Lahore - Market witnessed volatility at the start of the week with benchmark KSE-100 index declining by 996pts in the second trading session amidst unabated selling. Foreign investors continued their net selling rampage, offloading another US$25mn worth of equities during the week to slam uncertain political and economic climate. Local mutual funds followed suit, offloading US$9mn worth of equities. However, some recovery was seen during the later part of the week as bottom-fishers jumped in to capture value in sectors such as (1) fertilizers (up 1.4 percent WoW on flight to safety), (2) E&Ps (up 0.4 percent WoW value buying) and (3) commercial banks (up 4.7 percent WoW on anticipations of increase in policy rate in upcoming MPS to be announced tomorrow). Performance of these three heavyweights was enough to counteract decline in value of other heavyweights such as (1) OMCs (down 1.8 percent WoW on weak demand), (2) power generation (down 2.1 percent WoW), (3) autos (-2.3 percent WoW on weakening sales performance), (4) cements (down 4.4 percent WoW on tumultuous macros) and (5) pharmas (down 3.8 percent WoW on account of exchange rate vulnerabilities) etc. Much of the ongoing rocky ride can be attributed to expected return of convicted ex-PM Nawaz Sharif to Pakistan, causing shockwaves across the political spectrum as fears of widespread unrest have erupted. For now however, uncertainty is likely to persist until July 25 when General Elections are scheduled to be held.

Experts said that despite starting the week with an approximately 1000 points decline, the bulls returned to KSE-100 index closing the second week of July, 2018 flat wow at 40,271 level, down by a meager 13 points. Market closed positive in last 4 days of the week, with index returning to the 40K level in today’s trading session.

Although attractive valuation levels have kept the market participants interested, yet political noise and economic woes continue to keep participation thin as indicated by average daily volume of  131mn and average daily traded value of US$ 49.3mn for the week.

Towards the end of the week, banking stocks have rallied owing to anticipated increase in interest rates in upcoming monetary policy announcement on  July 14, 2018.

Foreigners continued to remain net sellers for the 10th consecutive week, wherein, net selling amounted to US$26.6mn. On the local front, mutual funds were net sellers of US$9.5mn whereas insurance were net buyers of US$13.8mn.  

United Bank (UBL) has entered into a new written agreement with Federal Reserve Bank of New York (US Fed), effective Jul 2, 2018 upon termination of the earlier written agreement. The new agreement requires UBL to take steps to strengthen its Bank Secrecy and Anti Money Laundering (AML) Compliance, Customer Due Diligence and Suspicious Activity Monitoring and Reporting programs. The FED has not imposed any civil penalty yet on UBL. As per the agreement, UBL has to submit reports on Corporate Governance & Management Oversight, Bank Secrecy & Anti-money laundering Compliance review, Customer due diligence and other compliance reports within the next 30-60 days of the said order.

Ghadoon textile Mills Limited (GADT) has approved to evaluate setting up hydro power projects having collective capacity of around 150 megawatts. Future investment will be based on the outcome of such evaluation and necessary approvals.

As per news, the Federal Board of Revenue (FBR) would start the process of identifying a large number of new taxpayers from its existing data after July 31, the last date of the amnesty scheme, FBR Member Accounting Faheem-ul-Haq said. Rising global oil supply, driven by crude giants Saudi Arabia and Russia, may come under pressure as key producers face disruptions, the International Energy Agency said on Thursday.

Sindh Engro Coal Mining Company (SECMC) planned a coal supply agreement with Shanghai Electric Corporation to undertake expeditious expansion of Thar Block-II -- a move likely to further trim the coal tariff, an official said on Thursday, as per news.

The country's total liquid foreign exchange reserves declined by over $ 301 million during last week due to external debt servicing. According to State Bank of Pakistan's weekly foreign exchange report issued Thursday, the total liquid forex reserves held by the country stood at $ 16.084 billion as on July 6, 2018 compared to $ 16.385 billion on June 29, 2018.