AKD Securities Limited – Stock Smart

Karachi, December 15, 2017 (PPI-OT): Weekly Review

Amidst the inevitable Rupee devaluation against the US dollar and continued political uncertainty arising from judicial developments, the KSE-100 index weakened 1.11%WoW closing at 38,646pts with average daily volumes traded decreasing to 135mn shares (down 4.39%WoW). Market sentiment cratered under a ‘controlled’ devaluation exercise by the SBP which saw the PkR lose 4.6%WoW against the Greenback, leading participants to raise concerns over the knock-on effects on the import bill, inflation and consumer confidence.

Key news flows impacting the market during the week included: 1) Supreme Court ruling in favour of PTI Chairman Imran Khan in a disqualification case, while disqualifying PTI General Secretary Jahangir Khan Tareen, 2) Supreme Court dismissing NAB’s appeal to reopen the Hudaibiya Paper Mills case, 3) NA speaker hinting towards early dissolution of assemblies, while later refuted by PM Shahid Khaqan Abbasi, 4) trade deficit treading upward in Nov’17, with 5MFY18 deficit now standing at US$15.03bn (up 29%YoY) and 5) long steel manufacturers raising re-bars prices by ~PkR5000/ton.

Gainers (of AKD Universe) during the week were: 1) EFERT (8.39%WoW), 2) KAPCO (5.72%WoW), 3) ENGRO (3.26%WoW), 4) PPL (2.60%WoW) and 5) OGDC (1.85%WoW) while the laggards were: 1) HASCOL (-12.05%WoW), 2) LUCK (-7.78%WoW), 3) PIOC (-7.73%WoW), 4) FCCL (-6.67%WoW) and 5) APL (-6.54%WoW). Top 5 volume leaders included: 1) TRG (67.23mn), 2) KEL (51.39mn), 3) PAEL (36.25mn), 4) WTL (30.54mn) and 5) ANL (22.81mn). During the week, foreign outflow of US$8.87mn was recorded against a net inflow of US$1.04mn last week.

Outlook

Apex court judgments on two key cases offering win-win situation to both PML (N) and PTI point towards relatively stable political environment going forward. This along with much-awaited devaluation exercise attracting higher foreign interest and encouraging participation by individuals and mutual funds at current levels give weight to wider consolidation as we approach the year-end window-dressing period.

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