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AKD STOCK SMART

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Weekly Review

Pakistan’s market had its best week since Jan 5’18, as rupee depreciation coupled with rising int. oil prices revitalized investors’ interest. In this backdrop, benchmark KSE-100 posted strong price performance gaining 3.84%YoY to close the short trading week at 45,030pts. Following rupee devaluation (4.3% since its last move in Dec’17 to settle at 115.57), foreigners came back into action amassing US$9.77mn worth of equities in the last trading session only. Banks (HBL/UBL/MCB +6.4/+11.01%/+8.9%WoW), E&Ps (OGDC/PPL/POL +4.0/+4.6/+3.2WoW), Power (HUBC/KAPCO +3.1/+3.9%WoW) and Textiles (NML/NCL +5.8%/+2.6%WoW) remained key beneficiaries in this scenario. Average trading volumes rose to 192.85mn shares (up 10.29%WoW) where LOTCHEM (64.91mn shares), TRG (54.96mn shares), NRSL (43.39mn shares), UNITY (32.85mn shares) and FFL (29.08mn shares) topped the list. Other market related news were: 1) Gov’t official reportedly hinting towards a likely inflow of US$2-3bn from two friendly countries, 2) PSX officials proposing rationalization of taxes on bonus shares, capital gains, and brokers’ regime while demanding to alter the taxing mechanism of inter-corporate dividends, 3) 8MFY18 CAD widening 50%YoY to reach US$10.83bn, with both imports and exports registering double digit growths of 17.3%YoY and 12.2%YoY, respectively. 4) GoP planning to raise FY19 tax collection target to PkR4.5trn while stating that no new tax would be levied and 5) possible unveiling of a new amnesty scheme which as per gov’t official could bring US$5bn worth of assets to Pakistan. Leading performers of the week from AKD universe were: 1) FFBL (+15.25%WoW), 2) MCB (+11.01%WoW), 3) EFOODS (+9.20%WoW), 4) UBL (+7.20%WoW) and 5) HBL (+6.41%WoW); while laggards included: 1) PSMC (-1.58%WoW), 2) INDU (-1.35%WoW), 3) PIOC (-0.50%WoW), and 4) ASTL (-0.46%WoW). Foreigners, after a 7 week selling streak, turned net buyers of US$0.16mn vs. an outflow of US$10.46mn in the preceding week.

 

Outlook

With concerns regarding PkR devaluation being largely absolved and intl. oil prices once again hovering near their 2.5 year highs, fresh foreign flows can induce another short term rally in the market. Moreover, strong primary margins of the chemical sector can also garner investors’ attention. Further, rate hike expectations ahead of the monetary policy statement (to be released by the end of next week) can drive banking sector performance.

   

AKD Research