Karachi, June 29, 2018 (PPI-OT): Weekly Review
With the commencement of its plenary meeting, FATF episode once again came into play with varying news flows setting market direction accordingly in the outgoing week. Losing 659pts on Monday ahead of plenary meeting, the benchmark KSE-100 index staged recovery on emerging clarity over Pakistan’s status in the FATF’s watch-list (being placed only in grey list, later confirmed by FO), with index closing the week at 41,911pts (up 0.66%WoW). Trading activity at the bourse marginally improved during the week, with avg. daily turnover increasing to 181.58mn shares (up 6%WoW).
Key news flows impacting the market during the week included: 1) GoP notifying increase in profit margins of Oil Marketing Companies (OMCs) and dealers for HSD (+PkR0.26/liter) and MoGAS (+0.09/liter), 2) GoP reportedly raising PkR36bn in tax revenue under the amnesty program for undeclared local and foreign assets, 3) Gas utilities demanding an increase in their average prescribed prices for FY19 by PkR357/109/mmbtu (SNGP/SSGC) based on their revenue requirements, however, consumer gas prices will officially be hiked post gov’t notification, 4) Pakistan’s foreign exchange reserves falling 3.30%WoW to US$16.243bn during the week ended Jun 22’18 and 5).
Performance wise, HASCOL (+9.31%WoW), KEL (+6.77%WoW), ASTL (6.64%WoW) and ABL (5.23%WoW) were major gainers in our AKD Universe, while laggards included: 1) CHCC (-7.40%WoW), 2) KAPCO (-5.74%WoW), 3) APL (-2.40%WoW and 4) PSMC (-2.36%WoW). Foreigners continued to offload equity stakes during the week, with net outflow of US$15.52mn compared to net outflow of US$24.53mn in the previous week.
Post FATF’s official announcement (expected by Saturday 30th), we expect investors to once again shift focus towards more dominant economic (interest rate hikes, further devaluation prospects) and political (Accountability Court’s deadline to decide on the corruption references against Sharif family, 2018 National Polls) themes. Moreover, with start of new fiscal year, portfolio rebalancing by local funds could swing momentum accordingly.