Stock Smart Weekly (Nov 06, 2020)
StockSmart
Weekly Review
The market started off on a weak note, with the market participants pricing in rising domestic COVID-19 cases and uncertainty on the US election outcome. The benchmark KSE-100 index shed 775pts (-1.94%) on the first trading session of the week. Softer than expected inflation reading (8.9%YoY vs. 9.2% consensus estimate), encouraging volumetric offtakes in Cement and OMC sectors, electricity package for the SME (50% tariff reduction on incremental usage) and general industry (25% tariff reduction on incremental usage), and rebound in global markets turned the tide, with KSE-100 index registering 3.5% gain on the second trading session, paring all previous day losses. After a brief respite on Wednesday, the domestic market regained momentum in line with its global peers, pricing in relatively better visibility on the US election outcome, with Democrats likely to take control of the White House and Republicans expected to maintain their majority in Senate. Overall, the KSE-100 index gained 2.11%WoW (+844pts) to close the week at 40,732pts. Market participation witnessed a reduction of 21.6%WoW, with an average daily trading volume of 368.2mn shares. Activity remained concentrated in high beta stocks, with UNITY (203.2mn shares), HASCOL (133.6mn shares), POWER (123.1mn shares), PRL (101.5mn shares), and TRG (82.4mn shares) being the top-5 volume churners. Other key news flows impacting the market performance during the week included: i) ECC approving PM’s PKR24 package for farmers, with a proposal to reduce DAP prices by PKR1000 per bag, ii) the federal gov’t marginally reducing the POL product prices (MOGAS/HSD: -PKR1.57/0.84 per ltr), iii) SC dismissing review petitions against GIDC while extending the payment deadline by another 36 months, iv) FBR raising PKR1.33trn in tax collection during 4MFY21, surpassing its relatively soft target of PkR1.32trn, and v) trade balance improving by 14.46%YoY/28.5%MoM during Oct’20, with exports growing by 3.07%/10.16%MoM while imports declining by 5.73%YoY/11.595MoM. Performance-wise, TRG (+17.1%WoW) , HMB (+15.6%WoW) , LOTCHEM (+14%WoW) , FFBL (+10.9%WoW), and POL (+9.6%WoW) were the top gainers, while laggards included GATI (+7.2%WoW), MUREB (-4.0%WoW), APL (-3.2%WoW), ANL (-2.8%WoW), and PAKT (-2.8%WoW).
Outlook
In the near term, the domestic market will continue to closely track global markets, with the outcome of the US presidential election dictating market sentiment. On the domestic front, a rising C-19 caseload could trigger risk-off sentiment, keeping the market under pressure. Relatively weaker market participation in the latter part of the week also points towards some risk aversion. From a macro vantage, CA numbers and MPS announcement later this month will be on top of investors’ minds, where encouraging trade numbers point to another positive reading on the external side. On MPS, we expect the central bank to remain on hold with a view to support domestic economic activity.
AKD Research
Fauji Fertilizer Bin Qasim Limited is a Pakistan-based holding company. The Company manufactures, purchases and markets fertilizers. It is involved in meat, dairy and coal based energy generation sectors. It has identified its potential business segments and has undertaken investments in the areas of food, financial, power sector and wind energy projects. Its products include Granular Urea, such as Sona Urea, and Di Ammonium Phosphate (DAP), such as Sona DAP. Sona Urea is a synthetic organic compound containing nitrogen in amide form available in the form of white solid prills. It is applied to soil and also suitable in solution form as spray application. Sona DAP contains nutrient element, phosphorous besides nitrogen available in flowing granular form Granules are stronger, harder and of uniform size. It is suitable for various crops and soils recommended for initial application. It produces over 791,260 metric tons (MT) of DAP and approximately 433,610 MT of Urea.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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