Karachi, July 16, 2021 (PPI-OT): Weekly Review
KSE-100 closed flat in the outgoing week at 47,834pts (+0.6%WoW), as investors preferred to remain on side-lines eyeing Eid holidays next week – high-low spread diminished to 0.5% vs. 1.0% in the previous week with avg. volumes contracting 4.0%WoW to stand at 467mn shares, while major activity continued to be in the mainboards (KSE-100/KSE-All volume standing at 0.3x vs. 0.4x avg. CYTD). Similar muted performance was recorded across all sectors with exceptions being Modarabas (+57.3%WoW), and Textile weaving (+9.1%WoW).
Major news flows in the week were, i) LUCK locking-in contract for setting-up plant for manufacturing of Samsung mobiles in Pakistan, ii) COVID positivity rate increasing to 6.1% from 3.8% at the start of the week while Sindh imposed restrictions on certain activities to counter the spread, iii) Cabinet deferring decision to cut Additional Custom Duty (ACD) and Regulatory Duty (RD) on LCVs and Cars in CBU condition,
iv) Ambassador Zalmay Khalilzad’s visit to Pakistan in relation to situation in Afghanistan (Taliban took over positions at Chaman Border during the week), v) SBP reserves reaching 4-year high with receipt of US$1bn Eurobond-tap, vi) Govt. possibly renegotiating PPA with 12 IPPs on advice of the anti-graft watchdog, and vii) Pakistan finalizing agreement with Russia for construction of North-South Gas pipeline, and lastly viii) G20 Finance ministers voting for setting a global floor on corporate tax. Flow wise, foreigners turned net buyers during the week with a net inflow of US$4.6mn, mainly in Cements, Techs, and E and Ps (US$1.3mn each).
On the local side, Insurance and Banks turned out to be the net buyers with US$12.7mn and US$1.7mn, respectively while Individuals and Brokers squared their positions indicated by net sell of US$10.0mn and US$6.3mn, respectively. Top performers during the week were, i) GADT (+23.9%WoW), ii) STJT (+23.8%WoW), iii) PSX (+13.6%WoW), iv) SYS (+7.3%WoW), and v) GATM (+6.0%WoW), while laggards were, i) HASCOL (down 5.0%WoW), ii) SCBPL (down 3.9%WoW), iii) GATI (down 3.5%WoW), iv) PMPK (down 3.2%WoW), and v) NESTLE (down 3.1%WoW).
Outlook
We expect market to remain sideways amid potentially lower volumes next week due to Eid Holidays, while post-Eid performance would be dependent on data points relating to COVID and developments on political front and negotiations with IMF. Moreover, result season is likely to pick pace determine performance outlook for individual stocks. We continue to advocate for thematic plays including Cements, Steel and Construction-Allied while textiles and PSO seems attractive on possibly stronger earnings invigorating investor interests. Refineries have recorded lackluster performance FYTD despite clarity on policy incentives, however we believe earnings announcements would bring fresh interest in the sector.