niu Energy Private Limited visited the Pakistan Stock Exchange (PSX) last week. This visit was part of their schedule whereby they are meeting with the Exchange and Corporate Sector mainstream players to explore business opportunities within the private sector of Pakistan. The PSX Management team extended a warm welcome to the Chinese delegates, AKD Securities representatives and the delegation hosts who…
Benchmark index descends, upcoming positive news may enhance investors’ confidence The benchmark Index of Pakistan Stock Exchange declined by 1.99%WoW for the week ended 31st August 2018 and closed at 41,742 points. Fearing gas price hike and its spillover effects on industries, investors’ sentiments turned negative even before the ECC meeting. An inconclusive outcome of the meeting with regards to fertilizer inventories, circular debt clearance and postponement of gas price hike led to further selling in the mainboard scrips. However, average daily trading volume increased by almost 20%WoW to 177.48 million shares. The volume leaders included EPCL, NRSL, AGL, STPL…
On 18th August 2018, Imran Khan, Chairman, Pakistan Tehreek-i-Insaf (PTI) has formally taken oath of Pakistan’s 22nd Prime Minister. On Friday he was chosen Prime Minister by the National Assembly by securing 176 votes, while his opponent, PML-N President Shahbaz Sharif managed to get 96 votes. The protests by PML-N leaders continued nearly all the way through the session despite the repeated attempts by the speaker to restore order in the House. Against this Chairman, PPP, Bilawal Bhutto Zardari, much younger as compared to Shahbaz Sharif delivered a very articulated speech. Concurrently the names to head finance, foreign affairs and…
During August newly elected government led by Imran Khan’s Pakistan Tehreek-i-Insaf (PTI) will get the control on the formation and implementation of economic policies of Pakistan. Its two top priorities should be boosting foreign exchange reserves for sustainable debt servicing and containing trade deficit by restoring competitiveness of the local manufacturers. Both these priorities hinges on facilitating farmers and industrialists in boosting production and productivity. Since Pakistan imports huge quantities of energy products and nearly 65 percent of its exports comprise of textile and clothing, keeping an eye on the movement of prices of crude oil, cotton and fertilizer is…
PSX posts marginal decline, assemblies transition and Imran’s takeover to improve investor’s faith During the week ended 17th August 2018, Pakistan Stock Exchange (PSX) remained volatile and the benchmark index lost 881 pointed during first three sessions. However, the market posted decent recovery on the last trading day of the week to close at 42,447 points, registering a marginal decline of 0.92%WoW. Fitch Ratings highlighted concerns about Pakistan’s economic woes and IMF program. Adding to the miseries was the news regarding legal actions against cement companies and Mansha group, weighing on overall investors’ sentiment. Average daily traded volumes at bourse…
Today, with over 85 years of winning the customers’ trust, EFU General Insurance Limited is Pakistan’s largest and the oldest general insurer, always ready to go an extra mile to serve better. The Company has been providing the full range of insurance services to fulfill the needs of all of its customers, whether they are commercial or individual. EFU has built a diversified customer base, enhanced its expertise and stood by its promises always. EFU has been rated by both the credit rating agencies, JCR-VIS and PACRA, who have assigned AA+ rating to the Company that denotes stable outlook. EFU…
According to the details released by State Bank of Pakistan (SBP), during 2017-18 financial institutions have disbursed Rs972.6 billion as compared to disbursements of Rs704.5 billion during 2016-17, up nearly 38 percent. As a consequence, the outstanding portfolio to agriculture increased to Rs469.4 billion at end June, 2018 as compared to Rs405.8 billion at end June 2017, registering a growth of 15.7%. Similarly, the agricultural credit outreach increased to 3.72 million farmers from 3.27 million farmers during the period under review, recording a growth of 13.8%. The central bank said achieving target of credit disbursement to farmers was a challenging…
Lackluster persists, imminent Govt and Eid-Ul Azha can guide investors During the week ended 10th August 2018, trading at Pakistan Stock Exchange (PSX) remained lackluster and the benchmark Index closed at 42,842 points, up 0.7%WoW. Daily trading volume remained largely inconsistent with mid-earnings season activity receding 26.6%WoW to slightly more than 208 million. Key news flow driving market sentiments included: 1) Pakistan expressed plan to borrow more than US$4 billion from the Saudi-backed Islamic Development Bank (IDB) as part of its attempts to boost foreign exchange reserves, 2) caretaker prime minister Justice Nasir-ul-Mulk formally recommended 13th August 2018 (Monday) for…
The new elected government will get the reign in control in less than a month. Pakistan Tahreek-e-Insaf (PTI) has contest the election to bring change in Pakistan and masses have given the party a big nod. While some of the analysts may not agree with the narrative that Pakistan’s biggest problem is not the inadequacy of energy products, but the real issue is prevailing gross mismanagement at the regulatory as well as players’ level. Policy planners completely fail in understanding the issues and in turn fail in coming up with appropriate policy. While five year term may not be enough…
Markets stay under pressure; imf bailout warning impairs confidence During the week ended 3rd August 2018, the benchmark Index of Pakistan Stock Exchange (PSX) mostly remained under pressure. The domestic post-election positivity was overshadowed by a statement of US State Secretary Mike Pompeo raising concerns regarding IMF program. Further bearish spell was caused by dismal banking sector results and market closed at 42,505 points, down 0.7%WoW. Average daily traded volume during the week increased to 283.7million shares, up almost 21%WoW. The top volume leaders included: DSIL, EPCL, WTL, PIBTL and PAEL. The news impacting the market during the week included:…
By the time you get an opportunity to read this article the situation would have become much clear as regards naming the next prime minister of Pakistan. Even at this time the most probable name appears to be that of Imran Khan. His agenda has already become somewhat evident from the speech he gave. He also mentioned his priorities but achieving those targets in a specified time may not be as easy as being portrayed by more loyal than the king. Khan pronounced the following priorities: All policies for ordinary citizens Safeguard tax revenue Decrease government expenses Strengthen institutions Across-the-board…
PSE index springs back sharply on election outcome; investors will keep wait and see policy Bouncing back from a tumultuous pre-election run-up, the benchmark Index of Pakistan Stock Exchange (PSX) rebounded sharply. During the week ended 27th July, 2018 the Index rose to 42,786 points, up 3.8%WoW. Election proceedings dominated investors’ sentiment, guiding stock price escalations as polling formalities were completed with limited violence and sporadic occurrences of documented discrepancies. Average traded volumes during the week surged more than 7% WoW to about 235 million shares/day. The volume leaders were: PIOC, BOP, KEL, PIBTL and LOTCHEM. Major news that influenced…
Cement scrips have historically remained darling of the day traders as well as short-term investors. Long term investors also invest in selected cement manufacturing companies, having credible dividend payout history. Lately, cement manufactures have made massive investment due to two key factors: 1) capacity utilization hovering around 95% and 2) mega infrastructure project constructed under China Pakistan Economic Corridor (CPEC). Many equity analysts have been presenting a rosy outlook for the industry. However, a few have been raising caution marks to avoid the fallout of herd mentality. One of the latest reports of AKD Securities highlights the adverse impact of…
Banks, fertilizer help index gains 951 points; political euphoria likely to dominate The benchmark index of Pakistan Stock Exchange (PSX), gained 951 points during the week and closed the week ended 22nd July 2018 at 41,222 level. Gains seen during the week was mainly on the back of attractive valuations with interest in Banking and Fertilizer stocks. Banking stocks continued the rally from end of last week and contributed 279 points to the Index since the latest MPS. Similarly, increase in the prices of cement and urea scrips during the week also helped push Cement and Fertilizer sector prices higher.…
As the State Bank of Pakistan (SBP) is scheduled to announce Monetary Policy on Saturday, this week, it is anticipated that the central bank is obliged under the external pressure of multilateral donors to increase the policy rate by 25bps. It is also anticipated at each future announcement; rate will be increase to take it to 10% before 31st December 2018. The SBP raised the policy rate by 50 basis points to 6.5 percent in the last monetary policy announced in May. The central bank pushed up its policy rate by a cumulative 75 basis points since January 2018. While…
Stocks ends above 40,000 mark amid political, economic woes The benchmark Index of Pakistan Stock Exchange (PSX) managed to close the week on higher note as it ended at 40,271 level on July 13, 2018. Despite starting the week with an approximately 1,000 points decline on first day of the week, the market closed positive in last 4 days of the week, with Index closing above 40,000 level. Although, attractive valuation kept the market participants interested, yet the political noise and economic woes, dampened sentiments, evident from average daily trading volume declining to 131 million shares and average daily traded…
The elected government of PML-N completed its term, an interim setup put in place and general elections are scheduled for 25th July 2018. The interim government is not likely to take any strategic decision on the economic front because PML-N announced FY19 budget prior to its exit. The next elected government also may not be in a position to bring in any structural changes. While one can’t change the history, it does offer an opportunity to learn from past mistakes and take corrective steps. At times the wounds are very deep and may take months and years to heal, provided…
Market ends week down, but post nab verdict will likely bring relief rally On Friday, the last day of the weekend 6th July 2018, the accountability court announced its verdict imposing severe punishments and hefty fines on Nawaz Sharif (elected prime minister of Pakistan for the third time) and his family members. Due to high political uncertainty, investors preferred to remain on the sideline. This was evident from average trading volume plunging by more than 39%WoW to less than 111 million shares. The benchmark Index of Pakistan Stock Exchange (PSX) closed the week at 40,284 points, down 3.88% WoW. Concentrated…
Reportedly Pakistan’s name has been added to the Financial Action Task Force (FATF) ‘grey-list’. The overwhelming reaction to this move is being termed ‘arm-twisting’ to add to the woes of the country already suffering from serious balance of payment crisis. A point worth exploring is that there is no official FATF terminology segregating countries into grey or black lists, Pakistan has never been identified as a potential risk to the international financial system, even after 9/11 and often being accused of supporting the various militant groups. I am being inclined to refer to a report by Pakistan’s leading brokerage house,…
Smidgen Recovery Witnessed, Investors Cling To Hope Of FATF Outcome With the commencement of its plenary meeting, Financial Action Task Force (FATF) episode once again came into play with news flow setting market direction. The benchmark Index of Pakistan Stock Exchange (PSX) lost 659 points on Monday (first day of the week) ahead of the meeting but staged some recovery on emerging clarity over Pakistan’s status. For the week ended 29th June 2018, the Index closed at 41,911pts, up 0.66% WoW. Trading activity at the bourse improved marginally during the week, with average daily turnover increasing close to 182 million…
The total liquid foreign exchange reserves of Pakistan increased to US$16,798 million on 14th June 2018. The positive surprise was that the reserves held by State Bank of Pakistan (SBP) increased by US$198 million to US$10,264 million, due to official inflows. The break-up of the reserves was:-foreign reserves held by SBP were reported at US$10,264.3 million, while reserves held by commercial banks amounted to US$6,533.7 million. This may be a good omen but two questions continue to haunt the analysts: 1) can the country bank on borrowed US$ and for how long the country will keep on borrowing to pay…
PSX Records Lowest Level Of 2018; Volatile Trend To Persists Continuing its volatile trend, Pakistan Stock Exchange (PSX) remained under extreme pressure during the week ended 22nd June 2018. The benchmark Index lost another 2,044 points and closed the week at 41,637 level, posting a decline of 4.68%WoW. This was also the lowest level of the calendar year 2018. Enhanced geopolitical uncertainty arising from fears of trade war between US and China dampened global growth outlook. On top of that the latest downgrading of Pakistan due to dwindling domestic macroeconomic indicators were the top reasons behind the overall poor performance…
The general perception is that Islamic banking in Pakistan is making progress in leaps and bounds. The supporting arguments are number of branches offering this facility, percentage of deposits held by Islamic financial institutions (Islamic banks and designated Islamic banking branches of conventional banks and Islamic banking attaining the status of first choice. However, some of the critics and even diehard followers of Islamic banking believe the pace of growth is not as robust as it should have been; keeping in view the fact that overwhelming majority of the population is Muslim in Pakistan. It may be very easy to…
Bulls Keep Control As Investor Interest Spreads Across The Board During the week ended 8th June 2018, the benchmark index of Pakistan Stock Exchange (PSX) continued its bull run into the second week post announcement of caretaker setup and closed at 43,948 points, up 2.41%WoW. Investor interest was spread across the sectors, with Banks, Oil & Gas and Cements in limelight. More specifically, both the gas utilities (SNGP & SSGC) gained 12.3/6.9%WoW as OGRA announced revised tariff regime (applicable from FY19). Under the revised formula, return on assets is now linked to a market based WACC calculation (resulting in 17.43%…
PMN-Nawaz government completed its five-year term on 31st May 2018. During its entire regime it has been boosting about putting economy of the country on fast moving trajectory. Its key mantras were overcoming energy crisis, boosting GDP growth rate and initiating infrastructure projects and completing these on faster pace. However, it completely overlooked fast deteriorating balance of payment situation, avoided approaching International Monetary Fund (IMF), the lender of last resort. The point of real concern is that PML-N didn’t approach IMF, but borrowed US$9.6 billion from other external sources during 10MFY18, of which US$1.6 billion were acquired during the month…
Positivity returns but may short-lived over new political outcome Despite prevailing political uncertainties, the benchmark Index of Pakistan Stock Exchange (PSX) managed to close in positive zone at 42,913 points, up 1.9%WoW. The impact of positive news was partially offset by the delay in the announcement of interim setup and rising concerns if the general elections would be held on time and which party would gain majority. There are growing fears that no single party would be able to form the government alone. Another serious concern is mounting current account deficit. During the week ending 25th May 2018, foreign exchange…
Interview with Dr. Izhar Hussain, Director for IBA-CEE [box type=”shadow” align=”” class=”” width=””]Dr. Izhar Hussain is currently Director, Center for Executive Education (CEE), Institute of Business Administration (IBA), Karachi. Before rejuvenating the CEE, he spent more than 25 years at senior management positions in various multinational companies (MNCs). His last engagement prior to joining IBA was with Abbott Laboratories where he served as a director in various regional roles including Marketing Services, Supply Chain and Business Excellence and Development covering multiple regions, i.e. GCC, South Asia, Far East, Asia Pacific, Africa and East Europe. Earlier, he has been associated with…
Upcoming political events may further pressure confused market confidence Investor’s confidence remained muddled over indecisiveness exhibited on the political front (appointment of caretaker prime minister) during the week ended 25th May 2018. The benchmark index of Pakistan Stock Exchange witnessed an increase of 450 points at 42,074 level, up 1.1%WoW. The failure of Sindh, Punjab and Balochistan governments to introduce any noteworthy schemes or development outlays for FY19, and the failure of the Khyber Pakhtunkhwa (KPK) government to propose any bill, kept sentiment subdued. Key news flows impacting the market during the week were: 1) current account deficit for 10MFY18…
An exclusive interview with Mr. Fayyaz-ur-Rehman Khan – General Manager, Ihsan Trust [box type=”shadow” align=”” class=”” width=””]Ihsan Trust was established as an Independent Trust (Waqf) in 2010 with the vision to create a poverty free society on the principles of equality and compassion. Their missions is to reach out and help the poor and needy according to the principles of Islam and take care/look after the wellbeing of poor and needy and to encourage the socio economic uplift of the low income community in order to increase the economic prosperity of the society, ultimately contributing towards the betterment of Pakistan…
Sentiments remain down; caretaker govt and poll announcements may guide The political noise increased once again after a controversial statement by former prime minister Nawaz Sharif coupled with looming macro instability dampening investors’ sentiments. For the week ended 18th May, the benchmark Index of Pakistan Stock Exchange (PXS) closed at 41,624 points, down by 4.52%WoW. Average daily traded volumes also shrunk by 31.34%WoW to 114.91 million shares. The volume leaders were FCCL, BOP, KEL, PAEL and TRG. Key news flows impacting the market during the week were: 1) Brent oil prices rose above US$80/bbl for the first time since November…
The recent decision of the US President Donald John Trump to pull its country out of the nuclear deal signed by six super powers of the world with Iran has serious implications for the world in general and Pakistan in particular. Contrary to policy recommendations, President Donald Trump’s decision to pull-out from the P5+1 Joint Comprehensive Plan of Action has already hiked crude oil prices to three-year high. Since Pakistan and Iran enjoy common border, the geopolitical tension in its backyard must be handled with extreme care as policy decisions of the country are influenced by its relationship with the…
Gloomy conditions exist; MSCI semi-annual index review in spotlight During the week ended 11th May 2018 Pakistan Stock Exchange (PSX) witnessed volatility. During the first three days, the benchmark Index lost 741 points, marginally recovered in the fourth session but failed in sustaining the recovering. The outgoing week closed on a negative note, losing 942 points to close at 43,595 level. The average daily trading volume remained on lower side, at 167.37 million shares. Volume leaders were: FDIBL, UNITY, SSGC, FCCL and BOP. Major news flows impacting the market included: 1) US announced to pull out from the landmark Iran…
Interview Mohammad Shoaib, CEO, Al Meezan Investment [box type=”shadow” align=”” class=”” width=””]Mohammad Shoaib, CFA is Chief Executive Officer of Al Meezan Investment Management Limited, the largest Shariah compliant asset management company in Pakistan. He has over 28 years’ experience of managing investment portfolio. Al Meezan Investments currently manages equivalent of US$ one billion under 14 mutual/pension funds and discretionary client portfolios. It has got a complete range of investment products in the risk return spectrum from very low risk products like Sovereign Fund, Cash Fund to high risk Equity Funds. It is one of the largest asset management companies in…
Sentiments remain lackluster over weak gdp outlook, political uncertainty Despite announcement of populist budgetary measures and persistent increase in international oil prices, sentiments at Pakistan Stock Exchange (PSX) remained lackluster during the week ended 4th May 2018. The benchmark index shed 1,006 points and closed at 44,537points, down 2.21%WoW. Political uncertainty and weak outlook for Pakistan’s GDP growth along with highlighting of macroeconomic vulnerabilities by IMF kept the market under pressure during the week. Keep Average daily traded volume at bourse declined by 1.56%WoW to a little less than 166 million shares with volume leaders being BOP, LOTCHEM, UNITY, STCL…
Interview with Mohammed Sohail — CEO, Topline Securities Limited [box type=”shadow” align=”” class=”” width=””]Mohammed Sohail has over two decade experience of working Pakistan’s capital markets. He was awarded ‘Best Analyst’ for two consecutive years (2003 and 2004) by the CFA Association. He was the first analyst from Pakistan to get this award. For the first time in Pakistan, Asiamoney awarded Mohammed Sohail the title of Best Salesperson in Pakistan in its Brokers Poll for sixth consecutive year (2011-2016). He is a Certified Director of Pakistan Institute of Corporate Governance (PICG). Sohail has been elected Director of Pakistan Stock Exchange (PSX),…
Proposals in new budget will likely favor the Pakistan Stocks Exchange Interview with Mr Humayum Javed — CEO, WE Financial Services Limited [box type=”shadow” align=”” class=”” width=””]Profile: Humayun Javed, Chief Executive Officer, WE Financial Services Limited is a seasoned capital markets expert and portfolio manager with a wealth of over 25 years of experience in banking and corporate finance, financial and stock markets of Pakistan. Humayun graduated with BBA (Honours) from Michigan, USA in 1993. He joined Deutsche Bank AG-Pakistan in 1993 and moved on to lead WE Financial Services Limited, a TREC Holder of Pakistan Stock Exchange (PSX)…
Bulls lead; removal of gidc and support of oil marketing sector catch the eyes Investors conducting transactions at Pakistan Stock Exchange (PSX) eagerly awaited for positive development ahead of the Federal Budget announcement on Friday, the last trading day of the week ended on 27th April 2018. GIDC removal/reduction beneficiaries again gained attention of investors where Fauji Fertilizer Company (FFC) gained 4% on last day of the week, followed by Fauji Fertilizer Bin Qasim (FFBL) +4%, and Lotte Chemicals (LOTCHEM) +2%. The benchmark index gained 255 points to close at 45,543 points. Oil marketing sector stocks cumulatively contributed 123 points…
Fertilizer industry remained under considerable pressure during 2017 due to huge inventory. The pressure was eased after the Government of Pakistan (GoP) allowed export of nearly half a million tons urea. While the manufacturers succeeded in exporting urea at whatever price they could get, the GoP didn’t pay the promised subsidy to urea manufacturers/exporter. Despite all odds the manufacturers got two immediate benefits: 1) reduction in supply glut and 2) earn extra foreign exchange for the country. A look at the earnings of two top manufacturers may help in understanding the prevailing industry dynamics and coming up with a comprehensive…
Agriculture sector is the prime mover of Pakistan’s economy. It contributes 20% share to country’s total GDP, employs 42% of labor force and provides livelihood to 66% of the population. Pakistan has lately joined club of wheat exporting country. The country is among the top five cotton producing countries and a major exporter of rice. Nearly 65% of country’s export proceeds come from cotton textiles and clothing export. This is despite that in Pakistan yields of many crops are below the regional average. The country enjoys the potential todouble production of major crops without increasing area under cultivation. It only…
Sentiments down; budget plans and results of large-cap firms eyed During the week ended 20th April 2018, sentiments at Pakistan Stock Exchange (PSX) remained subdued and the benchmark index closed at 45,259.34 points, down 1.76%WoW. The prime concern was seesawing budgetary expectations as the tenure of incumbent government ends in May 2018. Average daily traded volume shrunk by more than 37%WoW to around 155 shares. The volume leaders were: EPCL, LOTCHEM, UNITY, KEL and FCCL. Key news flows impacting the market during the week included: 1) current account deficit exceeding US$12 billion, up 51%YoY for 9MFY18 reflecting mounting pressure on…
It is often said that in Pakistan economic policies are dictate by elites of the elites enjoying majority in the Senate, national and provincial governments. While Pakistan Steel Mills has reduced to junk due to nepotism, embezzlements and corruptions, those at the helm of affairs have failed in establishing another steel mill in the country. At the best, steel industry in Pakistan comprises of remitting furnaces and the biggest name is Ittefaq Group, owned by Nawaz Sharif and his family. Despite ruling Punjab (where more than 65% population of the country lives) for nearly four decades and forming government at…
Anxiety prevails; result season, budget proposals may attract investors During the week ended 13th April, Pakistan Stock Exchange (PSX) remained under pressure and lost 566 points to close at 46,072 levels, down 1.21%WoW. Even hike in international crude oil prices and much awaited tax amnesty scheme could not lend support to the market. Investors’ concerns remained high due to: 1) FATF/IMF expressing concerns over the amnesty scheme aimed at bringing offshore assets back to Pakistan, 2) ADB becoming skeptical over Pakistan’s growth outlook for FY19 due to the Balance of Payment crisis and 3) the apex court ordering silicosis centers…
One of the themes of a recently organized conference by IBA-CIEF was ‘Making Pakistan Hub of Islamic Finance by 2025. Some of the critics termed this too ambitious; keeping in view less than 15 percent share of Islamic banking in total commercial banking in the country. Professionals associated with Islamic banking believe very strongly that if right impetuses are offered and a conducive environment is provided the growth rate can be enhanced. In this regard a Standing Committee has been established at Federation of Pakistan Chambers of Commerce and Industry (FPCCI). This Committee promptly prepared its recommendation that were submitted…
Amnesty, ITFC lending rejoice will be short lived; investors eye budget proposals Pakistan seems to be inching towards serious balance of payment crisis. The ruling junta has failed in containing import of luxury goods (most of the members of Senate, National and Provincial Assemblies are feudal lords and business tycoons) and has hardly any realization of the level of gravity. Despite indiscriminate borrowing, foreign reserves of the country are on the decline. Bad policies have rendered exporters uncompetitive in the global markets. Remittances are also proving paltry because of dismal exports. According to the data released by State Bank of…
Those who have access to power corridors and also the capacity to influence government are clearly divided into two groups; 1) those consider devaluation of Pak Rupee the only option to boost exports and 2) those who term devaluation bad omen for the country. Without mincing words it may be said that first group has a very myopic view and it also fails in understanding economy. Second group view economy with wide-angle lens but being in minority they are often not liked by those having vested interest. Pak Rupee value eroded by another 4.4% against US dollar on 20th March…
Bulls take lead, SBP’s steady rate policy likely to follow positive impact The trading on the last day at the Pakistan Stocks Exchange (PSX) delighted after the news of State Bank Monetary policy statement and rupee depreciation since the start of the week, which anticipated as a healthy sign for the confidence boost for the investors. KSE-100 Index, which led with gain of 70.68 points closed the week at 45,560.30 level. Moreover due to day earlier trade after foreigners turned buyers bought stock worth $9.36m. This led into a jubilant mood in the trading and supported the Index to gain…
On the inaugural day of conference Dr. Miftah Ismail Adviser to the Prime Minister on Finance and Economic Affairs said the Ministry of Finance would soon set up a separate division for the promotion of Islamic banking in Pakistan. He was the Chief Guest at a two-day World Islamic Finance Forum (WIFF-2018). The international forum was organized by Institute of Business Administration’s Centre for Excellence in Islamic Finance IBA-CIEF in collaboration with key partners. The theme was “Expanding the Footprint of Islamic Finance: Innovation, Fintech and Regulations.” In his visionary note, Shaikh Muhammad Taqi Usmani Chairman, Shariah Board of Accounting…
Interview with Mr Rizwan Hussain – Managing Director, Takaful Pakistan Limited [box type=”shadow” align=”” class=”” width=””]Profile: Rizwan Hussain is currently Managing Director of Takaful Pakistan Limited. He recently acquired majority stake in the Company. Prior to this acquisition, Rizwan has served at key positions at EFU General Insurance Limited. He managed several functions at EFU, both insurance and Takaful sales with major areas of interest being marketing, strategy formulation, corporate account management, risk underwriting and claims management. He has more than 30 years of experience as a seasoned professional in risk mitigation. He was promoted to the position of Executive…
Market springs back, fresh foreign flows can induce another short term rally The benchmark index of Pakistan Stock Exchange (PSX) for the week ended 22nd March 2018, posted an increase of 3.84%YoY to close the short trading week at 45,030 points. The rise has been attributed to erosion in Rupee value and improvement in international prices of crude oil. An erosion of 4.3% in Rupee value since December 2017 seems to have led foreigners to come back to Pakistan resulting in buying by them equities worth US$9.77million in the last trading session alone. Banks, E&Ps, Power and Textiles companies emerged…
In real life every individual and corporate entity faces certain risks. It may be true that such risk may become eventuality, but the adverse impact can be certainly minimized through risk mitigation. Insurance companies, both conventional and Takaful operators help individuals and corporates in risk mitigation. Pakistan faces one of the lowest insurance penetrations. Those who were able to evade conventional insurance in the past are left with no reason to reject Takaful. To achieve greater penetration of insurance there is a need to change the mind set of policy planners, regulators as well as individuals. The sector that needs…
Dull activities persist; budgetary proposals, major results key direction During the week ended 16th March 2018, activities at Pakistan Stock Exchange remained lackluster amid lack of positive triggers, continued political noise and flattish international oil prices. The benchmark index closed at 43,363, up 0.82%WoW. Average daily traded volumes improved by 15%WoW to 174.86million shares, but trading activity remained skewed towards second tier stocks. The top volume leaders of the week were LOTCHEM, NRSL, PAEL, FFL and ANL. Key news flow impacting the market included: 1) the country’s exports during February 2018 growing by 16% YoY to US$1.9billion, while imports inching…
It is becoming a serious cause of concern for Pakistanis that the incumbent government is borrowing foreign exchange at far higher interest rates as compared to the rate charged by the International Monetary Fund (IMF). While the ruling junta continues to say that the country can live without the crutches of IMF, independent observers are of the consensus that avoiding the ‘lender of last resort’ is plunging the country deeper into the balance of payment crisis. The incumbent government knows very well that IMF will certainly offer a bailout program, which will not be free from certain stringent conditions. Therefore,…
Politics and senate chairman election Mar index performance, range bound to persist The bizarre politics and developments surrounding Senate Chairman Election marred performance of Pakistan Stock Exchange (PSX) during the week ended 9th March 2018. Statements of key international lenders (International Monetary Fund and Standard Chartered Bank) raising concerns over macroeconomic stability of the country, further dampened investors’ sentiments. The market closed at 43,011 points, posting a decline of 1.67%WoW. Trading activity at the bourse remained weak as daily average trading volume plunged to around 152 million shares, down 16.07%WoW). Key news flow impacting the market during the week included:…
The automotive industry of Pakistan often attracts a lot of criticism for operating as a cartel and charging high price. There is an urgent need to bring down cost of production, boosting sale through soft-term financing and improving quality of roads for minimizing wear and tear. Indigenization is a positive policy but the objective just can’t be achieved without the focus of the government shifting to facilitator from tax collector. While assemblers enjoy access to power corridors, manufacturers of components suffers from neglect by the government. Developing a robust vendor industry can only help in progressive manufacturing, else the industry…
INDEX GAINS 473 POINTS AMID ANTICIPATION OF IMPROVED EXTERNAL OUTLOOK Despite uncertainty emanating from international developments over FATF inclusion, sector-specific developments and legal impediments during the week ended March 2, 2018, the benchmark index of Pakistan Stock Exchange (PSX) gained 473 points to close the week at 43,740 points. Cement sector remained in the limelight, with major activity witnessed in the sector on the back of industry-wide price hike, enhancing profitability of domestic players. Volume leaders during the week were: DSL, AGL, TRG, ANL and PAEL. Key news flows impacting the market during the week included: 1) Foreign office confirming…
There are two wide-spread perceptions prevailing in the market: 1) exploration and production companies (E&P) declare high dividend to facilitate the government in meeting the budget deficit, rather than investing in exploration and production activities and 2) the successive governments have failed in offering incentives for downstream oil companies. The get a clear picture an attempt has been made to review the performance of two companies one from E&P and other from downstream. Pakistan oilfields With an asset base comprising of 12 leases and possessing 9 exploration licenses, Pakistan Oilfields Limited (POL) has lagged behind its peers in terms of…
Buyers shun trade over increase in political, economic uncertainty The rising political uncertainty with news flows suggesting Pakistan to be added on terrorist financing watch list further dampened investors’ confidence. The benchmark index of Pakistan Stock Exchange (PSX) lost 360 points and closed the week ended 23rd February at 43,267 points. Increasing international oil price along with higher than expected reserves size for Jhandail field kept index heavy Oil & Gas sector in limelight. However, concerns about Senate elections allayed fears of postponement of the general elections. Key news flows impacting the market during the week included: 1) current account…
China’s investment set to see increased demand and success for all Pakistan sectors Interview with Mian Muhammad Kashif Ashfaq – Chief Executive Officer of ChenOne PAGE: What inspired you to open a lifestyle store? Muhammad Kashif Ashfaq: I have always been interested in complex structures and a lifestyle store is one of the most expansive concepts in retail. I drew the inspiration for ChenOne from high end boutiques, festivals and malls, which bring together diverse product lines to cater to the complete customer. ChenOne has been open since 1997 and we have been going from strength to strength. It was…
Stocks remain cool as political uncertainty likely to persist Political uncertainty, along with unabated foreign selling (US$28 million so far during February) dampened investors’ confidence. During the week ended 16th February 2018, the benchmark index of Pakistan Stock Exchange (PSX) lost 182 points or 0.41%WoW to close at 43,627 points. Average daily traded volume dropped by 18.8%WoW to 198.77 million shares. The volume leaders of the week were: ANL, TRG, LOTCHEM, FFL and KEL. Sector wise, commercial banks gained 2.5%WoW, while pharmaceutical sector lost 4.1%WoW on account of Supreme Court taking notice of Sindh High Court’s stay order. Other key…
Since Pakistan got independence it has been a key beneficiary of multilateral financial institutions. The World Bank, Asian Development Bank and Islamic Development have been offering grants and soft-term loans. International Finance Corporation (IFC) has been actively providing loans to the private sector and also contributing equity in the mega size private sector projects. The International Monetary Fund (IMF) has been actively playing the role of ‘lender of the last resort’. Despite all these favors, Pakistan’s GDP size and growth rate have remained dismal, exports are proving paltry for financing imports and the country is still exporting commodities, raw materials…
Stocks under pressure after global rout, buyers set sight on volatility ease During the week ended 9th February 2018, Pakistan Stock Exchange benchmark Index remained under the shadow of global equities market and closed at 43,809 points, posting 1.11% WoW decline. Overall traded volumes went down by more than 4%WoW to about 245 million shares. Key news driving the market were: 1) law makers in the US pushing for further aid suspension to Pakistan citing lack of actions against terrorist groups, 2) the Government of Pakistan (GoP) planning to announce separate amnesty schemes for both foreign and local assets, 3)…
As the Government of Pakistan (GoP) remains the biggest borrower that also offers lucrative return on its risk-free securities, the high risk consumer finance pie size remains small. The share of corporate finance remains substantial because of the absence of financial institutions that can offer medium and long term funds. A deeper probe also shows that the key beneficiaries of consumer finance remain high net worth clients and employees of corporate sector. Banking sector experts are of the consensus that there is an urgent need to establish housing finance companies because buying a housing unit at full cash payment has…