The Week in Review For the period Jul 27, 2018 – Aug 2, 2018

News This Week

SBP reserves surge by USD1.3bn

China agrees to give USD2bn loan to Pakistan

IDB activates USD4.5bn credit facility for Pakistan’s oil imports

Tax amnesty yields PKR21bn in additional revenues

CPI hits 4-year high of 5.8% in July as rupee devaluation weighs

Senate panel seeks measures to cut PKR566bn circular debt

Engro’s 660MW plant connected to national grid

Pak Suzuki raises car, bike prices

1,320MW power plant connected to national grid

KSE-100 – Hefty volumes witnessed at bourse

Stock Market Overview

The week started off on a positive note as uncertainty regarding hung parliament was put to rest. Consequently, the market reacted positively where the index gained 1,468pts in the first two sessions of the week; however, profit taking in the next session eroded some of the gains and the index eventually closed at 42,330pts, up by 0.6%WoW. Market participation remained heightened throughout the week as evident from ADT and ADTV that increased by 65%WoW and 72%WoW, respectively. Foreign investors exhibited a net outflow of USD11.1mn.

PIBTL, PMPK, ASTL, MLCF and DAWH were the major gainers while UBL, SYS, CSAP, ICI, and JSCL were the major losers in the benchmark KSE-100 this week.

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Market Review

The week started off on a positive note as uncertainty regarding hung parliament was put to rest. Consequently, the market reacted positively where the index gained 1,468pts in the first two sessions of the week; however, profit taking in the next session eroded some of the gains and the index eventually closed at 42,330pts, up by 0.6%WoW. Market participation remained heightened throughout the week as evident from ADT and ADTV that increased by 65%WoW and 72%WoW, respectively. Foreign investors exhibited a net outflow of USD11.1mn. During the week, National Transmission and Dispatch Company connected Engro’s 660MW and Hubco’s 1,320MW coal based power plants to the grid. Furthermore, Pak Suzuki raised the price for cars for the fourth time within a range of PKR20k-40k to keep the margins intact. Additionally, the size of circular debt swelled to PKR566bn and the senate panel sought urgent measures to arrest the issue of burgeoning circular debt. On the macro front, foreign exchange reserves of central bank increased to USD10.3bn, up by USD1.3bn. In this regard, Pakistan received USD2.0bn from China to address the issue of dwindling foreign reserves. Additionally, Islamic Development Bank also rolled over its 3 year oil financing facility also increased to USD4.5bn from USD3.2bn (that ended in FY17) for the country. Also, as per the provisional result, FBR managed to collect PKR120bn in taxes under the tax amnesty scheme. Furthermore, CPI for Jul’18 clocked in at 5.8%YoY, the highest in last 4 years, as a result of currency depreciation and rise in oil prices.

Outlook We expect the performance of market to remain contingent upon the developments on political front. Additionally, the ongoing result season would also play its role in dictating the direction of index.

KSE-100 – Hefty volumes witnessed at bourse

Date Open High Low Close Change Vol (mn)

27-Jul-18 42,090 42,845 42,014 42,786 1.7% 385

30-Jul-18 42,786 43,605 42,786 43,557 1.8% 378

31-Jul-18 43,639 43,639 42,603 42,712 -1.9% 275

1-Aug-18 42,743 42,941 42,527 42,810 0.2% 278

2-Aug-18 42,937 42,976 42,286 42,330 -1.1% 285

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News This Week

Economic highlights & Data points

SBP reserves surge by USD1.3bn| (Dawn): Foreign exchange reserves of the State Bank of Pakistan (SBP) rose USD1.3bn to USD10.4bn during the week ended on July 27. The total liquid reserves of the country amounted to USD17.1bn while holdings of the commercial banks were USD6.7bn, the SBP reported in a press release on Thursday. China agrees to give USD2bn loan to Pakistan| (Tribune): In a major development, China has agreed to immediately give a USD2bn loan to Pakistan, a move meant to arrest the sliding official foreign currency reserves and provide much-needed breathing space to the new government. IDB activates USD4.5bn credit facility for Pakistan’s oil imports| (Tribune): The Islamic Development Bank (IDB) has activated its three-year USD4.5bn oil financing facility for Pakistan that will give stability to rupee-dollar exchange rate in the interbank market that has largely remained under pressure. Tax amnesty yields PKR21bn in additional revenues| (Dawn): With the curtain set to drop on the amnesty scheme, nearly 15,000 people have filed returns declaring their domestic as well as foreign assets and deposited PKR21bn in taxes till July 31. CPI hits 4-year high of 5.8% in July as rupee devaluation weighs (The News): Annual consumer price inflation reached almost four-year high of 5.8% for the first month of the current fiscal year of 2018/19, official data showed on Wednesday, as rupee devaluation pushed prices up in the market reliant on oil and food imports.

Sector and Corporate highlights

Senate panel seeks measures to cut PKR566bn circular debt| (The News): Senate standing committee on circular debt on Wednesday underscored a need of urgent measures to cut the size of energy sector’s liability that swelled to PKR566bn. Secretary of Power Division sought reframing of policies especially with regards to power distribution companies (discos) to ensure progress on reduction in circular debt. Mukhtar said boards comprising professionals with no vested interest must be constituted to resolve the issues. He said each disco has its own planning wing, which should come up with new ideas and solutions to ease the situation. Engro’s 660MW plant connected to national grid| (Dawn): The National Trans¬mission and Despatch Company (NTDC) on Wednesday connected Engro’s 660MW coal-fired power plant (Thar) with national grid after it completed a mega project of laying 500kV double circuit quad bundle transmission line originating from Jamshoro. Pak Suzuki raises car, bike prices| (Dawn): Amid strengthening of rupee against the dollar, Pak Suzuki Motor Company Ltd (PSMCL) made the fourth increase in car prices – between PKR20,000 to PKR40,000 – for various models, effective from Aug 1. 1,320MW power plant connected to national grid| (Dawn): The 1,320MW coal-fired Hubco Power Plant has been connected with the national grid after the National Transmission and Despatch Company completed a new 500kV transmission line. The line will also enable the company to evacuate power from its existing plant to the national grid, according to an official source.

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Stock Market – Last week in pictorals

Chart 1: KSE-100 Index

Source: PSX

Chart 2: KSE Advance/Decline Ratio

Source: PSX

Chart 3: Pak Foreign Portfolio Flows (US$mn; US$=PKR115)

Source: NCCPL

Chart 4: KSE- Volumes & Values

Source: PSX

Chart 5: Price to Money Ratio

Source: NCCPL

Chart 6: Off market activity

Source: PSX

Economy Watch

Chart 7: Revenue Collection (PKRbn)

Source: SBP

Chart 8: Forex Reserves (US$mn)

Source: SBP

Chart 9: Import & Export (US$mn)

Source: SBP

Chart 10: Foreign Exchange Rate (PKR/US$)

Source: SBP

Chart 11: 6-mth T-Bill Yield (%)

Source: SBP

Chart 12: Yield Curve (%)

Source: SBP

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Stock Market Synopsis Last week This Week %Change 1M 3M 12M

Mkt. Cap (US $ bn) 67.1 70.1 4.6% 70.9 80.6 92.3

Avg. Dly T/O (mn. shares) 194.2 320.2 64.9% 193.9 163.9 175.9

Avg. Dly T/O (US$ mn.) 60.1 103.2 71.9% 62.7 57.5 71.4

No. of Trading Sessions 4.0 5.0 0.0 23.0 63.0 250.0

KSE 100 Index 42,089.2 42,330.3 0.6% 41,734.1 45,196.4 46,949.0

KSE ALL Share Index 30,377.1 30,715.3 1.1% 30,426.7 32,746.6 33,102.3

Chart 13: KSE-100 Active Issues (ADTO-million shares)

Source: PSX

Chart 14: KSE-100 Least Traded Issues (ADTO- shares)

Source: PSX

Chart 15: KSE-100 Top Gainer (% change)

Source: PSX

Chart 16: KSE-100 Top Losers (% change)

Source: PSX

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