LAHORE  - Uncertain political outlook and concerns over economy continued to take its toll on the market as the benchmark KSE-100 index closed 5 percent WoW lower, and in the process made a new intraday low on Friday.

At the end of the week, KSE-100 index has cumulatively lost 2,932 points since the start of the month. This week, mutual funds and foreign investors remained the largest net sellers of $24 million and $2 million, respectively. Mutual Funds were keen to rebalance their portfolios to adjust for seemingly tumultuous political and economic climate. On the other side, however, banks and individuals looked to take advantage of weak asset prices in hopes of capturing benefits of relentless selling.

In this backdrop of overall uncertainty, participation dried in the market with overall volumes declining by 3.4 percent WoW to 183 million shares/day and traded value remained thin at $94 million/day. Almost all listed sectors remained under pressure with key sectors such as Cements (-6.9 percent WoW), OMCs (-4.5 percent WoW), Automobiles (-8.1 percent WoW) and Fertilisers (-4.9 percent WoW) witnessing the major chunk of selling.

According to experts, the KSE-100 index shed a further 5 percent/2,210 points in the outgoing week to close at 2017 to date low of 43,078 points (down 10 percent CYTD). From its peak level seen on May 24, 2017, index is down 19 percent as political and economic concerns weigh on investors sentiments.

Index heavy weight sectors including Commercial Banks and E&Ps were down 4 percent and 3 percent, respectively. Cements and Fertiliser sectors also fell by 7 percent and 5 percent, respectively. Risk of demand slowdown and concerns of price war put pressure on cement stocks. On the other hand, fertiliser sector remained under pressure due to weak demand and excess inventory levels.

Mutual funds were the major sellers during the week with net selling of $23.6 million whereas banks bought $9.4 million. Foreigners were net sellers of $2.0 million during the week as against selling of $31.2 million during last week. Foreigners were major buyer in food sector ($10m) and net sellers of $4.2 million and $3.0 million in E&Ps and Banks, respectively. During the week, JS Bank (JSBL) announced 2Q2017 financial results reporting profits of Rs42 million (EPS Rs0.04), down 88 percent YoY. Earnings decline was due to lower non-markup income that declined to Rs830 million, down 40 percent YoY amid lower capital gains. Net Interest Income (NII) of JSBL declined to Rs1.5 billion lower by 2 percent YoY driven by margin compression.

Habib Metropolitan Bank (HMB) reported 2Q2017 earnings of Rs0.92/share, up 33 percent YoY. Earning was driven by higher NII that grew by 18 percent to Rs3.6 billion due to lower deposit cost driven by improving deposit mix. Effective tax rate also declined to 54 percent in 2Q2017 vs 64 percent in 2Q2016.

Bank of Khyber (BOK) also announced 2Q2017 earnings EPS Rs0.6/share, up 40 percent YoY. NII of the bank remained flat at Rs1.2 billion however 48 percent decline in provisioning expense supported earnings decline. As per the latest data released by PBS, Large Scale Manufacturing (LSM) grew by 5.6 percent in FY17 as compared to 3.1 percent in the same period last year. In June 2017, it was up 3.3 percent as against 6.30 percent in May 2017. Amongst major sectors, food, beverages and tobacco gained 11.5 percent whereas Iron and Steel were up 20 percent.

With an ambitious plan to double the volume of liquefied natural gas (LNG) imports this year, the government intends to ink multibillion-dollar state-to-state gas supply contracts with big African producers – Nigeria and Algeria, sources said. Total foreign exchange reserves stood at $19.9 billion as of August 11, 2017 as compared to $20 billion during the last week. Reserves held by SBP stood at $14.3 billion whereas reserves held by commercial bank stood at $5.6 billion.

MLCF during the week announced to partially finance the 2.2 million tons per annum of grey clinker expansion through 12.5 percent rights issue by offering 65.7 million right shares at a price of Rs65/share (inclusive of premium of Rs55/share) in proportion of 12.5 right shares for every 100 ordinary shares held. The notice further stated that the total project cost is estimated at Rs23 billion which is to be funded by 47.8 percent debt, 33.5 percent internal cash generation and 18.7 percent rights issue.