EUR 13.41 For Business Accounts Only

Stock Smart Weekly (Jan 07, 2022)

StockSmart                       

Weekly Review                                

Closing the first week of the year 2022, KSE-100 index stood at 45,346pts - a return of 1.7%WoW. Avg. volumes stood at 318mn shares in the outgoing week compared to activity in 218mn shares in the previous week, indicative of fresh allocations associated with beginning of the year. Tabling of Finance Amendment Bill and SBP Amendment Bill during the latter part of the previous week indeed provided confidence to investors on the eventual resumption of IMF program. Other important news flows during the week were, i) FBR revenue collection jumping 18%MoM to PkR600bn in Dec’21 taking 1HFY22 revenue collection to PkR2.92trn, +32.5%YoY, ii) Inflation clocking in at 12.3%YoY for Dec’21, iii) Furnace oil offtake from refineries improving with IPPs placing orders of 250k tonnes for Jan’22 alone, iv) Cements dispatches recorded at 4.6mn tonnes in Dec’21 vs. 4.8mn tonnes in the same period last year, v) Official release of trade numbers suggesting 106.4%YoY increase in trade deficit during 1HFY22, and vi) Power division releasing another 40% amount to 12 IPPs under the MoU signed in CY21. Sector-wise, within major sectors, Power segment recorded a gain of 3.0%WoW, followed by Fertilizers (+2.8%WoW) while Textile composite was down 1.5%WoW. Overall, Textile Weaving segment registered strongest increase of 10.1%WoW, followed by Transport (+6.8%WoW) whereas Woollen segment stood as the laggard, down 3.5%WoW. Flow-wise, Foreigners’ net buy stood at US$24.1mn whereas excluding gross buy of US$26.0mn which is likely to include strategic buying by TRG of its shares, the group stands as a net seller of US$1.9mn. On the local side, Individuals stood on the selling side with a net sell of US$15.1mn followed by Mutual Funds with a net sell of US$8.4mn – which is likely to include contra position of TRG transaction – whereas banks turned out to be on the other side of the spectrum with a net buy of US$7.0mn. Stock wise, major gainers include, i) STJT (+22.5%WoW), ii) HUBC (+9.7%WoW), iii) ISL (+9.1%WoW), iv) GATI (+8.7%WoW), and v) UNITY (+8.0%WoW), while top laggards were, i) TRG (down 10.3%WoW), ii) HMM (down 9.8%WoW), iii) MUREB (down 8.7%WoW), iv) PMPK (down 7.3%WoW), and v) KTML (down 5.8%WoW).

Outlook

Key events to watch in the upcoming week are, i) National Assembly session being called which is likely to consider Finance Amendment Bill 2021, and ii) IMF board meeting on Jan 12th, 2022 (likely be delayed on possible request by Pakistani counterparts subject to completion of prior actions as already hinted by the authorities). In the near term, the upcoming MPS on Jan 24th, 2022 would determine market direction along with IMF, where the Central Bank while have indicated to pause interest rate cycle but any further tightening given already higher trade deficit for Dec’21 and uptick in commodity prices could result in distressed stock performance in the short run. We continue to advocate for gradual accumulation on any weakness where our preferred sectors include, Banks, Cements, Fertilizers, Consumer plays (such as PREMA), and select-Techs.

AKD Research