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AKD STOCK SMART

Weekly Review

Ignoring populist budgetary measures (particularly with regards to taxation) and higher international oil prices, market remained lackluster throughout the week (shedding 1,006pts) to close the benchmark KSE-100 index at 44,537pts (-2.21%WoW). Political uncertainty (approaching deadlines for accountability court verdict) and weakened Pakistan growth outlook (revised down to 4.7% for FY19) along with highlighting of macroeconomic vulnerabilities by IMF were the major culprit behind the dull performance of the market during the week. Average daily traded volumes at bourse also declined by 1.56%WoW to 165.92mn shares with 1) BOP (134.89mn shares), 2) LOTCHEM (56.68mn shares), 3) UNITY (38.18mn shares), 4) STCL (19.97mn shares) and 5) EPCL (15.91mn shares) leading the board. Major news highlights during the week include: 1) total FX reserves rising to US$17.71bn (up 3.4%WoW), reversing its 19-weeks long declining trend, 2) average consumer price inflation rising to 3.7%YoY in Apr’18 due to increase in prices of oil and utility tariffs during the month, 3) ECP finalizing the new delimitations of national and provincial constituencies after conclusion of objections, 4) Raising increasing the prices of diesel and petrol by PkR2.31 and PkR1.70 per litre, and 5) Moody's Investor Service in its latest credit outlook has characterized the continuation of super tax on banks a credit negative event and estimates their ROEs to decline by ~1%. Performance leaders during the week were: 1) ASTL (+2.40%WoW), 2) FCCL (+1.84%WoW), 3) DGKC (+1.38%WoW), 4) EFERT (+1.01%WoW) and 5) KAPCO (+0.38%WoW); while laggards included: 1) FATIMA (-10.58%WoW), 2) HBL (-7.51%WoW), 3) UBL (-6.88%WoW), 4) PIOC (-6.07%WoW) and 5) INDU (-6.03%WoW). However, foreigners were net buyer during the week, with US$0.57mn inflows compared to US$2.80mn outflows in the preceding week.

 

Outlook

With verdicts of accountability court against Sharif’s family approaching close (due next week –  May 11’18), the broader market is expected to remain range-bound, with investors likely to stay on sidelines. Moreover, Oil & Gas sector is expected to remain in limelight as US President takes a decision next week on Iran’s Nuclear deal, where re-imposition of sanctions could spark intl. oil prices.