JS Securities Limited – Weekly Review

Karachi, November 16, 2018 (PPI-OT): KSE-100 index inches up by 0.7% WoW

The KSE-100 index continued its recent range-bound activity during the week; however, closing amid positive sentiments as the last trading session of the week lent 232 points to the overall 272 point increase. The benchmark index closed at 41,661 level, up 0.7% WoW. Along with updates on the ongoing meetings between IMF and various government officials, developments on the front of the Prime Minister’s visit to Malaysia and UAE also surfaced, (expected around the third week of this month).

Nonetheless, further delays in expected inflows from Saudi Arabia and lack of clarity on potential package from China kept investors lukewarm with participation remaining stagnant as compared to the previous week. Pressure on international oil prices (-5% WoW) dragged the Oil and Gas Exploration sector that declined by 1.2% WoW. On the other hand, a declining trend in global coal prices (-2.1% WoW) coupled with the Economic Coordination Committee (ECC) allowing the cement industry to raise prices supported the Cement sector to gain 2.7% on a WoW basis.

Additionally, MSCI Index Semi Annual review for November-2018 was released during the week where (1) Lucky Cement (LUCK, +3.8% WoW) and United Bank (UBL, +1.8% WoW) were relegated to MSCI Small Cap Index and (2) Honda Atlas (HCAR, -7.4% WoW) and Maple Leaf Cement (MLCF, +2.3% WoW) were deleted from MSCI Small Cap Index. Net foreign selling accumulated to US$23.4mn in this week, higher than last week’s net selling of US$9.2mn.

Other key news during the week were (1) Amreli Steels (ASTL, -4.4% WoW) to set up plant at Dhabeji, raising its capacity from 0.6mn tons to 1.1mn tons, (2) Engro Corporation’s (ENGRO, -1.3 % WoW) 660MW coal power plant to become operational in Jan-2019, (3) Ghandhara Nissan (GHNL, +2.3% WoW) to assemble Renault trucks from 2019 end, (4) Pakistan Bureau of Statistics (PBS) revises Oct-2018 CPI to 6.78% from 7.0% reported previously, (5) power generation for Oct-2018 declines by 6% YoY to 9,574 GWh, (6) projects worth Rs659bn approved by Ecnec, and (7) ECC decides to raise Rs300bn through Islamic financing to clear some portion of circular debt.

Oct-2018 Current Account Deficit at US$1.2bn

Current Account Deficit (CAD) for Oct-2018 clocked in at US$1.22bn, or -5.0% of GDP, compared to US$909mn (-3.5% of GDP) in Sep-2018. Trade deficit during the same period increased by 33% MoM to US$2.65bn, while Remittances increased by 38% MoM. As a result, 4MFY19 CAD accumulated to US$4.81bn, down 5% YoY, clocking in at 4.8% of GDP.