JS Securities Limited – Weekly Review

Karachi, April 12, 2019 (PPI-OT): Attractive valuations limit KSE100 index losses to 0.5% WoW

The KSE-100 index declined to its 3-year low level during the week. However, with expectation of support from state-owned enterprises brought an adrenaline rush to the local equities market, giving gain of 1.5% on the last trading session of the week. As a result, the week’s cumulative losses limited to 0.5% WoW as the index closed at 37,338 levels. The Finance Minister met with World Bank and IMF team during the week where it was reported that talks have now reached at final stages. Nonetheless, attractive valuations enticed investors, resuming increase in participation. Average volumes increased by 25% WoW to 148mn shares, while traded value increased by 36% WoW to US$34mn. Foreign investors remained net sellers with US$2.2mn cumulative net selling during the week, broadly witnessed in Banking (US$3.9mn) and Power (US$0.7mn) sectors. During the week, trimmed cement prices in some regions of the country touched off the Cement sector.

Consequently, the Cement sector declined by 7.3% WoW, underperforming the benchmark by 6.8%. Cherat Cement (CHCC, -16.4% WoW), Pioneer Cement (PIOC, -15.6% WoW) and Maple Leaf Cement (MLCF, -14.1% WoW) were the highest laggards from the sector as well as from the KSE-100 index in this week. Moreover, the Pharma sector took a beating of 1.9% WoW as the government initiated a crackdown against increase in medicine prices during the week. Other key news during the week were (1) the government reviews FBR proposal for Rs729bn additional taxes for budget FY20, (2) Pakistan to pay back US$1.129bn next week on maturity of 5-year international bond, (3) World Bank and IMF share Pakistan economy’s forecast with lower growth and higher inflation expectations, (4) amnesty scheme to be launched later this month, (5) SBP reserves fall by US$220mn to US$10.271bn and (6) auto sales for Mar-2019 report 2% YoY growth.

Remittances for Mar-2019 decline by 3% YoY

Remittances for 9MFY19 accumulated to US$16.10bn, up 9% YoY. For the month of Mar-2019, remittances showed a decline of 3% YoY, clocking in at US$1.75bn. Remittances from Saudi Arabia, UAE and other GCC countries witnessed decline of 5% YoY, 11% YoY and 9% YoY, respectively.

Trade deficit down 28% YoY in Mar-2019

Traded deficit during Mar-2019 dipped by 28% YoY to US$2.2bn as imports declined by 21% YoY to US$4.2bn. However, exports also witnessed a decline during the month, where it recorded 11% YoY drop at US$1.98bn. For 9MFY19, trade deficit clocked in 13% YoY lower at US$23.67bn.

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