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AKD STOCK SMART

Weekly Review
KSE-100 index tread on the trail set by global equity markets, shedding 492pts (-1.11%WoW) to close the week at 43,809pts. Amidst build-up of inflation expectations resulting in higher bond yields, investors across the world pursued the sell-off strategy, leading to profit taking in the local bourse as well. Correction in intl. oil prices (Brent losing 8.9% in last two weeks) resulted in the decline of index heavy weight oil & Gas sector (OGDC/PPL/POL: down 0.7/5.4/2.1%WoW), further dragging performance. Moreover, construction sector also suffered as Sindh High Court’s judgment declaring SRO (1035 (I) 2017) void was initially perceived negative for the steel stocks (ASTL/MUGHAL/ISL -3.0/4.0/2.6%WoW) while news of decrease in retail cement prices (in the north) affected cement stocks across the board. Overall traded volumes went down by 4.1%WoW to 244.9mn shares where 1) ANL (80.7mn shares), 2) TRG (73.2mn shares), 3) LOTCHEM (50.2mn shares), 4) ASL (48.8mn shares) and 5) SSGC (48.1mn shares) topped the list. Other news events included 1) law makers in the US pushing for further aid suspension to Pakistan citing lack of actions against terrorist groups, 2) GoP planning to announce separate amnesty schemes for both foreign (at 2.0-7.5% tax rate) and local assets (at 3.0-5.0% tax rate), 3) possible announcement of budget by the 2nd week of May where incentive packages regarding the fertilizer and IT sectors seem to be in the offing, 4) NA being apprised that the general elections’ schedule would be announced on May 26’18 and 5) MoF scrapping the idea of another US$1bn Eurobond issuance, while foreign reserves dwindled by US$173mn (down 0.9%WoW) to US$19.18bn. Performance leaders of the week remained 1) NBP (+4.3%WoW), 2) UBL (+3.2%WoW), 3) KAPCO (+1.2%WoW), 4) BAFL (+0.9%WoW) and 5) HUBC (+0.7%WoW) whereas laggards were: 1) CHCC (-8.8%WoW), 2) PIOC (-6.9%WoW), 3) DGKC (-6.5%WoW), 4) PPL (-5.4%WoW) and 5) MLCF (-4.4%WoW). Foreigners continued to off-load their holding, selling stocks worth US$8.5mn during the week.

Outlook
MSCI’s next quarterly review is scheduled on Feb 12’18 where changes in the constituents’ weights can drive stock specific performances accordingly. Moreover, market is anticipated to take direction from the ongoing result season where ASL, ASTL and BAHL are scheduled to release their financial performances for the period. Lastly, we highlight that foreigners can once again shift focus towards the Pakistani market as global volatility eases.