LAHORE - Regional markets sentiments remained weak owing to tension between Saudi Arabia & Iran, weak manufacturing data from China and the subsequent devaluation of Yuan, and depressing oil prices. Resultantly, the benchmark KSE 100-index also remained under pressure and declined 2.1 per cent to close at the 32,535 index level. Average daily volume increased 5 per cent to 119.8 million shares and average daily value increased 16 per cent to Rs7.6 billion/$72.6 million.
Pharma & biotech, tobacco and household goods were major gainers on a sector level over the week, increasing by 2.5-5.3 percent. Major losers were technology hardware & equipment, oil & gas and media as they declined by 5.5-6.1 percent.
Foreigners were net sellers of $11.2 million worth of shares during the week. Major selling was seen in oil & gas and banking sectors with net selling of $8.3 million and $4.7 million, respectively.
Experts said that the sentiments at the Karachi Stock Exchange remained largely negative, taking cue from regional and global markets. Slump in Chinese equities prompted renewed panic in global market, while global crude oil prices too dropped to as low as $32/bbl during the week. The oil sector was a key underperformer yet again, while pharmaceutical sector rallied on the news that the government has decided to bulk buy hepatitis C and various other vaccines from local manufacturers. The textile sector also remained in the news as government announced that it is likely to provide 60mmcfd of RLNG to the sector at subsidized rates, while a federal minister was quoted as saying that GSP Plus status is likely to remain valid till 2023. As a result, the benchmark KSE-100 Index closed 2.1 percent WoW lower at 32,535, with average traded volumes improving by 5.4 percent WoW. Other highlights of the week were: (1) Pakistan and IMF talks on 10th review likely to begin on Jan 26th, (2) T-bills cut-off yields declining by 3-8bps, (3) 1HFY16 provisional tax collection rising by 17.3 percent YoY to Rs1.374trn, (4) Oil sales rising by 5 percent YoY in 1HFY16 and (5) ECC seeking Law Ministry’s view on extending gas supply to Engro Fertilizers (EFERT). According to a report by United States Department of Agriculture, Pakistan’s cotton imports will rise to 2.7 million bales in 2015-16 from 850k a year earlier. Local production is expected to clock-in at 7.5 million bales, down 29 percent YoY. Output has been weak due to changing climatic conditions, pest infestation and sub-standard seeds.
Pakistan Mercantile Exchange (PMEX) will be introducing Islamic Contracts, Murabahas, which will be in-line with global commodity exchanges. PMEX will be introducing 70 products in the next 5 years which will be deliverable as well as cash settled futures. This will enable Islamic financial institutions to manage liquidity and bring them at par with commercial banks. Total assets of Pakistan’s Islamic banks stand at Rs1.5tn.
In the T-bill auction held earlier this week, govt raised Rs235.2 billion against target of Rs250 billion. The cut-off yields declined by 9 bps as 3-month T-bill settled at 6.30 percent (amount accepted Rs71.4 billion), 6-month T-bill settled at 6.31 percent (amount accepted Rs113.4 billion) and 12-month T-bill settled at 6.31 percent (amount accepted Rs50.4 billion). Pharmaceutical industry stocks were in the limelight during the week on the news that manufacturers have asked the govt to introduce structural reforms in the sector in order to halt declining exports. Ferozsons Lab (FEROZ) in particular grabbed investor interest as the Govt. of Punjab announced that it will be purchasing the company’s Sovaldi (Sofosbuvir) medicine and injections worth Rs600 million for treatment of Heptatis patients.
Book building of Hi-Tech Lubricants Limited was completed. A total of 48.7 million shares were received against the offer of 21.8 million shares at a strike price of Rs62.5/share. The retail portion of 7.25 million shares (25 percent of total issue) will be from Jan 25-27, 2016.