Karachi, December 30, 2022 (PPI-OT): Weekly Review
KSE-100 index settled at 40,420pts at the end of the week depicting a gain of 1.89%WoW largely attributable to renewed interest in the oil and gas sector as the Government constitutes a new committee for circular debt resolution. Participation in the market improved, with daily volumes averaging ~214.27mn shares during the week, compared to ~180.2mn shares in the prior week depicting a gain of 18.9%WoW. Additionally, Pakistan is expected to make debt repayments of $1bn to two commercial banks early next month. Furthermore, the SBP FX reserves position further declined by USD$294mn to reach US$5.8bn as of 23rd Dec’22, resulting in average import cover now shrinking down to 1.11x pressuring the country’s external position.
Other major news flows during the week included: i) SBP raises EFS and LTFF rates by 2pc to 13pc, ii) SBP’s forex reserves fall to eight-year low, iii) Makers raise steel prices by up to Rs25,000, iv) Development spending drops 38pc in July-Nov, v) Fertilizer offtake declines by 26.4% YoY during Rabi 2022, vi) Power sector receivables cross Rs2.5trn mark, vii) ADB says Pakistan needs $62bn to $155bn for energy sector until 2030, and viii) FBR reduces duty on import of agri tractors to 15%.
Sector-wise, the top performing sectors were; i) Food and Personal care products (+10.3%WoW), ii) Leasing Companies (+8.9%WoW), and iii) Leather and Tanneries (+7.6%WoW), while the least favourite sectors were; i) Woolen (-5%WoW), ii) Textile Weaving (-2.9%WoW) and iii) Automobile Parts and Accessories (-2.9%WoW). Stock-wise, top performers were; i) PSMC (+27.7%WoW), ii) HACR (+22.7%WoW), iii) NESTLE (+20.7%WoW), iv) PPL (+18.6%WoW), and v) PGLC (+17.6%WoW), while laggards were; i) THALL (-10.1%WoW), ii) YOUW (-10.0%WoW), iii) NCL (-9.9%WoW), iv) AICL (-5.3%WoW), and v) ARPL (-5.2%WoW). Flow wise, Banks were the major buyers with net buy of US$23.93mn, followed by other organizations (net buy of US$3.91mn), while foreign investors were major sellers during the week, with a net sell of US$16.59mn.
Outlook
The market is expected to remain under pressure in the near future, driven by the weakness in the PkR against the USD and the concerns regarding the country’s fiscal health. Pakistan will have to repay around $8.3bn in shape of external debt servicing over next three months of current fiscal year. Additionally, the political uncertainty and any developments regarding the 9th review by the IMF would remain in the limelight, which would unlock inflows from friendly countries. Consequently, the market will remain jittery amid uncertainty over economic fronts. Therefore, we continue to advise a cautious approach while building positions in the market.