Daily Times

KSE-100 Index nosedived 401 points or 1% week-on-week (WoW) on the back of profit taking, post a 10% gain in Januarry-2019.

Market activity also declined with average daily traded value/volumes going down by 28%/29%WoW to $45 milliion/135 million shares.

The downward trend in the Benchmark Index during the week was mainly driven by Commercial Banks, Oil Marketing Companies (OMCs) and Fertilizer Sector contributing 128 points (32%), 86 points (21%) and 70 points (17%) to the index decline.

On the political landscape, preparations were in full swing to welcome the Saudi Arabia’s Crown Prince Muhammad Bin Salman, due to arrive on February 16th. As per news reports, eight memorandums of understanding (MoUs) are due to be signed during the visit, to ink agreements worth $ 20 billion.

On the economic front, State Bank of Pakistan’s (SBP) foreign exchange reserves inched up 0.16% WoW (USD13 million) to USD 8.2 billion as at February 8, 2018. This is the third consecutive week when the reserves closed on a positive note. The total liquid foreign currency reserves held by the country stood at USD 14.9 billion.

International Coal Prices cooled down by 2.7%WoW to close at USD82/ton (at the time of writing this note). With imported coal being a key raw material in cement production, the sector rallied and returned 3.3%WoW with Cherat Cement (CHCC) and DG Khan Cement (DGKC) outperforming their peers, returning 5.4%WoW and 5.0%WoW, respectively.

As per the Pakistan Automotive Manufacturers Association, sale of Passenger Cars was recorded at 19,353 units in January-19 (down 2.9%YoY). An equity analyst at Elixir Research attributed this decline to slowdown in economy, interest rate lift off making car financing expensive, higher car prices on the back of Pakistani Rupee depreciation and ban on purchase of vehicle for non-filers for the respective month.

Foreign investors remained the major buyers during the week mopping USD12.1 million. Among the domestic investors, Individuals remained the major buyer with net buying of USD5.9 million. Brokers and Companies remained the major sellers, offloading share worth USD 6.3 million and USD 4.7 million, respectively.

The USD 20 billion worth of MoUs expected to be signed between the governments of Pakistan and Saudi Arabia over the weekend are heartening. But this is only likely to have a meaningful impact on Pakistan Equities if the developments during the Saudi Prince visit transpire into concrete laid out plans for immediate investment/flows into the country, said the analyst.

Published in Daily Times, February 17^th 2019.