Karachi, March 27, 2020 (PPI-OT): Weekly Review
The KSE-100 continued its slide down during the outgoing week, closing 8.34% WoW down at 28,110pts, as COVID’19 cases continue to soar. Despite further monetary easing – SBP announced a policy rate cut of 150bps to 11%, taking the cumulative rate cut to 225bps CYTD – and announcement of PkR1.2tn stimulus package at the end of the first trading session, the market sentiment remained bearish. Meanwhile, the KSE-100 also remained insulated to the announcement of massive economic stimulus by the US mid-week, as opposed to visible cheering by the international stock markets.
Major news flow during the week included: (i) announcement of PkR100bn refunds to export sectors along with deferred payment of principal and interests on bank loans, (ii) PkR100bn for deferred payment of loans for small and medium enterprises (SMEs) and agriculture and concessional loans, (iii) Rs15/litre reduction in the prices of petrol, diesel and kerosene with immediate effect, (iv) divestment from government debt instruments by foreign investors reaching some US$1.8bn, (v) PkR depreciating 4.3% against greenback over the week, (v) ministry requesting OMCs to halt petroleum imports Apr’20 onwards and increase their offtake from local refineries, and (vi) GoP considering to approach multilateral lending agencies for additional financial assistance for fighting adverse economic impact of COVID’19.
Resulting from reduced market timings during the week, KSE-100 average traded volumes declined 37.3%WoW to stand at 150.02mn shares. Stocks generating large volumes during the week included: i) KEL (100.0mn shares), ii) UNITY (45.4mn shares), iii) BOP (33.9mn shares), iv) HASCOL (31.5mn shares) and v) MLCF (30.22mn shares). Laggards amongst our coverage universe were: i) HASCOL (down 21.0%WoW), ii) PSMC (down 17.85%WoW), iii) PSO (down 15.7%WoW), iv) ASTL (down 15.48%WoW), and v) DGKC (down 15.19%WoW).
While the market sentiment in the upcoming week is likely going to be dictated by how GoP grapples with rising toll of Covid’19 cases in Pakistan, sectors relatively insulated from direct economic impacts of Covid’19 (Fertilizers, Food, and IT) may manage to remain afloat. The KSE-100 has already shed 33.5% CYTD, vs. anticipated profitability loss of 19.3% in CY20F based on our back of the envelop calculation of the impact of production halt and crude oil averaging at US$30/bbl over 4QFY20, and spike in NPLs. The release of inflation number expected in the upcoming week, and other industry metrics will be crucial in determining the market sentiment from here on.