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Weekly Review

Continuing its volatile trend, the benchmark KSE-100 Index stayed in the red territory this week as well after further declining by 2,044pts or -4.68%WoW to close the current week at 41,637 points (lowest level of ongoing calendar year). Rising concerns regarding global growth amid ongoing trade war (US and China) and domestic macroeconomic headwinds were major reasons behind the overall poor performance of the market during the week. However, with the conclusion of Ramadan, average daily traded volumes the at bourse increased encouragingly by 29%WoW to 170.07mn shares with 1) KEL (77.01mn shares), 2) POWER (41.48mn shares), 3) TRG (40.12mn shares), 4) LOTCHEM (31.73mn shares) and 5) SMBL (31.31mn shares) leading the board. Major news highlights during the week included: 1)  the caretaker FM commented that the amnesty scheme for declaration of assets will not be extended beyond the Jun 30’18 deadline, 2) country’s current account deficit rising to US$15.961bn in 11MFY18, an increase of 43%YoY, 3) Moody’s Investors Service downgrading Pakistan’s rating outlook to negative from stable, 4) SECP notifying new Anti- Money Laundering and Countering Financing of Terrorism Regulations 2018 to satisfy the upcoming FATF meeting and 5) local urea prices posting a sharp increase toward PkR1,600/bag in the last few week amid looming urea shortage in upcoming months. Performance leaders from our AKD universe during the week were: 1) FATIMA (+4.69%WoW), 2) FFC (+2.84%WoW), and 3) EFERT (+1.59%WoW); while laggards included: 1) MLCF (-12.50%WoW), 2) ASTL (-10.53%WoW), 3) HASCOL (-9.72%WoW), 4) HBL (-9.59%WoW) and 5) LUCK (-7.70%WoW). On the other hand, foreign participation have gone from bad to worse this week with US$24.53mn outflows compared to US$4.45mn outflows in the preceding week.

Outlook

The eagerly anticipated decision regarding raising oil supply in the OPEC biannual meeting in Vienna happening on Friday (today) will be a key event for the market next week where investors will likely to take direction from movements in Crude Oil. Moreover, any decision with regards to the review of Pakistan’s action plan by the FATF in its plenary meeting (scheduled next week from Jun 24-29) can continue to weigh on market sentiment. However, value investors can be expected to deploy liquidity to take advantage of attractive valuations after the sizable decline in share prices witnessed this week.

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