LAHORE - The KSE-100 index extended its gains during the week, closing up 1,148 points (+2.5 percent WoW), at 46,638 level.
Optimism continued on the back of rallies in Cement (+3.7 percent WoW), Oil and Gas Marketing (+3.1 percent WoW) and Oil & Gas Exploration (+1.7 percent WoW) sectors. Cement players sustained an upward trajectory as the passing week witnessed another price hike of Rs10/bag, taking cumulative price increase up to Rs60/bag (price increase varying in different cities).
Cement sales data for Mar-2018 was also reported during the week that marked all-time high dispatches, as sales clocked in at 4.65mn tons (+17 percent YoY). Banks (+1.2 percent WoW) took a U-turn during the week as initial profit taking by investors, post surprise 'status quo' decision on the Monetary Policy, was more than offset by net buying from Foreign and Institutional investors.
On the economic front, Foreign exchange reserves once again dropped by $152million, reaching $17.80billion; however developments such as (1) International Islamic Trade Finance Corp lending $3.285 billion to finance trade activities and (2) WB approving $145million to expand home ownership are expected to extend some support to the foreign exchange reserves ahead.
The prime minister finally announced the amnesty scheme towards the end of the week in order to incentivize repatriation of assets back to the country. However, this development coursed minimal impact on the local bourse as investors remained skeptical over implementation and success of the scheme. The week remained full of Budget-FY19 related news flows such as (1) proposal of cut in taxes for salaried class, (2) govt. eyeing fiscal deficit at 4.6 percent for FY19 with PSDP cut on cards, (3) PBA proposing 2 percent collection charges given to banks for performing WHT agent and withdrawal of Super Tax and (4) Fertilizer industry urging government to abolish GIDC on feed gas.
Experts said that the much awaited Amnesty Scheme was finally revealed by prime minister of Pakistan on Thursday, which in our view is more lenient and better than expectations. In early session today, market showed buoyant performance, crossing 47k mark (+584 points), later in second half investors' adapted "wait and see" approach till Amnesty approval from upper and lower house, as many politicians and business leaders expressed reservations over this. Resultantly, index was slightly up by 77 points, taking full week gains to 1,077 points (+2.4 percent), closing at 46,638 level. Market during the entire week witnessed positive trend in anticipation of announcement of Amnesty scheme and government steps for resolution of external account woes.
During the outgoing week, cement and banking sector emerged as the top performers, contributing 195/194 points respectively, as investors sentiments improved in cement sector post recent jump in cement prices by Rs50/bag and investors expectations of passing of amnesty flows through banking channel.
Total volumetric activity in the week showed jump of 8 percent, while value traded increased by 34 percent.
Among participants, mutual funds remained net buyers of $45.4million whereas, banks remained net sellers of $15.9million. Moreover, foreign investors remained net buyer of US$3.6million.
During the week, the International Islamic Trade Finance Corp (ITFC) has agreed to lend Pakistan $3.285 billion, its chief executive. "We will supply Pakistan with $3bn to finance trade activities for a period of three years," Hani Salam Sonbol said, adding that the remaining $285 million would be to finance gasoline purchases.
Three seats of shareholder directors for the board at the Pakistan Stock Exchange (PSX) has received seven applications on the last day of filing their nominations.
Business community and industry leaders reacted with a mixture of cautious optimism and disappointment at the new tax measures announced by Prime Minister Shahid Khaqan Abbasi.