JS Securities Limited – Weekly Review

Karachi, May 11, 2018 (PPI-OT): The slide continues for another week

The benchmark KSE-100 index continued its downward trajectory for the second week in a row, declining by another 2.1% WoW to end the week at 43,595pts. Challenges to the national budget FY19 also remained a cause of concern amongst the market participants, keeping fresh investments at bay. No respite from the foreign inflows as well, as the net flows remained negative (US$4.1mn net selling). On the other hand, overall volumes improved during the week by 1% WoW to 167mn and ADTO also improved by 3% WoW to US$57mn as local mutual funds remained busy accumulating positions in a sliding market. In terms of sectors, oil and gas exploration remained the only heavyweight sector which closed in the greenzone as US President Donald Trump scrapped Iran Nuclear deal, sending international oil prices above US$77/bbl level and estimates upgrade by major investment banks around the world.

Other than this, almost all key sectors such as (1) fertilizers (down 0.6% WoW), (2) oil and gas marketing (down 2.3% WoW), (3) automobiles (down 3.0% WoW), (4) cements (down 3.7% WoW mainly on account of increasing international coal prices) and (5) banks (down 3.2% WoW) dragged the overall index. Apart from this, key highlights of the week were (1) winding of budget debate in the National Assembly, (2) concensus amongst cements players to pass-on cost increases, (3) commercial operations of LNG based power plant at Haveli Bahadur Shah, (4) conclusion of Katas Raj case (neutral for cement manufacturers), (5) increase in urea prices of Rs100/bag, (6) cement sales in Apr-2018 registering 18% YoY growth and (7) release of FX reserves numbers (US$11.16bn recorded for the week ending May 4, 2018, down 3% WoW).

External trade statistics show positive trend

Pakistan exports posted 14% YoY increase to US$19.21bn during 10MFY18 from US$16.89bn in the corresponding period of FY17. According to the provisional trade figures, imports during this period also showed 14% growth and rose to US$49.45bn from US$43.33bn. Trade deficit also grew by 14% YoY to US$30.25bn during this period as compared to US$26.45bn during 10MFY18. Exports stood at US$2.14bn in April 2018 as compared to US$1.79bn in April 2017, showing an increase of 19% YoY, whereas imports registered an increase of 3% YoY to US$5.12bn from US$4.96bn in corresponding month of 2017. Pakistan Bureau of Statistics (PBS) also released remittances numbers for Apr 2018 wherein Pakistan received US$16.3bn in 10MFY18, reflecting increase of 3.9% YoY over 10MFY18.

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