Daily Times

Pakistan Equity Market took-off as fears of hung parliament subsided post a decisive Pakistan Tehreek-e-Insaf (PTI) victory in the Elections. During the past week KSE100 Index rose by 3.8% or 1,565 points s to close at 42,786.

Market activity also continued to improve with average daily traded value going up by 5.8% week-on-week (WoW) to $ 70.4 million shares and market volume went up 7.0% WoW to 235 million shares.

Pharmaceuticals returned 6.2%WoW, Cement sector posted a 9.4%WoW return while Oil Marketing Companies (OMCs) returned 6.6%WoW. Key contributors to the above sectors’ performance were The Searle Company, Lucky Cement, DG Khan Cement and Pakistan State Oil.

During the said week, Asad Umar (widely expected to be the next Finance Minister) while speaking to media mentioned exercising all options (including IMF) to pull the country out of twin deficits and economic crisis. The statements pointed towards the wide economic challenges the upcoming government has to face while they also reiterated a high possibility of entering into another IMF Program.

In terms of company specific news, Pakistan Oilfields Limited (POL) announced hydrocarbon discovery from exploratory well Khaur North-01 in Attock, Punjab. According to the notice, 502bpd of oil and 1.2mmcfd of gas was encountered. Our estimates suggest an annualized EPS impact of PKR3-3.5 for the company.

During the outgoing week, Pak Suzuki Motor Company (PSMC) announced its second quarter 2018 financial result, declaring EPS of Rs 4.78, down 43%YoY. Reason for the decline in EPS can be attributed to declining gross margins (due to depreciating Rupee) and likely booking of Super Tax.

Foreign investors, Mutual Funds and Banks remained the major net sellers as they sold shares worth $ 0.4 million, $ 18.4 million, and $ 2.2 million during the week, respectively. This selling was mainly absorbed by Individuals, Corporates and Insurance Companies with net buying of $ 18.9 million, $ 1 million and $ 0.9 million, respectively.

Elixir Research Department’s research report said result oriented movement in stocks is expected next week as result season has kicked-in. Honda Atlas Cars (HCAR), Lucky Cement Limited (LUCK) and Aisha Steel Limited (ASL) are scheduled to announce their financial results early next week. “On political front, investors will keenly watch out for reaction from losing parties; we however believe that they are unlikely to take up a retaliatory approach (Pakistan Muslim League-Nawaz (PML-N) has already decided not to boycott the Parliament). Thus disregarding the unwarranted negative Western Media coverage of the Elections, we reiterate that the current rally has the potential to take KSE100 to 44,000 in the near term”, it added.
Published in Daily Times, July 29^th 2018.