JS Securities Limited – Weekly Review
Karachi, January 12, 2018 (PPI-OT): PSX loses steam towards the end of the week as profit taking kicks in
The benchmark KSE-100 index closed 1% WoW higher at 42,934, however the market did lose some steam towards the end of the week with profit taking witnessed at higher levels. The news flows during the week centered on US-Pak relations with suggestions that Pakistan has suspended cooperation with the US, while threat of protests by religious cleric Tahir-ul-Qadri too remained unsettling. Gas Utilities (SNGP +18.7% WoW, SSGC +6.7% WoW) and some steel companies (CSAP +19% WoW) garnered investors’ interest on ECC approving Rs175bn for third LNG pipeline.
Apart from these stocks, key sector that outperformed during the week was Fertilizers (+1.4% WoW) on expectations of a new fertilizer policy and/or measures to reduce Urea prices in the country ahead of the general elections. On the other hand, (1) Cements (-0.5% WoW), (2) E and Ps (-1.5% WoW) and (3) Autos (-0.3% WoW) underperformed the index. Foreigners remained key buyers during the week with net buying of US$25mn, while local Banks/DFIs were major sellers of US$17.6mn in the market. Other key highlights of the week were: (1) potential trade deal with Saudi Arabia, (2) growth projections for Pakistan by the World Bank (+5.5% in FY18), (3) potential FDI of US$800mn in Pak Auto Sector, (4) Punjab govt. tightening regulations on the cement industry and (5) Attock Cements’ new production line in South starting commercial operations.
WB projects positive growth outlook
The World Bank says economic growth in Pakistan is likely to increase to 5.5% in FY18, and reach an average of 5.9% over the medium term on the back of robust domestic consumption, rising investment and recovery in exports.
Trade deficit widens to $17.963bn in 1HFY18
Pakistan’s trade deficit widened to US$17.96bn during 1HFY18, 24.5% YoY higher. During this period, exports improved by 11.2% YoY while imports increased by 19.1% YoY. In Dec-2017, trade deficit clocked in at US$2.93bn, 7.1% YoY and 0.3% MoM higher. Encouragingly, exports grew by 14.8% YoY vs. increase in imports by 10.1% YoY.
Remittances improve by 2.5% YoY in 1HFY18
Overseas Pakistanis sent remittances amounting to US$9.7bn in 1HFY18, up 2.5% YoY. Remittances from all important destinations, except Saudi Arabia, showed positive growth. Inflows from the kingdom declined by 7.5% YoY during the period under review. In Dec-2017, remittances amounted to US$1.72bn, up 9.3% MoM and 8.7% YoY.