EUR 9.12 For Business Accounts Only

Stock Smart Weekly (Jun 16, 2023)

StockSmart                            

Weekly Review                                

Market remains lackluster during the week, with KSE100 index losing 603 points during the week to close at 41,301 pts, making a fall of 1.4%%WoW. Additionally, market participation also witnessed a slowdown, declining by 25%WoW, averaging at 161.7mn shares compared to avg. of 215.7mn shares last week. Despite the negative impact of the budget, including the imposition of a 10% super tax, windfall tax, and bonus share tax, the market has shown some resilience. Meanwhile, in the last MPC meeting on Monday, SBP maintained the policy rate at 21%. Furthermore, as per news flow, GoP has paid US$1.0bn as debt repayment during the week, while on the contrary, SBP in their post-MPC briefing apprised that only US$800mn of repayment is due for the remaining month. The decline in reserves resulting from this repayment is expected to be visible in the FX numbers released next week. As of June 9th, SBP held reserves stood at US$4.02bn, which are anticipated to drop below the US$3bn mark due to the rumored debt repayment. On the currency front, PkR loses 0.09%WoW to close at PkR287.2/US$. Other major news flows during the week included; 1) LSM slumps 21.07 percent in April, 2) $7bn Chinese, Saudi deposits: Rs402bn paid as cost of rollovers, 3) July-May remittances plunge 13pc to $24.83bn YoY, 4) Car sales plunge 80pc in May, 5) Tax expenditures constitute 36.43pc of FBR tax collection, 6) IMF comes down hard on Pakistan’s budget proposals. Sector-wise, Leasing Companies, Chemical, and Textile Weaving were amongst the top performers, up 18.4%/11.3%/7.1%WoW respectively. On the other hand, Transport, Modarabas, and Textile Spinning were amongst the worst performers with a decline of 9.6%/6.7%/6.2%WoW. Flow wise, major net selling was recorded by Mutual funds with a net sell of US$1.97mn. On the other hand, Individuals absorbed most of the selling with a net buy of US$4.40mn. Company-wise, top performers during the week were, i) PGLC (up 130.3%WoW), ii) SHEL (up 30.0%WoW), iii) COLG (up 27.6%WoW), iv) MTL (up 13.6%WoW), and v) BNWM (up 4.1%WoW), while top laggards were, i) SML (down 13.4%WoW), ii) KEL (down 11.4%WoW), iii) HINOON (down 9.0%WoW), iv) PSMC (down 8.3%WoW), and v) FABL (down 8.0%WoW).

   

Outlook

Market is expected to remain range bound in the short term, primarily due to the lack of clarity on the IMF front as the current IMF program is nearing expiration with less than half a month remaining. Additionally, political instability will also contribute to investor uncertainty and impact market confidence. It is advisable for investors to remain cautious while building positions until stability improves. We continue to advocate stocks with dollar denominated revenue streams i.e. E&P and Technology sector. Additionally, considering companies with healthy forward dividend yields can be a strategy to explore.

AKD Research