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AKD STOCK SMART

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Weekly Review

Continuing with its last week positive momentum KSE-100 index gained another 770pts on first trading session of the week. However, US State Secretary Mike Pompeo's statement raising concerns regarding IMF program and dismal banking sector results overshadowed the election relief rally, with KSE-100 index closing at 42,505pts (down 0.7%WoW). Average daily traded volume during the week jumped 20.8%WoW to 283.7mn shares, where stocks leading the board included: 1) DSIL (92.9mn), 2) EPCL (86.8mn), 3) WTL (68.1mn), 4) PIBTL (58.1mn) & 5) PAEL (57.6mn). Wider news flows during the week included: 1) Chinese influx of ~US$2.0bn and extension of US$4.5bn oil financing facility by IDA, helped ease off pressure on the currency parity where currency appreciated 3.6% during the week in the interbank market with the parity settling at PkR124/US$, 2) owing to ~US$2.0bn inflow from China, FX reserves held by the central bank surged to US$10.3bn (up 14.9%WoW) while reserves held by the commercial bank remained stable at US$6.7bn (marginally up by US$12mn), 3) headline inflation surged to forty-five months high at 5.8%YoY, primarily driven by higher oil prices accompanied by elevated food index (3.5%YoY) and housing rent index (5.95%YoY), 4) during Multi-party conference, leaders of various political parties expressed grievances over the election results while voiced their intention to form the government with their own representatives, 5) NEPRA determined Rs1.172/kWh reduction in power rates for consumers of K-Electric under its profit claw back mechanism for FY15. Performance leaders during the week were: 1) ASTL (9.7%WoW), 2) KAPCO (8.1%WoW), 3) NBP (7.5%WoW), 3) MLCF (6.7%WoW), 4) FFBL (5.2%WoW). On the flipside, laggards were: 1) UBL (-11.2%WoW), 2) HBL (-9.8%WoW), 3) CHCC (-4.8%WoW), 4) MCB (-4.5%WoW) and PIOC (-3.7%WoW). Additionally, foreigners remained net seller with outflow US$14.62mn compared to net outflow of US$0.36mn in the previous week.

Outlook

Developments on the political front are likely to remain a focal point, as formalities of General Election wrap up (appointment of reserved members and issuance of notifications) providing clarity regarding the formation of government. Moreover, market will continue to take direction from the ongoing results season where major companies scheduled to announce their financial results include EFERT, ABL, GSKCH and LOTCHEM.