LAHORE - The outgoing week proved to be profitable for stock investors as the benchmark KSE-100 index of Pakistan Stock Exchange shrugged off external woes and closed at 45,560 points, up 1.2 percent WoW.

Some profit-taking was observed during the third session of the week near the 45,000 points level, however the bulls pulled through as investors continued to regard depreciation of rupee against the USD as favorable for the economy as a whole and for foreign portfolio investment in equities (net inflow of $1.8m during the week). Key sectors such as banks (up 1.2 percent WoW on anticipations of rate hike in monetary policy announcement), cements (up 2.0 percent WoW on further prices increases in the north region) and fertilizers (up 2.6 percent WoW on possible price increases amidst improving dynamics) led the charge and contributed most to the index.

In terms of specific scrips, K-Electric (KE) remained the talk of the town as Shanghai Electric submitted fresh intentions to acquire majority stake in the company. Despite delays in the announcement of the new Multi Year Tariff (MYT), the stock appreciated by 11 percent WoW as the Prime Minister assured the acquirer of full support in clearance of bureaucratic hurdles. Activity also improved as indicated by increase in average volume traded (up 24 percent WoW to 240m shares/day) and average value traded (up 13 percent WoW to $86m/day).

Experts said that despite depleting FX reserves Pakistan equities continued its positive trajectory for third consecutive week, gaining 530 points as turbulent political noise is subsiding; foreigners are net buyers for the second consecutive week and investors’ sentiment is improving on back of rising international crude oil and domestic cement prices.

During March 2018, index gained 5.4 percent after posting loss of 2 percent during last month, where banking sector alone contributed 845 points, led by buying from local insurance companies. Similarly, on the back of strong cement demand and rise in cement prices, cement sector added 466 points to the index, where foreigners remained net buyers of $6.3m in cement sector.

On quarterly basis, index posted rise of 13 percent, highest return after four quarters, last seen in 4Q2016 (+18 percent) with return of foreign buying amounting to $31m, after selling for last six consecutive quarters, where last buying was seen in 2Q2016 amounting to $60m. In 1Q2018, banking sector index (BKTI) and Oil & Gas Exploration Index (OGTI) was up by 17 percent & 6 percent, respectively. To recall, experts had highlighted banking and E&P sectors as top picks in Pakistan Strategy Report 2018 that was published in Dec 2017.

During the week, State Bank of Pakistan (SBP) announced monetary policy for the next two months, where policy rate remained unchanged at 6 percent.  Soneri Bank (SNBL) notified exchange about its Board’s approval regarding additional tier I capital raise of Rs4b (inclusive of Rs1b green shoe option) in form of unsecured, subordinated, rates, listed perpetual, non cumulative Term Finance Certificates (TFCs).

Jamshoro Power Company and Siemens-HEI will develop Pakistan’s first supercritical coal-fired power plant in Jamshoro. The engineering, procurement and construction (EPC) contract for the first unit that has a capacity of 660MW was signed at a ceremony in Islamabad. A five-year operation and maintenance (O&M) contract was also signed.

WTI crude oil prices posted a biggest weekly gain in eight months, as they hit a 2-month high on surging geopolitical risk in the Middle East and prospects of an extension of Opec-led production cut into 2019.

Askari Bank (AKBL), in its notice to exchange, stated that BoD of the bank had approved the raising of additional tier I capital through issuance of redeemable capital in the form of TFCs up to Rs6b on Dec 8, 2017. In connection to this approval, the notice stated that these TFCs are convertible to common shares upon occurrence of any of the conversion events as required by SBP.

Government is all set to release economic survey for the current fiscal year of 2018 on April 26 with annual growth estimated at up to 5.7 percent, while the document would also highlight poverty counts and financial losses of wars.