EUR 13.77 For Business Accounts Only

Stock Smart Weekly (Dec 11, 2020)

StockSmart                       

Weekly Review                                

Climbing for a third consecutive week on the back of stable participation (avg. daily turnover up 2.5%YoY), the benchmark KSE-100 index was up 0.6%WoW to close at 42,470pts revisiting levels we last witnessed in early September. Key news flows included: 1) pronounced rise in political to-and-fro as opposition parties planned for the upcoming rally in Lahore, threatening to resign from seats in the federal and provincial legislature ahead of Senate elections in early March – regardless, legal and constitutional experts stated that en-masse resignations would fail to stop the ruling PTI Govt from acquiring a majority, 2) HUBC reportedly accepted the proposal of the Power Division, accepting a major deduction in claimed CPP payments from the base plant in return for approval for PPA with KE for purchase of 600MW of Coal power by 2024 and commitment to supply 300mn gallons per day of potable water (desalination) to the Karachi based on concessionary pricing of Thar coal (base plant to be converted from FO to Coal), 2) FBR has registered a 4%YoY rise in number of income tax filings, at 1.8mn (with significant requests for delay approved) and the amount collected  rising 63%YoY, coming on the back of the decision taken not to extend the last return filing date seen as a measure to promote tax discipline, 4) Pakistan will get US$873mn worth of debt servicing suspension from the Paris Club of creditor nations, the Paris Club said on Monday, and 5) total cement dispatches during Nov’20 were recorded at 4.51mn tons, an increase of 4.19%YoY. Stocks driving the index higher included: 1) ATRL (+9.5%WoW), 2) ANL (+8.1%WoW), 3) LOTCHM (+7.0%WoW) and 4) AGP (+7.0%WoW), while on the flipside: 1) SFL (-5.9%WoW), 2) HUBC (-5.8%WoW), 3) KAPCO (-4.9%WoW), and 4) GATI (-4.8%WoW) underperformed. Volume leaders on the basis of avg. daily turnover during the week were: 1) PRL (165.9mn), 2) TRG (162.4mn), 3) UNITY (151.2mn) and 4) PIBTL (92.1mn).

Outlook

With all signs pointing to a lack of consensus on concrete political steps to formalize opposition to the ruling PTI Govt., political noise is unlikely to sour sentiment at the bourse. Broad sectoral participation suggests significant rotations are underway, where supporting macros appear likely to provide tailwinds to market momentum through to 2021. Headway on energy sector reforms could kick-off significant upsides to the relegated energy chain.

AKD Research