LAHORE - The investors endured another week of insipid market performance, as overhang of ongoing political events combined with uncertain economic outlook continued to keep investors sidelined. There was, however, some interest was witnessed in the fertilizer sector on the back of strong Aug-2017 off-take and rising international urea prices and oil & gas exploration sector as POL announced a new oil and gas find and international oil prices touched their highest levels since Oct-2015. On the other hand, cements (-3.7 percent WoW) were yet again a key laggard as provisional data for Sept-2017 suggests a decline of 18 percent MoM in domestic demand during the month. Banks too dragged down the index as NBP (-15.3 percent WoW) is expected to take a significant hit of Rs48b after the Supreme Court on Monday dismissed appeal filed by the bank with respect to its pension fund case. HBL (-2.3 percent WoW) also continues to face the ill effects of the recent fine imposed on it by the US Regulators. Overall, the benchmark KSE-100 index declined by 0.8 percent WoW to close at 42,409. Activity continues to remain dismal, with average trading volumes of 146mn shares/day (-14 percent WoW) and average traded value of $59m/day (31 percent WoW) during the week. Key buyers were mutual funds with net buying of $6.2m, while foreigners were also net buyers of $0.5m during the week.

Experts said that the outgoing week saw KSE-100 decline by 0.8 percent/341 points. Participation thinned as trading took a backseat to politics; average volumes were down 14 percent while value plunged 31 percent to $59m.

During outgoing week, banks sold $10.3m, while funds bought $6.2m worth of equities. Foreigners bought $0.5m compared to $0.4m last week. Buying centered in banks ($7.5m), cement ($3.5m) & OMCs ($2.8m), while selling in E&P ($10.4m) & fertilizer ($0.7mn).

After 14-month lull, foreigners were significant buyers of $28.3m in Sep’17; concentrated in banks ($14.5m), cement ($11.6m), fertilizer ($10.9m) & OMCs ($9.5m); selling in E&P ($13.7m). KSE-100 index gained 2.9 percent in Sep’17, after 3 months decline, before which KSE-100 gained 2.6 percent in May’17. On quarterly basis, KSE-100 declined 8.9 percent in 1QFY18, worst quarterly performance in 36 quarters or 9yrs since Jun’08/4QFY08.

During the week, State Bank of Pakistan (SBP) Monetary Policy Committee decided to keep the policy rate unchanged at 5.75 percent. Going forward, there are anticipations of gain in exports on account of favorable global economic conditions, improvement in domestic energy supplies, and incentives given to exporting industry. Compared with information in July 2017, exports present an encouraging picture. However, imports are also expected to rise due to ongoing CPEC related investments and domestic economic activities, although at a slower pace than in FY17. Amid declining number of workers proceeding abroad there are prospects of sluggish growth in workers’ remittances. Hence, an improvement in the country’s external account and its foreign exchange reserve relies upon timely realization of official financial inflows along with thoughtful adoption of structural reforms to improve trade competitiveness in the medium term.

State Bank of Pakistan (SBP) results of the latest Consumer Confidence Survey, conducted during September 5 to 9, show that, in general, consumers’ confidence on Pakistan’s economy has increased. The overall Consumer Confidence Index increased by 5.07 percent compared to the previous survey, held in July 2017. Consumer Confidence Index rose to 173.81 in Sep’17 as compared to 165.43 in Jul’17. Average urea prices (Middle East) eased by 15$/5 percent WoW to settle at $275/ton, while futures were trading b/w $260-265 on Friday, pointing towards lower average prices in first week of October.

The Searle Company (SEARL) notified financial results for FY17, reporting consolidated PAT (attributable to owners) of Rs2.4b translating to EPS of Rs15.3, up 12 percent YoY. Revenue grew 17 percent to Rs13.3b while gross margins were stable at 53 percent. Along with the result SEARL announced final cash dividend of Rs8/sh and 20 percent bonus shares. The stock closed at Rs403.9, hitting upper limit, while it has shed 45 percent from its 52w high of Rs739/sh.

Sapphire Textile Mills (SAPT) reported FY17 consolidated EPS of Rs159, up 61 percent YoY. The company did not declare any year end entitlement. Tariq Glass (TGL) reported FY17 profit after tax of Rs760mn (EPS: Rs10.2), up 53 percent YoY. Sales were up 23 percent YoY to Rs9.9b while gross profit only rose 19 percent as margins contracted by 60bps.

Along with the result, TGL declared final cash dividend of Rs4.15/sh.