Karachi, June 29, 2018 (PPI-OT): Market makes a minor recovery, up 0.7% WoW
The market made a minor recovery during the week, with the KSE-100 index edging up 274 points (0.7% WoW) to close at 41,911 level, nevertheless an improvement from the preceding week (down 4.7% WoW). Although the market kicked off on a bearish note (possibly due to news flows relating to increase in gas prices), down 659 points at the end of the first trading session (the index cumulatively shed 6.2% during the last four trading sessions), the next three days saw the market jump 1,020 points (up 2.5%), which was likely due to (1) attractive valuations perceived by investors following massive correction, (2) Positive news flows on ongoing amnesty scheme, and (3) fiscal year-end factor.
Market participation also witnessed an increase, as volumes rose by 6.8% WoW to reach an average of 182mn per day, while average daily value traded moved south slightly by 1.4% WoW to US$60mn. Oil Marketing Companies (OMCs) put up a strong performance, up 1.8% WoW, on news of the government notifying increase in profit margins of the sector by up to ten percent from July 1, 2018.
Cements (up 0.7% WoW) also enjoyed a bullish run, which was likely due to news flow regarding pressure from the apex court to construct dams in Pakistan. Additional burden was probably caused due to Pakistan’s placement on the FATF grey list, which would create additional scrutinization of the country’s international trade. Other news of note included (1) Foreign exchange reserves dipped by US$602mn WoW and (2) INDU raised car prices by Rs50k-250k across variants.
Development spending comes under axe as deficit grows
The government has restricted the disbursement of the Public Sector Development Programme (PSDP) to Rs752bn, compared to allocation of Rs1,001bn, i.e. only 75 percent of the budgeted allocation for FY18, mainly due to massive and higher-than-expected fiscal deficit. In the previous year, i.e. FY17, the government had disbursed Rs740bn out of total budgetary allocation of Rs800bn, which amounted to roughly 93 percent allocation for the development program.
International Steels Limited kick-starts new plant
International Steels Limited (ISL) has commenced operations at its new plant to become the country’s largest cold roller with an output capacity of 1mn tons per annum.