Market Review
The outgoing week started off on a negative note in anticipation of the crucial decision by FATF to place Pakistan in the grey list, consequently, the index shed 664pts on the first day of the week. However on weekly basis, the benchmark index closed in green at 41,911pts, up by 0.7%WoW. The announcement of placing Pakistan in the grey list failed to deteriorate market participation in this week as evident from ADT that increased by 6.8%WoW, however, ADTV decreased by 1.6%WoW. Foreigners continued their selling spree in this week as well with a net outflow of USD15.5mn.
During the week, NFDC released the latest numbers on urea offtakes that declined by 5%YoY, clocking in at 494k tons for May’18 taking the cumulative 5MCY18 volumes to 2.1mn MT, up by 29%YoY. Moreover, International Steels Limited commenced the production of its largest cold rolling mill having an annual capacity of 1.0mn MT. Additionally, the government increased the OMC margins for petrol and HSD to PKR2.64/ltr and PKR2.63/ltr, respectively. Furthermore, Lucky Electric Power Company achieved the financial close for its 660MW coal based power project that is anticipated to come online by Mar’21.
On the macro front, central bank’s foreign exchange reserves decreased to USD9.7bn, down by USD602mn accredited to the official debt repayments. Also, foreign repatriation for 11MFY18 increased by 19%YoY to USD2.2bn with the highest outflow of USD329mn was witnessed in the telecommunication sector. Moreover, the private sector credit offtake for FY18 clocked in at PKR601bn in comparison to PKR748bn in SPLY, down by 20%YoY. Furthermore, as per sources, the FBR has made recoveries of USD46mn tax under the tax amnesty scheme till Jun 23, 2018 which is going to expire on Jun 30, 2018 but may be extended potentially.
Outlook
This week marks the end of FY18 where the market will now begin to factor in the annual result expectations. However, economic troubles will continue to put weight on market performance.
NEWS THIS WEEK
Economic highlights & Data points
Forex reserves fall to USD16.2bn| (The News): Pakistan’s foreign exchange reserves fell 3.3% to USD16.2bn during the week ended June 22, the central bank said on Thursday. The foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased USD602mn on weekly basis.
FATF decides to keep Pakistan on ‘grey list’| (The News): The Financial Action Task Force (FATF) on Thursday decided to keep Pakistan on its ‘grey list’. According to details, Pakistan has fielded its interim Finance Minister Shamshad Akhtar to defend the country in Paris where the Financial Action Task Force is meeting. While pleading Pakistan’s case to remove its name from FATF grey list, the minister apprised the anti-terror financing body of measures that country has taken to combat money laundering, terrorist financing and to eliminate the terrorism from its soil.
Profit repatriation soars 19%| (Dawn): The outflow of profits and dividends on foreign investments from Pakistan has increased by over 19% to USD2.24bn in the 11MFY18. The State Bank of Pakistan reported on Wednesday that the outflow on foreign direct investment (FDI) rose over 26pc during July-May FY18; but the FDI decreased 1.3% during this period. The outflow of profits on foreign portfolio investment declined to USD291mn against USD346.7mn in the same period of last fiscal year.
Private sector borrowing down 20%| (Dawn): The private sector credit off-take for FY18 stood at PKR601bn, down 19.65%, from PKR748bn in FY17, the State Bank of Pakistan released on Monday. The government which completed its tenure on May 31 had set the GDP target of 6%, however, with the passage of time doubts have emerged over the target.
Outlook changed to negative: Moody’s affirms B3 deposit ratings of five banks| (BR): Moody’s Investors Service has affirmed the long-term local-currency B3 deposit ratings of five Pakistani banks and changed the outlook to negative from stable. Moody’s says that affected banks include Allied Bank Limited (ABL), Habib Bank Ltd (HBL), MCB Bank Limited (MCB), National Bank of Pakistan (NBP) and United Bank Limited (UBL).
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Sector and Corporate highlights
Lucky achieves financial close for USD1bn coal power project| (The News): Lucky Electric Power Company has achieved financial close for its Thar coal-based 660MW Lucky Electric Coal Power Project on Monday.
International Steels emerges as biggest cold roller after kick-starting new plant| (The News): International Steels Limited has begun production from its new plant to emerge as the country’s biggest cold roller with one million tons of output capacity and to shed reliance on steel inbound shipments that account for 10% of the country’s imports.
Margins on petrol, diesel sales raised| (Dawn): The government has notified increase in profit margins of Oil Marketing Companies (OMCs) and dealers by up to 10% on petrol and diesel sales effective from July 1. The regulator has been told that margin for OMCs on high-speed diesel (HSD) had been jacked up by 23 paisa to PKR2.64 per litre instead of PKR2.41. Petroleum Division also notified an increase of 9 paisa per litre for OMCs on petrol. As such, the OMC’s margin would go up to PKR2.64 per litre from PKR2.55.
Urea sales down in May| (Nation): National Fertilizer Development Corporation (NFDC) released fertilizer numbers for May-2018, wherein local urea sales depicted a slight attrition of 5 percent YoY to clock-in at 494,000 tons, in-line with estimates.
Stock Market Synopsis | |||
---|---|---|---|
Last week | This Week | %Change | |
Mkt. Cap (US $ bn) | 70.3 | 71.3 | 1.5% |
Avg. Dly T/O (mn. shares) | 170.1 | 181.6 | 6.8% |
Avg. Dly T/O (US$ mn.) | 61.2 | 60.2 | -1.6% |
No. of Trading Sessions | 4.0 | 5.0 | 0.0 |
KSE 100 Index | 41,637.4 | 41,910.9 | 0.7% |
KSE ALL Share Index | 30,152.3 | 30,582.9 | 1.4% |