Stock Review.

Byline: Shabbir Kazmi

Index keeps falling; investors poise some political and economic news snag

Despite positive news flows at the start of the week, a barrage of weak volumes, mediocre results, skipped payouts by IPPs and lack of concrete development on the passage of the Supplementary Finance Bill by the parliament equity market performance subdued. The benchmark Index of Pakistan Stock Exchange (PSX) declined by 1.16%WoW during the week ended 22nd February 2018 to close at 40,016 level. Key news flows during the week were: 1) Saudi Crown Prince Mohammed bin Salman signed investment agreements worth US$20 billion during his high-profile visit to Pakistan, 2) the delay in the passing of a supplementary bill in the National Assembly dampened its likely impact of tax relief to businesses and individuals, 3) the country's current account deficit during January 2019 narrowed to US$809 million, falling by 47%YoY from US$1.544 billion recorded during December 2018 and 4) India pressing for Pakistan to be kept on a terrorism financing watch list following an attack in occupied Kashmir.

Gainers of the week were led by: PSO, MCB, OGDC, POL, whereas laggards included: KAPCO, PSMC, UBL and MLCF. Daily trading volumes climbed 18.8%WoW to 125.13 million shares, but remained well below levels seen during earnings season. The volume leaders were: KEL, PIBTL, PAEL and LOTCHEM. Earnings announcements during the coming week include INDU, NML, NCL, PIOC, DGKC, ASTL and PPL. Any pickup in activity would bode well for market participants, where illiquidity has caused erratic moves in main board sectors, relegating investors to the sidelines. Geopolitical developments, circular debt clearance and passage of the mini-budget through parliament remain major flashpoints for investors in the near term.

During the week ended 15th February, 2019, total liquid foreign exchange reserves of Pakistan were reported at US$14,794.6 million. A point of concern was that the reserves held by State Bank of Pakistan (SBP) further decreased by US$163 million to US$8,043 million due to external debt servicing and other official payments. Net reserves held by commercial banks were reported at US$6,751.6 million.

Pakistan's first and the largest Islamic bank, Meezan Bank (MEBL) announced profit after tax of Rs2.7 billion for 4Q2018 (EPS: Rs2.3), up 70%YoY. The result was above market expectation. The prime reason for growth in income was the rise in net spread earned, up by 57%YoY...