Stock Review.

Byline: Shabbir Kazmi

Healthy volume witnessed, support packages from China and UAE in spotlight

For the week ended 2nd November 2018, the benchmark Index of Pakistan Stock Exchange (PSX) closed above 42,000 points, up 3.57%WoW. Investors awaited details of support packages from China and UAE, while closely watching the on-going country-wide protests. Moreover, healthy volumes were witnessed at the bourse with average daily trading volume rising by 7.07%WoW to 322.32 million. Volume leaders included: BOP, KEL, PAEL, LOTCHEM and PIBTL.

The key news flows impacting the market sentiments included: 1) Advisor to Prime Minister on Commerce asking cement manufacturers to be ready for an unexpected surge in demand due to PM's housing scheme, 2) Privatization Commission coming up with an updated list of entities including State Life Insurance, SME Bank, First Women Bank, OGDC, PPL and Mari Petroleum while dropping loss making entities including PIA, PSM and the discos amongst others, 3) Government of Pakistan (GoP) reviving the ADB sponsored smart metering project worth US$900 million initially for 2 DISCOS, 4) Pakistan rising 11 places on the World Bank's Doing Business Global Ranking to reach 136th among 190 countries, 5) IMF team arriving Pakistan on 7th November 2018 for talks on a bailout package and 6) Pakistan's total foreign exchange reserves falling to US$14.18 billion, including SBP's reserves at US$7.78 billion.

Cement sector scrips grabbing 4 of the 5 top gainers' positions that included: MLCF, DGKC, CHCC, NCL and PIOC, while laggard were: POL, PPL, FFC, FATIMA, and EFOODS. During the outgoing week, foreigners further offloaded equities worth US$12.62 million, in addition to nearly US$400 million already sold in CY18. The details regarding the quantum and composition of the Chinese support package will be the most sought after news by the market participants. While an amicable solution to the ongoing country wide protests is a welcome sign, inflation rate for October 2018 rising higher than estimates at 7.0%, hints towards further hike in interest rate by the central bank, which can put leveraged sectors under pressure.

Habib Bank (HBL) posted 3Q2018 EPS of Rs1.15.00, down by 82% YoY (3Q2017 earnings adjusted for New York State Department of Financial Services US$225million penalty on HBL). The decline is primarily due to high provision for diminution in value of investments, high expense growth as well as flattish net interest income...