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AKD STOCK SMART

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Weekly Review                                

Fragmenting under wider macro constraints, brought home by a strong CPI read and 0.5bps hike in the MPS last week, the KSE-100 index dropped 2.9%WoW to close at 37,522pts. Additional news flows of concern was a consistently pressured PkR, which slipped 0.2%WoW against the US$, fueling concerns over continued inflationary headwinds to disposable incomes and consumer demand. Other news flows moving markets included: 1) Pakistan's foreign exchange reserves rose to $17.3bn in the week ended March 29 from $15.5bn in the previous week, 2) local cement dispatches during the first 9MFY19 declined by 6%YoY to 29.45mn tonnes down from 31.31mn tonnes during the same period last year, while exports increased to 5.13m tonnes during the same period from 3.44mn tonnes, 3) The OGRA has increased wellhead gas price up to 34.9% for 22 gas fields with effect from January 2019, 4) Pakistan will continue to face macroeconomic challenges leading to a downgrade in the country's GDP is forecast to 3.9% for FY19, says the ADB, and 5) FBR is eyeing PkR300bn in revenue under the proposed tax amnesty scheme as it has advised the government to keep concessional tax rates on the assets to be declared higher, as the government mulls another tax amnesty scheme for foreign and domestic undeclared assets. Average daily turnover fell 7.5%WoW to rest at US$118.7mn, with volumes led by: 1) WTL (51.3mn shares), 2) KEL (39.6mn shares), 3) MLCF (23.9mn shares), and 4) UNITY (23.5mn shares). Gainers over the week included: 1) POL (+1.3%WoW), 2) OGDC (+0.2%WoW), 3) ABL (+0.1%WoW), whereas laggards were: 1) ASTL (-15.8%WoW), 2) PSMC (-14.9%WoW), and 3) HASCOL (-12.8%WoW). Foreign portfolio investors turned net sellers with cumulative outflows of US$3.7mn vs. inflow of US$0.5mn last week.

Outlook

Sagging volumes offered a bittersweet cushion to drastic market moves, where outflows from institutional investors indicate a wider shift away from equity exposures amidst rising yields on debt instruments. Consequently, upcoming results season is likely to be significantly tamed in the run-up to Ramzan, with investors hunkering down and the current flight to blue-chip/mainboard stocks remaining in full-swing.  â€‹

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