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AKD STOCK SMART, Oct 18, 2019

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Weekly Review                                

Paring gains made in the last week, the KSE-100 index went down 605pts to close at 33,870pts down 1.76%WoW. Dim volumes (avg daily volumes down 51%WoW) were on the back of uncertainty surrounding FATF plenary meeting while investors also remained cautious ahead of volatile result season where construction sector is expected to be a major drag. Key news flows driving sentiments during the week included: 1) the FATF has decided in principle that Pakistan will remain on its grey list till next February and directed Islamabad to take ‘extra measures’ for ‘complete’ elimination of terror financing and money laundering, 2) an IMF team held talks on revenue collection, C/A deficit enquiring from the Commerce Division as to program specifications to meet  Pakistan’s needs, receiving the response was that the program should be growth oriented, 3) FDI flows posted a decline of 3% during the 1QFY20 owing to lower inflows from China, according to the SBP, the country fetched FDI amounting to US$542mn in 1QFY20 compared to US$559.4mn during 1QFY19, and 4) The IMF on Wednesday projected Pakistan’s primary deficit to turn positive 1% in FY21 from -0.5% in FY20 but said the country’s debt levels are likely to remain elevated at above 65.4pc until FY24 despite continuous declines. Top performers during the week in the AKD Universe were: 1) HASCOL (27.5%), 2)EFERT (3.87%), 3) ENGRO (2.2%), 4) ASTL (1.72%), and 5) BAHL (0.63%) whereas dampeners were: 1) PSO (-17.68%), 2) PPL (-16.43%), 3) INDU (-7.58%), 4) PAEL (-6.51%), and 5) PIOC (-6.28%). Volume leaders at the bourse were: 1) LOTCHEM (18.39mn), 2) EFERT (7.92mn), 3) BOP (7.77mn), 4) TRG (5.35mn), and 5) UNITY (4.07mn).

 

Outlook

Earnings season remains in full swing with major companies expected to release earnings include ENGRO, MEBL, FFBL, OGDC DGKC and NML. Political developments may creep into the limelight as the JUI’s planned sit-in the capital is expected to gain steam (opposition parties remain divided on participation), while the GoP’s response to FATF plenary meeting observations could mold near term investor sentiments.