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Stock Smart Weekly

Weekly Review

Developments over reconstitution of Baluchistan provincial cabinet following CM’s resignation was positively interpreted by the market participants, pushing KSE-100 higher by 0.96% over the week to close at 42,934pts. Further impetus was provided by aggressive foreign buying of US$26.41mn with total net inflows reaching US$49.37mn in CY18, though, the market did pair some of the gains towards the end of week as PAT Chief announced protest against model town incident from Jan 17’18. Volumes remained healthy in all 5 trading sessions averaging 276.38mn shares (up 16.83%WoW) where leaders were 1) WTL (101.23mn shares), 2) TRG (91.38mn shares), 3) ANL (63.27mn shares), 4) SSGC (60.66mn shares) and 5) PAEL (58.51mn shares). Gas utilities in particular registered gains (SNGP/SSGC: +18.6/+6.7%WoW) as ECC approved financing plan for the 3rd RLNG pipeline at PkR175bn while NEPRA’s resistance to revise KEL’s MYT dragged the stock down by 4.96%WoW. Other news flows for the week included: 1) US officials reiterating their demand of concrete actions against certain terrorists group especially safe havens in Pakistan, 2) ECC approving a waiver of sales tax and customs duty on the import of cotton, 3) trade deficit widening to US$17.96bn in 1HFY18, up 24.5%YoY led by 11.2/19.1% growth in exports/imports, 4) Overseas Pakistanis remitting US$9.7bn in 1HFY18, higher by 2.5%YoY, 5) auto sales figure for CY17 registering 18.7%YoY growth, where PSMC /HCAR sold 21/50%YoY more units while INDU’s sales remained flat(-0.1%YoY), and 6) GoP mulling to levy further duties on import of luxury items while considering to slash power/gas tariffs for textile firms. Performance leaders (of AKD universe) during the week were: 1) FFC (+7.02%WoW), 2) FFBL (+6.12%WoW), 3) HBL (+4.82%WoW), 4) APL (+3.65%WoW) and 5) CHCC (+2.94%WoW); while laggards included: 1) NBP (-5.93%WoW), 2) KEL (-4.96%WoW), 3) DGKC (-4.43%WoW), 3) ASTL (-4.42%WoW) and 5) KAPCO (-3.33%WoW).

Outlook

 Political happenings are expected to cloud the investors’ sentiments with PAT chief led protest against model town incident being the prime focus, although early apprehension of Kasur incident culprits can keep the country’s overall political environment calm. On the other hand, progress over GoP’s incentives for textile firms (rationalisation of tariff, resolution of GIDC issue being the possible outcomes) can lead to increased optimism amongst the market participants to be furthered in case of sustained foreign buying. Having said this, textile composites are anticipated to remain the center of attention while resolution of GIDC issue might also positively impact the fertilizer sector in the upcoming week.