Karachi, October 21, 2022 (PPI-OT): Weekly Review

In the outgoing week, focus remained on the current account position along with upcoming FATF plenary. The KSE-100 remained flat to close at 42,213pts (+0.6%WoW) while average volumes for the index continued their downward trajectory, dropping to 228mn shares and down by 14.4%WoW. Major news flows during the week were; i) Q1FY23 Current Account deficit down by 37%YoY, ii) Trade deficit shrinks by 30.2%YoY in September: PBS, iii) Gas sector circular debt bloats to Rs1.5 trillion, iv) Pakistan receives only USD88m assistance against USD816m flash appeal (Negative), v) Pakistan seeks rescheduling of $27bn debt: Dar, vi) Pakistan forex reserves inch up to $13.250 billion.

Sector-wise, top performing sectors were; i) Tobacco (+11.9%WoW) ii) Close-end Mutual funds (+8.0%WoW), iii) Synthetic and Rayon (+5.1%WoW), iv) Modarabas (+3.0%WoW), and v) Power Generation and Distribution (+1.5%WoW), while the least favorite sectors were; i) Woolen (-7.9%WoW), ii) Textile Weaving (-5.1%WoW), iii) Sugar and Allied Industries (-4.3%WoW), iv) Oil and Gas Marketing (-3.3%WoW), and v) Automobile Parts and Accessories (-2.5%WoW). Stock-wise, top performers in the KSE-100 were; i) PAKT (+11.9%WoW), ii) HGFA (+10.7%WoW), iii) PGLC (+8.9%WoW), iv) SNGP (+8.4%WoW), and v) AKBL (+8.3%WoW), while laggards were; i) BNWM (-7.9%WoW), ii) SHEL (-4.4%WoW), iii) HCAR (-4.1%WoW), iv) NRL (-4.1%WoW), and v) SRVI (-3.7%WoW). Flow-wise, Foreigners were the largest sellers, offloading US$3.4mn followed by Banks and DFI (US$1.5mn), Mutual funds (US$1.3mn), Companies (US$0.4mn), Other Organizations (US$0.2mn), and NBFC (US$0.0mn). While Individuals, Brokers and Insurance Companies were on the buying side, with a net buy of US$5.4mn, US$0.9mn and US$0.6mn respectively.

Outlook

Amid the volatile local political situation, the name of the game is waiting and seeing. If the political turmoil dampens down, some may view it as a bull-trigger for the market, while the potential of anarchy may keep some away. Moreover, with the outcome of the FATF plenary scheduled to be announced tonight, the result will boost/suppress the market. It is likely that the country will be removed from the grey list of the global money laundering and terrorism financing watchdog, which will in turn increase the flows of foreign funding into the equity market. The local currency continued its slump which started last week, as the PkR lost 1.1%WoW owing to the speculation regarding changes in the finance ministry leveling out. Keeping in view the uncertainty, near-term outlook for the equity market remains hazy as both bear and bull-run triggers loom overhead.