MARKET REVIEW
The local bourse gained 1,386pts during the week continuing last week’s rally to close at 42,787, up by 3.3%WoW. Market participation also increased substantially during the week with ADT and ADTV reporting a jump of 15.6%WoW and 7.8%WoW respectively. Foreign institutional investors were net buyers during the week with an inflow of USD27.7mn following FTSE’s inclusion of five additional from Pakistan.
During the week, remittances figure for the month of August clocked in at USD1.95bn, up by 11%YoY. Country’s total FX reserves reported a 1%WoW jump and clocked in at USD20.6bn owing to inflow from ADB loan. However, country’s trade deficit increased to USD6.3bn during Jul-Aug, up by 33.5%YoY. Trade deficit worsened despite healthy growth in exports by 11.8%YoY following a massive jump in imports of 25%YoY posing serious threat to balance of payment.
Also, APCMA released cement offtake figures where the industry reported 5%YoY/11%MoM increase in volumetric growth. Local sales during the said period witnessed robust growth of 11%YoY/15%MoM whereas exports nosedived 26%YoY/14%MoM. On the other hand, SNGPL and SSGC rejected the 7.1% UfG target losses proposed by the consultants hired by Ogra. Finally, government approved export of 0.5mn tons at a subsidy of PKR10.7/kg in view of 2.8mn tons of sugar availability.
OUTLOOK
As euphoria of PSX being rerated in FTSE emerging market fizzled out in the last trading session, we expect the market performance to remain depressed.
NEWS THIS WEEK
ECONOMIC HIGHLIGHTS & DATA POINTS
Forex reserves increase to USD20.6bn | (The NEWS): The liquid foreign exchange reserves of the country rose USD20.6bn during the week ended September 8 from USD20.39bn a week ago, the central bank reported on Thursday.
Trade deficit up USD6.3bn in two months | (BR): Pakistan’s trade deficit has increased to USD6.3bn during the first two months of the current fiscal year (July-August 2017), according to Pakistan Bureau of Statistics (PBS). The trade deficit for the first two months is higher by 33.52% over USD4.7bn for the same period a year before and it is a major concern for the government as it poses serious threat to the balance of payment position deteriorating in the recent months.
Remittances from EU, UK shows strong growth | (Tribune): Overseas Pakistani worker sent home USD1.9bn in August 2017, up 27% from USD 1.5bn the country received in July, according to released by the SBP. On YoY basis the flow of remittance in August 2017 stood 11% higher compared to the same month last year, when inflows totaled USD1.8bn. This is the second month in a row when remittances have shown a significant growth.
SECTOR AND CORPORATE HIGHLIGHTS
Subsidized export of 0.5mn tons of sugar allowed | (DAWN): The government on Thursday decided in principle to expand incentive package for exporters and allowed subsidised export of half a million tonnes of sugar at the rate of PKR10.7 per kg.
Cement local sales increase by 10.9% in August | (BR): Buoyancy in the domestic cement market continued in August as well as local sales increased by 10.9% compared with sales during corresponding month of last year but exports nosedived by 26.5% reducing overall sales growth to 5.1% only. According to the data for the month of August 2017, Cement despatches in the month were 3.8mn tons as compared to 3.6mn tons in August 2016.
OGDCL eyes oil, gas exploration in overseas markets | (The NEWS): Pakistan’s biggest energy firm Oil and Gas Development Company Limited (OGDCL) on Wednesday unveiled a plan to expand its exploration stint beyond the local oil and gas fields, in partnership with a global energy conglomerate MOL.
ADB signs loan pacts for development projects | (DAWN): The Asian Development Bank (ADB) signed two loan agreements totalling USD453mn on Tuesday with Pakistan for important development projects in Khyber Pakhtunkhwa and Sindh.
HBL makes USD225mn payment to DFS | (BR): Habib Bank Limited (HBL) has paid USD225mn to New York State’s Department of Financial Services (DFS) by borrowing the amount from abroad. This fine was imposed on HBL’s New York branch by DFS for non-compliance of laws and regulations designed to combat money laundering and illicit financing. Earlier, the DFS was seeking a fine of USD630mn, however on September 7, 2017, HBL reached a settlement with DFS for payment of a fine amounting to USD225mn.
Q2CY17: Advances to private sector register robust growth: SBP | (BR): Broad-based and robust growth has been witnessed in advances to private sector during the second quarter of this calendar year (CY17), supported by consistent monetary easing and positive prospects of real economy. According to the Quarterly Performance Review (QPR) of the Banking Sector for the quarter ended 30th June, 2017, released by State Bank of Pakistan (SBP) on Friday, overall, banking sector has remained in sound and stable state. Banking sector has earned profit (before tax) of PKR150.4bn with strong Return on Assets (ROA) and Return on Equity (ROE) of 1.8% and 21.9%, respectively.
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STOCK MARKET SYNOPSIS
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LAST WEEK
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THIS WEEK
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% CHANGE
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Mkt. Cap (US $ bn)
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82.5
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84.2
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2.1%
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Avg. Dly T/O (mn. shares)
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135.9
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157.1
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15.6%
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Avg. Dly T/O (US$ mn.)
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76.3
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82.3
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7.8%
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No. of Trading Sessions
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4.0
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5.0
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0.1
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KSE 100 Index
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41,401.0
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42,787.2
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3.3%
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KSE ALL Share Index
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29,753.3
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30,410.5
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2.2%
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