Lahore -   The outgoing week ended with a major development in Pakistan’s equity market as a consortium of three major Chinese Stock Exchanges (China Financial Futures Exchange, Shanghai Stock Exchange and Shenzhen Stock Exchange) winning the bid to acquire 40 percent stake in the Pakistan Stock Exchange (PSX) at a price of $212 million.

Whilst the news did little to stir equity prices in the trading session following the announcement, this marked the start of a new chapter in Pakistan’s equity market as strategic sale is expected to open new doors of growth opportunities going forward.

In terms of performance, benchmark KSE-100 index ended flat on a WoW basis at 46,634pts as foreign investors continued to offload positions at high levels ($46 million) net selling recorded during the week).

Local mutual funds, on the other hand, continued to absorb hefty selling amidst hefty liquidity inflows ($21 million worth of equities bought during the week).

Most of the profit taking remained concentrated in heavyweight Oil & Gas (down 1.3 percent) and Cement sectors (down 1.5 percent WoW) given strong performance in the last few weeks.

Apart from this, key highlights during the week were recommendation by OGRA to increase petroleum product prices by up to Rs3.5/liter, release of C/A deficit numbers (up by 91 percent) YoY to $839 million during 5MFY17) and uptick in textile exports (+9.71 percent YoY to $1,762 million in Nov-216).

Experts said that consolidation was seen at the local bourse during the week with the benchmark closing down 0.6 percent WoW to close at 46,634 level. Investor interest continued in small cap stocks as evident from 6 percent WoW decline in average daily turnover (ADT) against a 13 percent WoW decline in average daily traded value (ADTV).

Selling from foreigners continued with net FIPI outflow of $45.6 million in the outgoing week with a total outflow of $126.6 million in the month of Dec’16.

Major outflow was seen in banks ($18.6 million).

All other sectors ($10.6 million) and Cements ($5.9 million).

Selling was absorbed by Mutual Funds ($21.0 million) and individuals ($19.7 million) in the local market.

The long-awaited strategic sale of 40 percent stake of PSX was completed during the week in continuation of demutualization of stock exchange.

The bid was won by a Chinese consortium which included China Financial Futures Exchange, Shenzen Stock Exchange and Shanghai Stock Exchange (cumulative 30 percent) along with HBL and Pak China Investment Company (5 percent each).

Key data points released during the week were Current Account numbers where CAD clocked in at $839 million in Nov’16 (up 2.2xMoM).

Moreover, PBS reported textile export numbers for Nov’16 which depicted an increase of 9.7 percent YoY.

Considering a consolidation momentum, direction of the market is expected to remain range bound in the short term.

Moreover, foreign participation is expected to remain subdued owing to Christmas holidays next week.

Activity is likely to be focused in select sectors - Textiles might attract attention if the much awaited textile package is released next week and fertilizers since numbers are expected to be released. 

During the week, VimpelCom and Dhabi Group announced the completion of Mobilink and Warid deal, after getting approval from the Islamabad High Court (IHC).

According to the announcement, combined legal entity will be serving over 51 million customers in the country.

Engro Polymer (EPCL) made an announcement stating that the BOD has approved the reliability and debottlenecking of its plants that will increase PVC production capacity to 195K tonnes.

The project is expected to be completed by Dec 2017 with an estimated capex of $9 million.

ICI Pakistan (ICI) made an announcement stating that the transaction with respect to acquisition of Cirin Pharmaceuticals (Pvt) Ltd. had been completed and ICI had taken over the control and ownership of the company as a wholly owned subsidiary.