MARKET REVIEW
The week started off on a dull note where investors tracked Supreme Court proceeding on case against the incumbent government. Exchange of statements and submission of documents by the defendant induced uncertainty in local bourse. Despite all political noises looming around, the market returned 2.15%WoW to close at 45,294 points. FIPI registered net outflow of USD2.0mn. Market participation remained thin as average volume traded decreased by 23.3%WoW while average value traded declined by 22.5%WoW.
During the week, ECC approved export of 0.3mn tons of sugar against the demand of 0.6mn tons to avoid price escalation. This is in addition to quantities already approved for export. Also, UHT milk producers increased prices by PKR10/ltr to PKR130/ltr.
SBP reported a decline in reserves by USD718mn to USD15.5bn, taking total liquid foreign reserves to USD20.8bn (down by 2.9%WoW). Moreover, current account deficit widened by a massive 148.5%YoY to an all-time high of USD12.1bn in FY17. On the other hand, LSM sector grew by 5.6%YoY in 11MFY17 (+6.3%YoY in May-17) with substantial growth in Automobiles (12.2%YoY) and Iron & Steel (20.2%YoY) sectors.
OUTLOOK
Going forward, we expect lackluster performance in local bourse until political uncertainty prevails. We advise investors to remain cautious and maintain exposure in high yielding value stocks.
NEWS THIS WEEK
ECONOMIC HIGHLIGHTS & DATA POINTS
Current account deficit touches record USD12.1bn (Dawn): The current account deficit widened by 148.5% to an all-time high of USD12.09bn for FY17. The deficit was USD4.86bn in the preceding fiscal year. The balance on trade in goods jumped to a deficit of USD26.8bn compared to USD19.3bn in FY16.
LSM expanded by 6.3% in May (Dawn):The large-scale manufacturing expanded by 6.3%YoY in May. It posted a record single-month growth of 9.7% in April. During the first 11MFY17, the LSM grew by 5.7%.
Country’s reserves decline to USD21bn mark (BR):The country’s foreign exchange reserves continued downward trend and reached below USD21bn mark in the end of the last week. According to SBP’s weekly foreign exchange reserves, the country’s total liquid foreign reserves declined by USD618mn to USD20.83bn during the week as compared to USD21.45bn on July 7, 2017.
SECTOR AND CORPORATE HIGHLIGHTS
ECC allows export of 0.3mn tons of sugar (Thenews): The ECC of the Cabinet approved export of 0.3mn tons of sugar against the demand of 0.6mn tons. Keeping in view the fluid political situation in the country, the ECC took a cautious decision and allowed exports under certain condition in order to avoid escalation in prices in the domestic market.
Ministry issues 12 more notices to oil and gas companies (Tribune): The Ministry of Petroleum and Natural Resources has issued another 12 notices to six oil and gas companies, due to their failure to start exploration and production (E&P) activities as per their commitment. The action was being taken against inactive E&P companies holding licenses for the last several years but having no groundwork to show for it.
Power sector’s woes: Ministry plans to raise PKR185bn loans to pay off loans (BR):Ministry of Water and Power has reportedly planned to raise around PKR185bn loans from private banks afresh to pay existing loans as power Distribution Companies (Discos) have expressed their inability to pay loans due to financial constraints.
SECP Chairman Zafar Hijazi taken into FIA custody (Dawn): SECP Chairman Zafar Hijazi was taken into custody by the FIA. The criminal case was registered on the orders of the Supreme Court after the bench had examined a report prepared by the JIT. The report alleged that the SECP chairman had altered records related to Chaudhry Sugar Mills.
[ads1]
|
STOCK MARKET SYNOPSIS
|
|||
|---|---|---|---|
|
LAST WEEK
|
THIS WEEK
|
% CHANGE
|
|
|
Mkt. Cap (US $ bn)
|
86.4
|
88.3
|
2.2%
|
|
Avg. Dly T/O (mn. Shares)
|
174.7
|
133.9
|
-23.3%
|
|
Avg. Dly T/O (US$ mn.)
|
92.3
|
71.5
|
-22.5%
|
|
No. Of Trading Sessions
|
5.0
|
5.0
|
0.0
|
|
KSE 100 Index
|
44,337.4
|
45,294.4
|
2.2%
|
|
KSE ALL Share Index
|
31,097.0
|
31,778.8
|
2.2%
|