The Week in Review For the period May 14, 2018 – May 18, 2018

News This Week

Foreign exchange: SBP's reserves plunge 3.26% to USD10.8bn

FDI increases 2.4% to USD2.24bn in 10 months

Services sector exports fall 11% in nine months

Bank borrowings rise by 15.6%

To service maturing debt, Pakistan to borrow PKR22trn in FY19

Auto sales soar 40% in April; Suzuki hits record

Banks allowed to finance USD940mn telecom towers deal

SBP approval sought for Meezan Bank’s stake sale

KSE-100 – Volumes dry up amid Ramadan

Stock Market Overview

The benchmark index continued its negative momentum throughout the week as political noise in the country rose given Civil-Military tensions over ousted PM's remarks. Moreover, persistent foreign selling, uncertainty over macroeconomics and lack of positive triggers led to the broader market meltdown whereby index settled down at 41,624pts, a decrease of 4.5%WoW. Resultantly, market participation exhibited a decline of 31%WoW and 22%WoW in ADT and ADTV, respectively. Additionally, foreign investors exhibited a net outflow of USD20mn.

JDWS, JSCL, MUREB, HMB and SSGC were the major gainers while UNITY, PAEL, ATRL, CSAP, and FCCL were the major losers in the benchmark KSE-100 this week.

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Market Review The benchmark index continued its negative momentum throughout the week as political noise in the country rose given Civil-Military tensions over ousted PM's remarks. Moreover, persistent foreign selling, uncertainty over macroeconomics and lack of positive triggers led to the broader market meltdown whereby index settled down at 41,624pts, a decrease of 4.5%WoW. Resultantly, market participation exhibited a decline of 31%WoW and 22%WoW in ADT and ADTV, respectively. Additionally, foreign investors exhibited a net outflow of USD20mn. During the week, PAMA released automobiles data for Apr’18 that clocked in at 25,567 units, posting a growth of 40%YoY/14%MoM. Furthermore, Edotco Pakistan Private Limited (Edotco PK) successfully obtained approval from the SBP, allowing local lenders to fund the acquisition of 13,000 tower by Edotco currently under Deodar Private Limited (Deodar). On the macro front, country’s foreign exchange reserves held by SBP decreased to USD10.8bn, down by 3.3%WoW, owing to the external debt servicing. Pakistan’s external debt soared to USD91.8bn as of Mar’18 which suggests that the figure may touch USD100bn as the country faces grave challenges in meeting growing external financing requirements. On the other hand, foreign direct investment (FDI) in Pakistan increased by 2.4%YoY to USD2.2bn in 10MFY18 mainly on the back of energy and construction projects.

Outlook We expect political situation to take the front seat and dictate the market direction. Furthermore, market participation is expected to remain dull during the month of Ramadan. Moreover, we expect status quo monetary policy which is due to be released next week.

KSE-100 – Volumes dry up amid Ramadan

Date Open High Low Close Change Vol (mn)

14-May-18 43,516 43,595 42,431 42,499 -2.5% 176

15-May-18 42,510 42,608 41,845 42,460 -0.1% 181

16-May-18 42,483 42,580 42,199 42,301 -0.4% 78

17-May-18 42,273 42,301 41,834 41,870 -1.0% 57

18-May-18 41,887 41,974 41,458 41,624 -0.6% 83

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News This Week

Economic highlights & Data points

Foreign exchange: SBP's reserves plunge 3.26% to USD10.8bn| (Tribune): Foreign exchange reserves held by the State Bank of Pakistan (SBP) again came under pressure, falling 3.26% on a weekly basis, according to data released by the central bank on Thursday. On May 11, foreign currency reserves held by the central bank were recorded at USD10.8bn, down USD364.1mn or 3.26% compared with USD11.2bn in the previous week. FDI increases 2.4% to USD2.24bn in 10 months| (The News): : Foreign direct investment (FDI) in Pakistan increased 2.4% to USD2.24bn in 10MFY18, the central bank data showed on Tuesday, mainly on the back of energy and construction projects. Services sector exports fall 11% in nine months| (The News): Pakistan’s exports of services declined 11% to USD3.86bn during the 9MFY18, the Pakistan Bureaus of Statistics (PBS) said. Services exports stood at USD4.31bn in the corresponding period last year. In 9MFY18, services sector’s imports surged 7.17% to USD7.71bn. Trade deficit in services increased 34% to USD3.84bn during the nine-month period, according to PBS. Bank borrowings rise by 15.6%| (Dawn): According to the weekly statement of position of all scheduled banks for the week ended April 27, 2018 deposits and other accounts of all scheduled banks stood at PKR12,276bn after a 0.74% decrease over the preceding week’s figure of PKR12,186bn. Compared with last year’s corresponding figure of PKR11,214bn, the current week’s figure was higher by 9.47%. To service maturing debt, Pakistan to borrow PKR22trn in FY19| (Tribune): As the country falls deeper into payments obligation, the federal government has sought the National Assembly’s approval to borrow a record PKR22trn in the next financial year to serv ice its maturing public debt, an amount 44% or PKR6.7trn higher than the figure for the ongoing year.

Sector and Corporate highlights

Auto sales soar 40% in April; Suzuki hits record| (The News): Automakers on Friday reported robust sales growth in April, with Suzuki posting a record for monthly sales, as low cost consumer finance and high demand from ride-hailing services pulled buyers into showrooms. Auto sales jumped 40% in the month of April 2018 compared to the same period last fiscal, Pakistan Automotive Manufacturers Association (PAMA) data showed. Banks allowed to finance USD940mn telecom towers deal| (The News): The central bank allowed local lenders to fund a joint venture firm between a Malaysian telco and a local conglomerate to acquire an estimated USD940mn worth of telecom towers in Pakistan. “Edotco Pakistan Private Limited (Edotco PK) has successfully obtained approval from the State Bank of Pakistan (SBP), allowing local lenders to fund the acquisition by Edotco PK of Jazz’s portfolio of 13,000 tower assets currently under Deodar Private Limited (Deodar),” SBP approval sought for Meezan Bank’s stake sale| (The News): Kuwait-based Noor Financial Investment Company (NFIC) plans to sell 9.59% of its 49.1% stake in Meezan Bank Limited (MEBL), seeking approval from the State Bank of Pakistan, a statement said Wednesday. The MEBL in statement to Pakistan Stock Exchange said the company owns 522.03mn shares in the bank representing 49.1% of the issued and paid-up capital, lying in a blocked account maintained by Central Depository Company (CDC).

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Stock Market – Last week in pictorals

Chart 1: KSE-100 Index

Source: PSX

Chart 2: KSE Advance/Decline Ratio

Source: PSX

Chart 3: Pak Foreign Portfolio Flows (US$mn; US$=PKR115)

Source: NCCPL

Chart 4: KSE- Volumes & Values

Source: PSX

Chart 5: Price to Money Ratio

Source: NCCPL

Chart 6: Off market activity

Source: PSX

Economy Watch

Chart 7: Revenue Collection (PKRbn)

Source: SBP

Chart 8: Forex Reserves (US$mn)

Source: SBP

Chart 9: Import & Export (US$mn)

Source: SBP

Chart 10: Foreign Exchange Rate (PKR/US$)

Source: SBP

Chart 11: 6-mth T-Bill Yield (%)

Source: SBP

Chart 12: Yield Curve (%)

Source: SBP

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Stock Market Synopsis Last week This Week %Change 1M 3M 12M

Mkt. Cap (US $ bn) 77.6 74.7 -3.7% 80.7 81.9 96.4

Avg. Dly T/O (mn. shares) 167.4 114.9 -31.3% 154.6 184.5 190.2

Avg. Dly T/O (US$ mn.) 56.7 44.4 -21.7% 58.1 69.9 84.5

No. of Trading Sessions 5.0 5.0 0.0 22.0 64.0 250.0

KSE 100 Index 43,594.8 41,623.5 -4.5% 45,478.6 43,627.1 50,956.6

KSE ALL Share Index 31,586.0 30,397.7 -3.8% 32,750.6 31,456.9 35,113.9

Chart 13: KSE-100 Active Issues (ADTO-million shares)

Source: PSX

Chart 14: KSE-100 Least Traded Issues (ADTO- shares)

Source: PSX

Chart 15: KSE-100 Top Gainer (% change)

Source: PSX

Chart 16: KSE-100 Top Losers (% change)

Source: PSX

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