Stock Smart Weekly (Oct 29, 2020)
StockSmart
Weekly Review
Tracking sell-off in global equity markets on the back of uncertainty regarding US elections and increasing cases of COVID-19 (major economies recording highest ever daily increase in cases), KSE-100 index pared gains achieved on the first trading day (+1.4%DoD on positive developments on FATF), to close the week at 39,888pts, down 3.34%WoW. Major sell-off during the week was witnessed in, i) Commercial Banks—down 4.9%WoW (despite above expectation results in the banking space as foreigners continue to exit emerging markets), ii) Textiles—down 7.2%WoW (as major export markets gradually limit business activity), and iii) E&Ps—down 4.8%WoW (oil prices coming under pressure over demand concerns). Major newsflow during the week included, i) FATF extending time period for Pakistan till Feb’20 to meet all action plans, with the country now compliant on 21 out of 27 accounts, ii) IMF and Pakistan remaining closely engaged for completion of 2nd review of EFF, iii) Govt. mulling another amnesty scheme to attract dollar flows, iv) Special Assistant to the Prime Minister (SAPM) on Health Dr Faisal Sultan announcing that second wave of COVID-19 has begun, and v) Govt. announcing subsidy on DAP of PkR1000/bag. Avg. volumes also jumped to 469.6mn shares vs. 465.6mn shares in the previous week whereas avg. value traded increased by 35.8%WoW to stands at PkR28.4bn. Activity wise, foreign outflow stood at US$21.34mn but was absorbed by Insurance and Individuals with US$7.7mn and US$6.4mn inflows during the week. Top performers during the week were, i) FFBL (+10.8%WoW), ii) STJT (+8.8%WoW), iii) GHGL (+8.5%WoW), iv) UNITY (+7.1%WoW), and v) HUBC (+6.1%WoW) whereas laggards were, i) ILP (down 13.7%WoW), ii) PAEL (down 10.9%WoW), iii) POL (down 10.6%WoW), iv) BYCO (down 10.4%WoW), and v) GATM (down 10.2%WoW).
Outlook
Volatile sessions are likely to continue in the coming week amid increasing COVID-19 across the country and foreign investors shifting portfolio towards safer bets. However, any weakness should open valuations which had become stretched in our view. Hence, we advise buy on dips strategy in the short term with our preference tilted towards Banks (particularly top tier as expectation of resumption in payouts could drive stock performance in the near term), Construction-related sectors, Power and Textiles.
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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