LAHORE - Lack of clarity on policies kept the local bourse range-bound in the outgoing week as the KSE 100-index closed a mere 0.2 percent higher from last week at 40,920 points.

However, daily traded value recovered with 19 percent WoW increase to an average of $47m, while average daily traded volume (139m shares) slightly increased by 0.2 percent WoW. Nonetheless, net selling from foreign investors front sustained with $25m net outflow recorded during the week, taking YTD 2018's tally to $296m. On the economic front, uncertainty over increase in gas and electricity prices persisted during the week as investors awaited official notification from government. Moreover, with expectations of higher taxes and cut in Public Sector Development Programme (PSDP), investors also await the new Finance Bill which is due to be announced next week, followed by IMF's staff level team to arrive during the last week of the month.

Foreign exchange reserves of the State Bank of Pakistan (SBP) further plunged by $261m, touching $9.62b. Sector-wise performance depicted refineries (-0.6 percent WoW), glass & ceramics (-0.5 percent WoW), automobile parts & accessories (-2.1 percent WoW) and food & personal care products (-2.9 percent WoW) being ranked amongst the worst performers of the week. On stock-wise performance, Engro Polymer (EPCL, +1.0 percent WoW) closed in the green as the company announced fresh investment of $23m in hydrogen peroxide business. Moreover, Indus Motor Company (INDU, -0.9 percent WoW) and Pak Suzuki Motors Co Ltd (PSMC, -3.3 percent WoW) from the auto sector felt the heat as auto sales for Aug-2018 witnessed a decline of 20 percent YoY. Other key news during the week included (1) government likely to amend Petroleum Policy 2012, (2) China agrees to finance $1.9b Karachi Circular Railway and (3) Prime Minister likely to make first foreign visit to Saudi Arabia next week.

KSE-100 index closed flat in the week under review, as the market added a meager 65 points to the index. Market remained range-bound due to mixed news on economic measures to be taken by new government. At the start of the week, market was abuzz with possibility of a gas price hike which resulted in negative sentiment among investors. However the market rebounded as investors anticipated clarity on economic measures in the meeting of ECC held on 13 Sep, 2018.

During the week, oil & gas exploration companies and fertilizers were the best performing sectors, the former due to increase in oil prices during the week and the latter due to no change in gas prices despite rumors. On the other hand, commercial banks were seen under pressure as a result of foreign selling amounting to $12.1m.

Foreigners sold $26.1m worth of shares during the week vs net selling of $9.9m last week. On local front, insurance companies and mutual funds were net buyers amounting to $11.8m and $10.6m, respectively.

During the week, Orix Leasing Pakistan (OLPL) announced its financial result for FY18, reporting EPS of Rs10.05, up by 9 percent YoY. The increase in earnings was primarily led by 66 percent increase in income from other activities. Simultaneously, 3 percent decline in expenses also supported the bottom-line. The company announced cash dividend of Rs3/share for 4QFY18, as well as a bonus of 20 percent.

Kohinoor Mills (KML) reported its earnings for FY18, wherein its EPS clocked in at Rs4.70, up by 79 percent YoY. Despite 0.6ppt fall in gross margins, rise in profitability is attributable to 13.6 percent decline in expenses and ~2x increases in other income. The company also announced dividend of Rs1.2 per share for 4QFY18.

MARI Petroleum (MARI) and Pakistan Petroleum (PPL) in a Ziarat joint venture (60 percent stake MARI, 40 percent stake PPL) have made a new oil discovery at exploratory well Bolan East-1 in Ziarat Block, Balochistan. The cumulative oil production is 1500bpd (Chiltan Formation at 810 bpd, Moro/Mughal Kot Formation at 690bpd).

The country’s foreign exchange reserves fell by $300m during the week ended on Sept 7, announced the State Bank of Pakistan (SBP). The reserves of the central bank and commercial banks have been falling for the last few weeks. The SBP’s reserves declined by $261m while the holdings of the commercial banks by $39m during the week under review.