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AKD Securities Limited – Stock Smart (August 26, 2022)

Karachi, August 26, 2022 (PPI-OT): Weekly Review

The market remained jittery during the week, clouded by political uncertainty after a case was registered against ex-Prime Minister Imran Khan in the Anti-Terrorism Court, which shadowed positive news regarding foreign inflows and SBP keeping interests rates unchanged. The PkR lost value against the USD, with the currency depreciating 2.72% against the greenback over the week, to close at PkR220.66/US$. The KSE-100 Index lost 679 points during the week, down 1.57%. Participation in the market was also lackluster, with average daily traded volume dropping by 52%WoW to 250mn shares during the week. SBP also conducted T-bill auction this week where the central bank raised PkR780bn against the target of PkR750bn.

Other major news flows during the week were: i) SBP indicated that Pakistan was over-financed by ~US$4bn, ii) Qatar’s Sovereign Wealth Fund to invest ~US$3bn in Pakistan with KSA looking to invest US$1bn, iii) FFC reduced DAP prices by ~PkR850/bag, iv) SPI rose by 44.58%YoY and 1.83%WoW, and v) CAD dropped 45% MoM to US$1.2bn in Jul’22. Sector-wise, the top performing sectors were; i) Woolen (+10%WoW), ii) and Glass and Ceramics (+2.2%WoW), while the least favorite sectors were; i) Miscellaneous (-8%WoW) and ii) Vanaspati and Allied Industries (-8%WoW). Stock-wise, top performers were; i) TGL (+11.0%WoW), ii) BNWM (+9.8%WoW), iii) FATIMA (+5.8%WoW), iv) LUCK (+5.3%WoW), and v) SCBPL (+4.7%WoW), while laggards were; i) PSEL (-18.8%WoW), ii) POML (-18.1%WoW), iii) KTML (-8.3%WoW), iv) PSO (-7.8%WoW), and v) AICL (-6.7%WoW). Flow wise, Banks/DFI remained the major buyers with (net buy of US$4.1mn) followed by Individuals (net buy of US$3.8mn) while Insurance Companies stood on the other side with (net sell of US$5.1mn) followed by Mutual Funds (net sell of US$3.8mn).

Outlook

With the IMF tranche (US$1.2bn) expected to be approved on August 29, 2022, which would unlock inflows from friendly countries, the development may lead to positive sentiment in the market. Pakistan’s currency is also expected to gain footing as the fall in FX reserves is arrested as a result of foreign inflows, expected to materialize soon. Furthermore, the ongoing result season will keep all eyes on the scrips yet to announce results, including heavyweights in the E and P sector. However, with the economy slowing down – an intended outcome of the SBP’s contractionary policies and the effects of floods across the country, could adversely affect the sentiment.

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