Karachi, February 23, 2018 (PPI-OT): Weekly Review
Political noise emanating from SC declaring Nawaz Sharif ineligible to continue as party head, along with new flows alluding Pakistan to be added on terrorist financing watch list by FAFT from Jun’18, eroded investor confidence with the KSE100 index losing 360pts (-0.8%WoW) to close the current week at 43,267pts. That said, increasing oil prices (Brent: +2.3%WoW) along with higher than expected reserves size for Jhandail kept index heavy Oil and Gas sector (particularly POL) in limelight whereas clarity on Senate elections allayed concerns on postponement of General elections.
Average daily traded volumes shrank 7.46%WoW to 183.94mn shares with 1) ANL (61.55mn shares), 2) DSL (61.40mn shares), 3) TRG (51.09mn shares), 4) LOTCHEM (42.60mn shares) and 5) FFL (40.25mn shares) leading the board. Key news flows impacting the market during the week included: 1) current account deficit widened to US$9.156bn (up 48%YoY), reflecting mounting pressure of trade deficit up by 24%YoY, 2) European Parliament’s Committee on International Trade (CIT) passed the GSP+ scheme, enabling Pakistan to enjoy preferential duties on exports for the next 2 years, 3) Pakistan’s foreign exchange reserves fell to US$18.829bn, with the reserves held by central bank fell by US$130mn (1.1%WoW) attributable to external debt servicing, 4) WB announced debarment of PEL in connection with collusive practice on contracts under the WB financed electrical distribution and transmission projects, 5) BOI and EDB both have agreed to recommend Ghandhara Nissan investment plan as Brownfield under the new auto policy. Performance leaders during the week were: 1) POL (+10.0%WoW), 2) KAPCO (+4.1%WoW), 3) LUCK (+2.5%WoW), 4) FATIMA (+1.3%WoW) and 5) EFOODS (+1.1%WoW); while laggards included: 1) PIOC (-8.9%WoW), 2), MLCF (-6.7%WoW), 3) FCCL (-6.5%WoW), 4) NBP (-4.4%WoW) and 5) KEL (-3.6%WoW). Foreigners continued to off-load their holding, selling stocks worth US$2.78mn during the week.
Outlook
We expect the market to take direction on developments pertaining to 1) upcoming Senate elections (scheduled on Mar 3’18), 2) decision on corruption references against the Sharif family drawing close, 3) FTSE rebalancing scheduled on Feb 28’18 and 4) clarity on inclusion of Pakistan in FATF grey list. Additionally, key result announcements for next week include GWLC, PPL, NCL, BAFL, SEARL, and SNGP can keep the respective scrips in limelight.