EUR 9.40 For Business Accounts Only

AKD STOCK SMART, Feb 14, 2020

StockSmart                       

Weekly Review                                

Week started with market witnessing a major sell-off (KSE-100 down 847pts) amid fears of global growth slowdown as cases of coronavirus increased however subsequent slowdown in incremental cases helped return some confidence and market posted positive moves in subsequent session. Momentum was carried through to mid-week with news of smooth progress in discussions with IMF while improvements on political front also provided support after fruitful discussions took place between govt. and some of its allies.  Week ended on a negative note though amid yield of 12-month Treasury bill increasing by 39bps in the latest auction and investors booking profits after the mid-week rally. KSE-100 closed the week at 40,243ptts, up 0.25%WoW where trading activity remained flat on WoW basis. Foreigners remained net sellers during the week where selling of USD11.15mn was mainly absorbed by insurance companies and other organizations. Other major news flow during the week included: (i) Pakistan's trade deficit shrinking over 28% to USD13.8bn in 7MFY20 due to import compression, as exports showed negative growth for the third consecutive month, (ii) Prime Minister Imran Khan assuring the export-oriented sectors that there will be no change in tariffs of electricity and gas for next three years, (iii) Federal cabinet approving a comprehensive package under which PkR10bn subsidy is to be provided in order to make essential items available at subsided rates, (iv) Pakistan's auto sector continuing to show dismal performance during 7MFY20 with cars sales plunging by 44%YoY, and (v) possibility of The Federal Board of Revenue (FBR) imposing a standard rate of 17% sales tax on certain items subjected to lower rates of sales tax (5, 7.5 and 10 percent). Top performers during the week included MLCF (+4.17%WoW), HUBC (+4.09%WoW) and HBL (+3.61%WoW), while PAEL (-7.12%WoW), KAPCO (-6.66%WoW) and GWLC (-4.14%WoW) remained the worst performers. Major volume churners included UNITY (65.61mn shares), HASCOL (61.78mn shares), MLCF (41.69mn shares), BOP (40.36mn shares) and DGKC (39.85mn shares).

 

Outlook

With result season in full swing, near term market performance will largely be guided by earning reads. PSO, UBL, HBL & ENGRO are some of the major corporates scheduled to announce their earnings next week. From a macro vantage, the market will be keenly watching developments pertaining to the second IMF review under EFF, where the deadlock on future policy framework on the conclusion of IMF's team visit could trigger risk-off sentiment.

AKD Research