JS Securities Limited – Weekly Review

Karachi, December 29, 2017 (PPI-OT): PSX closes 2017 on a happy note, KSE-100 index up 2.5% WoW

Positivity returned to the bourse ahead of year-end closing, as investors’ looked favourably at the appointment of the new economic team by the government. Valuations turned compelling, attracting value buying during the week. Local companies and mutual funds turned out to be largest buyers with US$8.2mn and US$13mn worth of net buying, respectively. Euphoria was also seen in trading activities with average traded volumes improving to 215mn shares/day (+55% WoW) and average traded value increasing to US$79mn/day (+53% WoW) as most of the buying was observed in heavyweight stocks. Key sectors outperforming the benchmark KSE-100 index during the week were (1) Cements (+8.6% WoW) and (2) Pharmaceuticals (+3.2% WoW).

On the other hand, sectors such as (1) Fertilizers (+1.3% WoW) and (2) E and Ps (+1.6% WoW) underperformed the broader index. The outgoing week marks the end of worst year in terms of market performance since 2008 with KSE-100 index plummeting by 15% (US dollar terms: -20%) to close at 40,471 pts. Apart from this, key highlights of the week were: (1) news of impending US$6bn debt repayments in upcoming six months period, (2) tightening government restrictions on import of furnace oil, (3) OGDCL’s discovery at Dhok Hussain, (4) OGRA’s recommendations to increase fuel prices by Rs4-10/litre, (5) ABAD fearing US$250mn commitments during ABAD expo 2017 to be in jeopardy and (6) Indus Motor (INDU) increasing prices with immediate effect.

Medium term risks rise for Pakistan according to Fitch

International rating agency Fitch has stated in its report that the decline in Pakistan’s foreign exchange reserves, coupled with widening trade deficit, has raised medium term risks for the country. That said, the agency reiterated that the country was unlikely to face external financing difficulties in the short term.

LSM expands by 8.8% YoY during Oct-17

Large Scale Manufacturing (LSM) grew by 8.8% YoY during Oct-2017, where Iron and Steel Products recorded the highest growth (36.75% YoY), followed by Automobiles (25.83% YoY) and Coke and Petroleum Products (21.64% YoY). Cumulatively, LSM growth clocked in at 9.64% YoY in 4MFY18.

Chinese looking to set up auto plants in Pakistan

A delegation of Chinese companies’ representatives visited Pakistan, expressing interest to set up auto manufacturing and assembly units in the country.

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