Daily Times

Pakistan Equities declined by 0.9 percent or 396 points Week-on-Week (WoW) closing at 42,447 points.

Trading activity remained lower as average daily traded value stood at $64 million, down 18 percent WoW and /volume stood at 161 million, down 23 percent WoW.

The outgoing week saw a flurry of financial result announcements with major disappointments coming from Engro Corporation (ENGRO), National Refinery (NRL), Attock Refinery (ATRL), Pakistan Oilfields (POL), Attock Cement (ACPL) and Pak Elektron (PAEL).

Globally, Turkish Lira plunged to all-time lows against the US Dollar after United States of America announced tariffs on imported goods from Turkey. As highlighted in our note last week, the economic turmoil in Turkey had a spillover effect on European and Emerging Markets as investors feared contagion for the global banking sector. Resultantly, MSCI Emerging Market Index (MXEF) closed down 4%WoW.

In local political arena, members of National and Provincial Assemblies elected Speakers and Deputy Speakers of their respective legislatures who will run the houses during the next five years. Towards the end of the week, PTI leader Imran Khan was also elected as the 22nd Prime Minister of the country.

On economic front, Pakistan’s Trade Balance was recorded at $ 3.2 billion (down 16%MoM) during July-2018. The decline in trade deficit came on the back of decline in imports by 15% MoM to $ 4.8 billion while exports also fell by 12.8% to $ 1.6 billion. Also, according to State Bank of Pakistan’s (SBP) latest data, country’s total liquid foreign exchange reserves declined by $ 292 million to $ 16.7 billion (down 1.8%WoW). The decline came due to $216 million and $ 76 million decreases in SBP and local banks’ reserves, respectively.

In terms of sector performance, Commercial Banks remained the major index dampener with Habib Bank (HBL, down -6%) alone contributing 142 points to the KSE-100 Index decline.

Foreign Portfolio Investors sold shares worth USD6.6mn during the week followed by mutual funds who recorded a net selling of USD6.2mn. Individuals (USD5.9mn) and Insurance Companies (USD5.5mn) stood as the major buyers during the week.

The result season has so far been disappointing, as there has not been much to cheer about, except for one-off tax gains and/or bonus announcements. Meanwhile investors will keenly watch out for key economic decisions and road map which would be laid out by the new government over the coming weeks. These measures should revolve around the theme of austerity to tame the external accounts – reemphasizing the need to remain defensive in exposure/stock selection in Pakistan Equities, said Elixir Securities’ Research report.

Published in Daily Times, August 20^th 2018.