Karachi, March 11, 2022 (PPI-OT): Weekly Review
In the outgoing week, we saw global commodity prices reach unparalleled highs, affecting the market adversely with KSE-100 losing 2.0%WoW to close at 43,653 pts. Local political uncertainty along with Central Bank’s hint of potential further tightening (as a result of commodities super cycle) also negatively contributed to market sentiments. Average volume for the Index remained neutral, gaining just 0.3% up to 213mn shares this week.
Other major news flows during the week were, i) FATF retaining Pakistan on the grey list, ii) GoP pursuing financial support of about US$21.7bn from China through rollover of existing loans of US$10.7bn and US$10.0bn as deposit fund, iii) Forex inflows in RDAs reaching US$3.6bn in 18 months, iv) Public debt up 9.5% in July-Jan FY2022, v) GoP raising PkR951bn as T-bills’ yields see up to 130bps rise, vi) US and Pakistan agreeing to reinvigorate and revitalize trade and business relationships to enhance bilateral trade and investment, vii) Six-month KIBOR reaching two-year high at 11.93%, and lastly viii) NEPRA increasing electricity tariff by PkR5.95/unit for Jan’22. Sector-wise, the gains remained small, with the top performing sectors being; i) REITs (+0.9%WoW) ii) Close-end Mutual funds (+0.5%WoW), iii) Technology and Communications (+0.5%WoW), while the least favourite sectors were; i) Refinery (-8.2%WoW), ii) Oil and Gas Marketing Companies (-6.5%WoW), iii) Engineering (-6.1%WoW), iv) Modarabas (-5.6%WoW), and v) Vanaspati and Allied Industries (-5.0%WoW).
Stock-wise, top performers were; i) SYS (+11.4%WoW), ii) NATF (+9.5%WoW), iii) SHFA (+6.1%WoW), iv THALL (+5.1%WoW), and v) MLCF (+4.7%WoW), while laggards were; i) MTL (-19.6%WoW), ii) HMM (-16.6%WoW), iii) KTML (-13.3%WoW), iv) UNITY (-11.9%WoW), and v) NRL (-11.6%WoW). Flow-wise, Mutual funds remained as the net sellers, offloading US$7.1mn followed by Foreigners (US$3.1mn), Insurance Companies (US$0.6mn) and Brokers (US$0.3mn). While Banks, Companies, Individuals and Other organizations were on the buying side, with a net buy of US$1.5mn, US$5.5mn, US$0.4mn, and US$3.7mn respectively.
Outlook
Global commodities pared gains this week, leading to a positive impact on the market. This along with local political unrest and Russia-Ukraine peace talks will continue to steer the market’s trend. Additionally, news flows related to ongoing IMF review would also dictate market sentiments in the coming weeks, warranting a closer look. Hence, we advocate for gradual accumulation in fundamental scrips with a longer-term focus. We prefer Banks (on possible further monetary tightening by the Central Bank), select-Techs (SYS, AVN) and other select-value stocks (LUCK etc.)