JS Securities Limited – Weekly Review

Karachi, March 08, 2019 (PPI-OT): Dull activity on the bourse as benchmark index loses 1.5% WoW

The KSE-100 posted lackluster performance as it lost 589 points to close the week at 38,950, marking the fifth consecutive week to close in the red. Average daily traded volumes shrunk 29% WoW to 114mn shares while Daily Traded Value averaged at US$33mn, down 35% WoW. During the week the second minibudget was approved, providing much relief particularly to the auto sector as it allowed non-filers of tax returns to purchase locally manufactured vehicles while limiting them from the purchase of imported vehicles. Furthermore, with the Financial Action Task Force (FATF) decision just months away, the federal government announced seizure of all assets linked to organizations banned by the United Nations Security Council (UNSC) and detained individuals with links to these organizations in an attempt to comply with the requirements set forth by the force.

On a sector wise basis, Oil and Gas Marketing (down 3.0%) and Oil and Gas Exploration Companies (down 4.2%) were among the major losers of the week while Automobile Assemblers (up 7.4%) and Investment Banks (up 11%) posted the highest returns. Net foreign selling increased from US$1.3mn to US$3.5mn, reflecting an increase of 161% WoW. Continuing from last week, foreign selling was mostly witnessed in Commercial Banks and Oil and Gas Marketing Companies. Other significant news flows from the week include: (1) US$1bn grant committed by China for nearly 20 social sector programs, (2) Expression of interest by two Chinese groups to invest nearly $2bn in Pakistan’s housing sector, (3) issuance of orders to set up a third LNG terminal on a fast track basis and (4) Saudi Arabia’s vow to support Pakistan in settling disputes with India.

SBP reserves inch up 1% WoW to US$8,116.5mn

According to the latest updates, Foreign exchange reserves with the State Bank of Pakistan inched up by just 1% to settle the week ending March 1st 2019 at US$8,116.5. Foreign reserves with banks clocked in at US$6,839.7mn, up US$60.7mn (up 0.9% WoW). These aggregate to a Total Foreign Exchange reserves of US$14,956.2 (up 0.95% WoW).

Private sector borrowing swells 92% in 8MFY19

According to the State Bank of Pakistan, private sector borrowing during 8MFY19 has swelled by nearly 92% YoY despite monetary tightening measures (cumulative 450bps rise in interest rates). Lending from conventional banks has increased by more than 100% to Rs409bn while Islamic banks have lent Rs90bn, reflecting a staggering increase of 278%.

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