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Stock Smart Weekly (Sep 03, 2021)

StockSmart                       

Weekly Review                                

The benchmark index remained under pressure throughout the week, retracting by 0.4%WoW to close at 46,957 points. Geopolitical uncertainty, unabated PkR depreciation and concerns related to 4th COVID-19 wave continued to dampen investor sentiments, thus keeping the index performance in check. Rapid PkR depreciation, of 0.6%WoW, has raised some eyebrows as country experiences a surge in import bill. During the week, foreign trade numbers for Aug’21 were released where country’s exports clocked in at US$2.26bn (up 42.5%YoY) whereas imports were reported at US$6.31bn (up 89.9%YoY). Consequently the trade deficit widened by 133%YoY to close in at US$4.05bn during Aug’21. Other economic data released during the week was tax collection, which settled at PkR850bn during Aug’21 (up 51%YoY) and CPI for Aug’21 which clocked in at 8.4%YoY (0.6%WoW). Participation during the week remained strong with average daily traded volume standing at 454.9mn shares against 384.1mn shares witnessed during last week. Sector-wise, rebar and CRC prices increased by PkR4000/ton and PkR5000/ton to PkR179,500/ton and PkR233,700/ton. Other major news flow during the week included i) PSO booking costliest LNG cargo for Sept’21 amid rising international oil prices, ii) S&P reaffirming Pakistan’s credit rating  at B– and B for long and short term, iii) Cotton prices touching all time high of PkR14,500/maund amid supply shortages in Punjab, iv) Country’s foreign debt hitting historic high of US$122bn and v) Air link successfully raising PkR6.4bn in the biggest ever IPO of the country. Top performers of the market included i) GATI (+13.9%WoW), ii) SYS (+10.7%WoW), iii) ATRL  (+8.1%WoW), iv) FABL (+7.4%WoW), and v) EPCL (+6.2%WoW). Meanwhile laggards included: i) PMPK (-6.4%WoW), ii) PIOC (-7.1%WoW), iii) HMM (-7.8%WoW), iv) PSMC (-12.4%WoW), and v) STJT (-12.6%WoW). Top volume leaders included WTL (309.2mn), GGL (82.6mn), TELE (176.4mn), BYCO (128.7.3mn) and YOUW (83.4mn). Flow wise, Individuals were the biggest buyers with (net buy of USD5.06mn) followed by Insurance Companies  (net buy of USD3.95mn) while Mutual Funds stood on the other side with (net sell of USD3.84mn) followed by Companies (net sell of USD1.30mn). 

Outlook

Over the next week, market’s performance will remain contingent to MSCI’s verdict related to reclassification of PSX to the frontier market from emerging market, quantum of PkR depreciation against Greenback and news-flow related to the fourth wave of COVID-19 in the country. We continue to advocate building positions in thematic plays such Technology and Textiles (on currency devaluation). Potential stocks that may outperform in short term could be TELE, BYCO, SYS, SITC, REWM and PAEL.

AKD Research