JS Securities Limited – Weekly Review

Karachi, June 28, 2019 (PPI-OT): KSE-100 loses another 3.5% WoW, ends the year at 33,901 level

The market ended another stressful week (and an equally stressful financial year) in the red at 33,901 points, posting a loss of 3.5% WoW. This week’s closing marks the 30th negative one during the outgoing financial year during which the index dipped ~19%. This week saw improved market participation as volumes during the five trading sessions averaged at 146mn shares (up 17% from last week) while average traded value inched up by 5% WoW to US$28mn. Refineries and Oil and Gas Marketing remained the worst performing sectors during the week, underperforming the falling KSE100 by 2.1% and 1.9%, respectively. In terms of individual stocks, PSMC (-18%), HCAR (-12%) and INIL (-11%) were among the weakest performers of the week. The wayward exchange rate kept constant pressure on the benchmark index with the US$ breaking records back to back, to touch a high of ~164 in the interbank market.

Nevertheless, the biggest news by a margin was the Financial Action Task Force’s evaluation of Pakistan’s performance in dealing with Terror Financing and Money Laundering which (ironically) put terror in the hearts of investors. Foreign investors, who were net sellers in the last week, turned net buyers of US$7.7mn as they accumulated stocks in Cements and Banks. Other noteworthy news that affected the market include: (1) The Qatari Emir’s visit to Pakistan and his decision to inject US$3bn into the economy in the form of investments and deposits, (2) Fitch Solutions predicts Pakistan’s GDP could further shrink to 2.7% in FY20, (3) the final version of the budget to be shared with the IMF by July 3rd, (4) ECC’s approval for a 190% increase in gas prices, (5) Prime Minister Khan hinting at extending the deadline for the Asset Declaration Ordinance and (6) signing of LoI to obtain the US$6bn from the IMF.

SBP reserves fall US$322mn to US$7.28bn

The latest data reports foreign exchange reserves with the State Bank of Pakistan at US$7.28bn (down US$322mn) while reserves with commercial banks increased marginally to US$7.06bn during the week ended June 21st, 2019. As at the date, total reserves in the country amounted to US$14.35bn.

LSM shrinks 7.76% YoY in April-19

Large scale manufacturing (LSM) declined by 7.76% YoY / 9.40% MoM during Apr-2019, where heavyweights such as Food, Automobiles, Iron and Steel and Coke and Petroleum Products pushed it into negative territory. During 10MFY19 LSM declined 3.51% YoY, indicating that the provisional FY19 estimate of – 2.06% YoY might not be attainable.

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