JS Securities Limited – Weekly Review

Karachi, April 15, 2016 (PPI-OT): Index drops 0.6% WoW amid political disturbances

The KSE-100 index ended the week down 0.6% WoW basis as political uncertainty edged up a notch in the aftermath of the Panama Leaks. As a result, both average traded volumes (-31% WoW) and value (-18% WoW) took a hit. Of the major sectors, Cements (-1.5% WoW) and Power (-1.3% WoW) closed in the red zone mainly on account of general profit taking observed during the week whereas Oil and Gas sector recovered by 1% WoW on the back of recovery in international crude oil prices, providing some respite to the overall index level.

Other major news during the week included (1) auto sales numbers rising by 11% MoM during Mar-16 with Honda Car (HCAR) and Indus Motor (INDU) posting double digit growths, (2) approval of PIA bill by the government, converting the airline into a public limited company, (3) lifting of ban by Saudi Arabia on export of cement and (4) ECC granting 18 additional months extension to refineries for upgrading their existing facilities. Apart from this, ongoing results season also induced some ripples into the market with Pakistan Oilfields (POL) surprising investors and analysts alike with above consensus 3QFY16 EPS of Rs9.17/share. A number of major results are expected next week (FFBL, LUCK, HBL and MCB among others), which JS Securities Limited believes could contribute in restoring the market’s vigour.

Trade Deficit up 22% MoM and 20% YoY in March 2016

Pakistan’ s trade deficit was up 22% MoM and 20% YoY in March 2016 as Exports fell 3% MoM and 10% YoY and Imports rose 9% MoM and 4% YoY. In 9MFY16, Trade Deficit jumped by 6% YoY to US$16.9bn as 9MFY16 exports declined by 13% YoY to US$15.6bn against 9MFY16 imports declining by 4% YoY to US$32.5bn.

Forex reserves down US$50.6mn from last week

The country’s foreign liquid reserves fell to US$20.834bn for the week ending April 8, 2016 from US$20.885bn in the preceding week. Of the total reserves, US$16.04bn was held by the State Bank of Pakistan (SBP) and US$4.79bn by the commercial banks.

IMF expects gross govt. debt to soar to 65% of GDP

The International Monetary Fund (IMF) has projected gross government debt to increase from 64.4% in 2015 to 65% of GDP in 2016. According to the IMF Fiscal Monitor 2016 “acting now, acting together”, the net debt of Pakistan is projected to go down to 57.5% in 2017 and 55.6% by 2018.

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