Pakistan equities decline 1.0 percent in the week

KARACHI: Pakistan Stock Exchange (PSX) benchmark KSE-100 Index corrected 1.0 percent, down 401 points, for the week ended February 15, 2019 as investors opted for profit taking post a 10 percent gain in January 2019.

“The domestic equity bourse remained under pressure at the start of the week as speculation over the weekend suggested that a deal had been secured with the IMF, but by Monday morning it was clear that this was just a rumor. Moreover, Moody’s changed the banking system outlook to B3 negative which added further pressure on the market,” an analyst at Arif Habib Limited said.

Market activity also declined with average daily traded value declining 28 percent to $45 million/day and average daily traded volumes declining 29 percent to 135 million shares/day.

Foreign investors remained the major buyers during the week mopping shares worth $12.1 million. Among the domestic investors, individuals remained the major buyer with net buying of $5.9 million. Brokers and companies remained the major sellers, offloading shares worth $6.3 million and $4.7 million, respectively.

On the political landscape, preparations are in full swing to welcome the Saudi Arabia’s Crown Prince Muhammad Bin Salman, due to arrive on February 17th. As per news reports, 10 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 percent to $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 $14.9 billion,” a report issued by Elixir Securities noted.

International coal prices cooled down by 2.7 percent to close at $82/ton. With imported coal being a key raw material in cement production, the sector rallied and returned 3.3 percent in the outgoing week with Cherat Cement (CHCC) and DG Khan Cement (DGKC) outperforming their peers, returning 5.4 percent and 5.0 percent, respectively.

As per the Pakistan Automotive Manufacturers Association, sale of passenger cars was recorded at 19,353 units in January 2019, down 2.9 percent YoY. “We attribute this decline to slowdown in economy, interest rate lift off making car financing expensive, higher car prices on the back of PKR depreciation and ban on purchase of vehicle for non-filers for the respective month,” Elixir Securities report noted.

“We expect the market to recover from recent correction and remain upbeat in the following week with the Crown Price of Saudi Arabia Mohammad Bin Salman visiting Pakistan to sign historic deals, further strengthening our relationship with the gulf giant. Whereas the ongoing result season could keep certain scrips under limelight,” an analyst at Arif Habib Limited said in a note.

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