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Stock Smart Weekly (Sep 18, 2020)

StockSmart                       

Weekly Review                                

The KSE-100 remained volatile during the outgoing week due to the uncertainty with regards to the upcoming AGP-FATF meeting, closing flattish WoW at 42,505 points. The week began on a weak note, with government and opposition parties in a deadlock over passage of bills concerning anti money laundering regulation. Furthermore, IMF also pushed for materialization of long due utility tariff hikes, which were put on hold earlier this year due to COVID-19. Later during the week, the market breathed a sigh of relief as NA passed an amendment bill to meet certain requirements of the FATF. However, the jubilance was met by profit taking by the investors, keeping market performance flattish. Sector wise developments included: (i) a PkR10/bag increase in cement prices, giving some support to the market in 2nd trading session of the week, (ii) PkR100-250 per bag increase in DAP prices leading to a modest rally in FFBL, and (iii) M&A related rumors regarding PTC driving the stock’s performance. Other news items affecting the market performance included: (i) SHC bars collecting GIDC from two firms (EFERT & FATIMA), (ii) Fertilizer firms threaten to hike prices, (iii) Government keen to explore workable GIDC options, (iv) Remittances up 31pc in July-August, (v) Large-scale manufacturing rebounds by 5.02pc in July, (vi) Foreign investment jumps 24pc in August, and (vii) Reko Diq dispute: World Bank panel grants stay on enforcement of award. Top performers in the outgoing week were, i) UNITY (+16.5%WoW), ii) FFBL (+12.5%WoW), iii) SPWL (+8.9%WoW), iv) EPCL (+7.1%WoW), and v) MTL (+7.0%WoW), whereas laggards were, i) YOUW (-8.7%WoW), ii) JLICL (-8.2%WoW), iii) FATIMA (-7.3%WoW), iv) KAPCO (-8.0%WoW), and v) ANL (- 6.0%WoW).

 

Outlook

 

The MPC of the SBP is slated to announce its monetary policy on Sep 21’20 (Monday), where consistent improvement in external account coupled with a need to support domestic economic activity should keep the MPC to maintain its accommodative bias. AKD Research expects the committee to keep its policy rate on hold at 7.0%, which may prove to be a neutral event for the market. The KSE-100 may continue to consolidate gains in the coming week, in absence of any major trigger.

AKD Research