LAHORE - Investors breathed a sigh of relief as the local bourse turned green on a weekly basis for the first time after a three-week bearish run, closing up by 2.4 percent WoW at 38,430 points.
Sectors that contributed to the pull back were (1) refinery (+21 percent), textiles (+16 percent) and autos (+9 percent). Activity levels also registered a bounce back, with average daily volumes at 199m, up 13 percent; however daily average traded value ended down by 5 percent. While there was some semblance of clarity on the external front (IMF, etc.) that helped jolt investors out of hibernation mode, the previous three weeks' cumulative decline of 9 percent also pointed towards a recovery on the basis of valuations. Moreover, the Prime Minister's second visit announcement to Saudi Arabia before the scheduled visit to China and developments on Financial Action Task Force (FATF) front also added to investors' positive sentiments. Given the precariousness of the external account scenario, the decision to impose regulatory duties on 570 imported goods displayed intent to bring down the external deficit. Foreigners, however, remained net sellers with total net selling of $19m compared to $33m in the previous week.
Experts said that the benchmark index ended a hectic week on a positive note, ending a 2 week consecutive slide, rising by 912 points over the week (up 2.4 percent WoW). This increase in the index was the largest since general elections 2018 (after 11 weeks). During the week, Finance Minister Asad Umer’s comments regarding entry into an IMF program within two months as well as potential funding from other multilateral agencies fueled Investors’ confidence.
Experts said that Lotte Chemical Pakistan (LOTCHEM) generated the second most volume during the week (average volume 13mn; stock up by 30 percent WoW) as investors were expecting good earnings. Exceeding expectations, LOTCHEM reported EPS of Rs1.36 along with a surprising DPS of Rs1.5.
Foreigners sold $19.1m worth of shares during the week versus net selling of $32.6m last week. On local front, companies and individuals were net buyers amounting to $5.8m and $5.2m, respectively.
During the week, Al-Ghazi Tractors Limited (AGTL) announced its 3Q2018 results for the year, posting EPS of Rs4.40, down 63 percent YoY. This fall in earnings was due to 1) a 34 percent YoY decrease in sales 2) 45 percent YoY fall in other income and 3) a 173x YoY increase in finance cost.
Abbott Laboratories Limited (ABOT) revealed its 3Q2018 results, announcing EPS of Rs8.35 vs EPS of Rs11.35 for the same period last year. The bottom-line was affected by an 8ppts YoY decline in gross profit margins, 28 percent YoY rise in administration expenses and a 12 percent YoY rise in finance cost.
In a notice to the exchange, Pakistan Refinery Limited (PRL) announced its 4QFY18 results, recording LPS of Rs0.65 vs. LPS of Rs0.02 the same period last year. The increase in losses can be attributed to a 400bps YoY decrease in gross profit margins and a 9 percent YoY increase in administration expenses while even a 39 percent YoY rise in sales was unable to prevent further increase in losses.
Dolmen City REIT (DCR) disclosed its 1QFY19 results, revealing EPS of Rs0.33, up 5 percent YoY. The improvement in earnings can be attributed to a 7 percent YoY rise in sales and a 9 percent YoY fall in administration and operating expenses.
During the week, Pakistan’s foreign exchange reserves fell 1.60 percent to $14.6b during the week ended October 12, as per data published by the central bank. The reserves stood at $14.9b in the previous week. The reserves held by the State Bank of Pakistan (SBP) decreased by $219m to $8.1b due to external debt servicing and other official payments.
Foreign direct investment (FDI) flows into the country dropped 42.6 percent to $440m in the first quarter of the current fiscal year, dragged down by continuously declining Chinese inflows, eroding investor trust, and macroeconomic concerns.