Karachi, August 09, 2019 (PPI-OT): Weekly Review Faltering under mounting macro risks and pressured by significant headline risks, the KSE-100 index continued its FYTD tumble, slipping 7.1%WoW to close at 29,429pts, dropping below the physcological 30K mark after a span of five years. Key news flows during the week included: 1) to avoid US$30mn penalty under Take or Pay mechanism and reduce the volume of demurrages, the GoP has minimized FO and coal based power generation to ensure maximum intake of RLNG, 2) FBR announced that it will not take any adverse action against traders on the condition of provision of CNIC numbers till September 30, countering a major contention held by them, 3) the ECC of the Cabinet on Thursday approved mechanism for payment of subsidy on account of lower gas price of US$6.5/mmbtu to the export industry and ordered to have a proper definition of export oriented sector to avoid misuse of public funds, 4) the National Security Committee on Wednesday decided to downgrade diplomatic ties with India and suspend bilateral trade in response to New Delhi’s move to annex occupied Kashmir, and 5) National Accountability Bureau (NAB) on Wednesday arrested former Finance Minister Miftah Ismail, former Managing Director of Pakistan State Oil (PSO) Sheikh Imran-ul-Haqin, in LNG corruption reference. Volumes during the week averaged 57.85mn gain 1.7%WoW, with volume leaders being: 1) MLCF (28.52mn shares), 2) KEL (22.87mn shares), 3) TRG (16.69mn shares), 4) UNITY (14.99mn shares), 5) ISL (12.40mn shares). Stocks leading the performance board during the week included: 1) DGKC (+5.42WoW), 2) MLCF (+4.76WoW), 3) EFOODS (+2.37WoW), 4) NCL (+1.56WoW), On the flipside, stocks heading lower included: 1) UBL (-14.22WoW), 2) APL (-12.56WoW), 3) HASCOL (-12.42WoW), 4) HMB (-11.87WoW), 5) INDU (-11.55WoW). Outlook We re-affirm out view of period gains remaining highly likely, while a wholesale rally would hinge on a slew of catalysts likely to emerge from: 1) conclusion of the current cycle of monetary tightening seen in early 4QCY20 (Sept’19 MPC expectations can be seen crystalized in 21st Aug’19 PIB auction participation), 2) successful completion of IMF’s second quarterly review (expected during Nov’19) and FATF consultations (expected on Oct’19), and 3) external space emerging from global monetary tightening (softening US$) and weak energy commodity prices.

Karachi, August 09, 2019 (PPI-OT): Light at the end of a long tunnel

It will be difficult to achieve IMF’s target of 2.4% GDP growth in FY20, let alone SBP’s target of 3.5%.

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