AKD STOCK SMART, Jul 03, 2020
StockSmart
Weekly Review
Marking the first positive return on FY basis in the past 3y (FY20 KSE-100: +1.5%YoY) and holding gains in the remaining week, KSE-100 index closed the first week of FY21 at 35,051pts - +3.28%WoW with almost all sectors closing in green vindicating strong investor confidence (Avg. volumes for the week stands at 250.8mn shares vs. 176.8mn in the previous week). Attack on PSX in early trading hours on Monday turns out to be non-event for the market where successful passage of Finance Bill 2020 with additional incentives for the businesses (particularly cement sector, +6.5%WoW) and debarring of institutional investments in National Saving Schemes (NSS) expected to direct flows to equity market helped in sustaining the upward rally. Amongst other news flows were, i) World Bank approving US$500mn loan for budgetary support, ii) SBP receiving US$1.3bn from Chinese banks, iii) Jun’20 inflation edging up slightly to 8.59%YoY, and iv) OGDCL starting commercial production of gas from its exploratory wells Thal East-1 and Bhambhra-1, located in district Sukkur (Sindh). Sectoral performances was led by Techs (+8.7%WoW) and Sugar (+7.2%WoW) while amongst the major sectors Cements (+6.5%WoW), Engineering (+6.3%WoW), Textiles (+5.9%WoW on currency depreciation and export order book), Commercial Banks (+3.1%WoW), and Fertilizers (+3.1%WoW on potential urea shortage and indecisiveness of the Govt. on resumption of subsidized gas to LNG based manufacturers) stood tall. Flow wise, foreigners continue to churn positions (Net sell: US$20.5mn) which was absorbed by Insurance (Net Buy: US$17.4mn) and Companies (Net Buy: US$9.6mn). Scrip wise top gainers were, i) TRG (+21.4%WoW), ii) SHFA (+15.0%WoW), iii) PTC (+12.7%WoW), iv) KTML (+10.2%WoW), and v) KEL (+10.0%WoW), while laggards were, i) JLICL (down 10.0%WoW), ii) IDYM (down 9.7%WoW), iii) JDWS (down 3.7%WoW), iv) BNWM (down 3.4%WoW), and v) AGIL (down 3.1%WoW).
Outlook
Taking cue from recent performance, equities is expected to continue its momentum in the coming weeks however, a keen eye on COVID-19 roll out in the medium run (Aug/Sep’20 – expected peak COVID-19 transmission period) and possible impact of locust attack would be prudent in our view hence, short term trading strategies are advocated in the near term. For a longer term horizon, we advise gradual accumulation in for Banks (on valuations), E&Ps (upward momentum in global crude prices, coupled with external pressures forcing PkR depreciation), Cyclicals (particularly leveraged – DGKC and MLCF) and Textiles (NML, export orders despite slowdown and portfolio value).
AKD Research
Nishat Mills is engaged in the business of textile manufacturing and of spinning, combing, weaving, bleaching, dyeing, printing, stitching, buying, selling and otherwise dealing in yarn, linen, cloth and other goods and fabrics made from raw cotton, synthetic fiber and cloth, and to generate, accumulated, distribute and supply electricity.
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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