k 9 8 Pakistan Weekly Update kStockSmartresearch.akdtrade.com/documents/Stock_Smart_Weekly_June_22_201… · vestors will likely to take direction from movements in rude Oil. ...
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On the other hand, foreign participation have gone from bad to worse this week with
US$24.53mn outflows compared to US$4.45mn outflows in the preceding week.
StockSmart
AKD Equity Research / Pakistan
Pakistan Weekly Update
Important disclosures including investment banking relationships and analyst certification at end of this report. AKD Securities does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision.
The eagerly anticipated decision regarding raising oil supply in the OPEC biannual meeting in Vienna happening on Friday (today) will be a key event for the market next week where in-vestors will likely to take direction from movements in Crude Oil. Moreover, any decision with regards to the review of Pakistan’s action plan by the FATF in its plenary meeting (scheduled next week from Jun 24-29) can continue to weigh on market sentiment. Howev-er, value investors can be expected to deploy liquidity to take advantage of attractive valua-tions after the sizable decline in share prices witnessed this week.
22 June 2018
Outlook
Index & Volume Chart
Source: PSX & AKD Research
Universe Gainers & Losers
43,683
43,003 42,359
41,637
40,500
41,000
41,500
42,000
42,500
43,000
43,500
44,000
-
50,000
100,000
150,000
200,000
250,000
300,000
19-Jun 20-Jun 21-Jun 22-Jun
(Index)(Shrs'000)
Ready Volume (LHS) KSE100 Index (RHS)
Top- 5 Volume Leade rs
Symbol Volume (mn)
KEL : 77.01
POWER : 41.48
TRG : 40.12
LOTCHEM : 31.73
SMBL : 31.31
Source: PSX & AKD Research
Indices KSE-100 KSE-30
This w eek 41,637 20,490
Last w eek 43,681 21,566
Change -4.68% -4.99%
Indices KMI-30 Allshare
This w eek 70,649 30,152
Last w eek 74,060 31,691
Change -4.60% -4.86%
Mkt Cap. PkRbn US$bn
This w eek 8,539 70.28
Last w eek 8,978 74.57
Change -4.88% -5.75%
Avg. Daily Turnover ('mn shares)
This w eek 170.07
Last w eek 131.84
Change 29.00%
-14.0%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
FATI
MA
FFC
EFER
T
AP
L
FFB
L
LUC
K
HBL
HA
SCO
L
AST
L
MLC
F
37,000
39,000
41,000
43,000
45,000
47,000
0
55
110
165
220
275
330
385
440
495
Jun-
17
Au
g-17
Sep
-17
Oct
-17
No
v-1
7
Jan
-18
Feb
-18
Mar
-18
May
-18
Jun-
18
(Index)(share mn)
Volume (LHS) KSE-100 Index
AKD Securities Limited
22 June 2018
StockSmart
Pakistan Weekly Update
This Week’s Daily Reports
2
Jun 21, 2018
Pakistan Economy: CAD remains elevated for May'18, (AKD Daily, Jun 22, 2018)
Current account deficit for May'18 clocked in at US$1.93bn (marginally down 0.7%MoM) vs.
US$1.95bn in the previous month. Rise in trade deficit to US$2.9bn (up 6.7%MoM) for the
month was offset by a rebound in current transfer (up by US$337mn) and uptick in remit-
tance inflows, recorded at US$1.77bn (reflecting growth of 7.3%MoM). Consequently, cur-
rent account for 11MFY18 surged to US$15.96bn (vs. US$11.14bn in comparable period last
year), surpassing the GoP target of US$15.3bn for full year FY18. The rise in CAD is primarily
a function of growing trade deficit recording at US$27.94 (highest ever recorded), as import
growth (+16.4%YoY) outpaced the growth in exports (13.2%YoY) while remittance showed
marginal recovery (up 3.0%YoY). Consequently, SBP's FX reserves sharply fell to US$10.03bn
by May-end (cumulative drawdown of US$6.1bn in 11MFY18) in the absence of any material
inflows. Going forward, external account imbalance is likely to remain persistent in FY19F
with CAD likely to record at 4.95% of GDP (US$16.3bn) considering higher oil imports
(+16.8%YoY in FY19F). This together with chunky debt repayments (FY19F: US$7.5bn) during
the year is expected to push gross external financing gap to US$20.7bn, according to our
estimates.
Pakistan Fertilizers: From export to import, (AKD Daily, Jun 21, 2018)
After exporting more than 500k tons of Urea last year on account of all-time high inventory
levels, the fertilizer sector dynamics are likley to take another turn this year with the indus-
try expecting acute shortage of urea during the later part of CY18. Currently standing at
436k tons in Apr'18 (significantly lower than last 2yr average of 1.5mn tons - equivalent to
just 0.9x of one month's average production), we expect urea inventory to further go down
to extreme levels in the upcoming months owing to: 1) continued high demand in the ongo-
ing kharif season, followed by Rabi season later in Oct-Dec, and 2) lower industry produc-
tion due to closure of LNG based plants (economically infeasible LNG cost) and limited gas
supply. In this regard, MoI is already considering NFML's proposal of importing 0.6mn tons
urea in the current calendar year to meet the expected demand-supply gap. In our view,
this highly probable import scenario presents a lucrative opportunity to local manufacturers
to further increase local urea price which is currently available at ~12-15% discount to pre-
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AKD Research Team
Analyst Tel no. E-mail Coverage
Umer Pervez +92 111 253 111 (693) [email protected] Executive Director Research & Business Development