The Week in Review. For the period Dec 3, 2018 Dec 7, News This Week. Stock Market Overview. REP 039

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1 The Week in Review For the period Dec 3, 2018 Dec 7, 2018 News This Week Forex reserves drop to USD14bn SBP hikes interest rate to 10% on inflation fears Consumer inflation clocks in at 6.5% in November FBR needs to collect PKR586bn more in Dec 18 Foreign debt up 13%YoY in JulySept to USD96.7bn Cabinet approves PKR25.7bn gas subsidy for exporters Government allows furnace oil export 48 Punjab sugar mills agree to start cane crushing Cement sales fall 7.1%YoY on construction slowdown Honda jacks up bike prices for sixth time Auto sector assured of continuity of current ADP 41,000 KSE100 Bears dominate again 40,500 40,000 39,500 39,000 38,500 38,000 37,500 37,000 36,500 36,000 Mon Tue Wed Thu Fri Stock Market Overview Although the bourse managed to close in green today, the recent hike in monetary policy deteriorated the attractiveness of equities as evident from multiple negative sessions in the benchmark index, closing the week in red at 38,562pts, a decline of 4.8%WoW. Market participation improved during the week as evident from increase in ADT by 7.5%WoW however ADTV decreased by 18.3%WoW. Mutual funds remained the biggest net sellers exhibiting a net outflow of USD31mn and foreign investors displayed an outflow of USD2.5mn. KEL, BOP, MLCF, PAEL and EPCL were the major gainers while COLG, JLICL, PAKT, BATA, and NESTLE were the major losers in the benchmark KSE100 this week. REP BIPL Securities Limited 5 th Floor, Trade Centre, I.I. Chundrigar Road, Karachi 1

2 KSE100 Bears dominate again Date Open High Low Close Change Vol (mn) 3Dec18 40,383 40,496 39,015 39, % 164 4Dec18 38,890 39,658 38,889 39, % 196 5Dec18 39,607 39,607 38,720 39, % 138 6Dec18 39,371 39,448 38,247 38, % 190 7Dec18 38,300 38,652 37,780 38, % 129 Market Review Although the bourse managed to close in green today, the recent hike in monetary policy deteriorated the attractiveness of equities as evident from multiple negative sessions in the benchmark index, closing the week in red at 38,562pts, a decline of 4.8%WoW. Market participation improved during the week as evident from increase in ADT by 7.5%WoW, however, ADTV decreased by 18.3%WoW. Mutual funds remained the biggest net sellers exhibiting a net outflow of USD31mn and foreign investors displayed an outflow of USD2.5mn. During the week, the Ministry of Industries and Production assured the auto sector regarding the Auto Development Policy to be implemented as is, with no existing player to be provided with Greenfield status. Additionally, the government decided to allow the export of furnace oil while putting a stop on further import of the fuel to help ease off surplus of refineries. Also, cement sales fell 7.1%YoY in November due to demand slowdown in construction and development activities. Moreover, sugar mills in Punjab started crushing after reaching an understanding with the government. Furthermore, the federal cabinet approved a supplementary grant of PKR25.7bn for subsidized gas to five zerorated export sectors in Punjab. On the macro front, country s foreign exchange reserves decreased to USD14.0bn from USD14.6bn, down by 4%WoW owing to external debt payments. Also, annual consumer price inflation (CPI) clocked in at 6.5%YoY in Nov 18 which was below market expectations as prices of perishable food items saw a steep decline. Moreover, Pakistan s outstanding foreign debt and liabilities rose by 13%YoY in 1QFY19 to USD96.7bn, as compared to USD85.6bn in SPLY. Furthermore, Federal Board of Revenue (FBR) has to collect an enormous amount of PKR586bn in the current month to meets its half yearly tax collection target of PKR1.96tn. Outlook Soaring twin deficits and depreciation of PKR against USD due to depleting forex reserves have cornered Pakistan with likelihood of another IMF bailout seeming more apparent. While Pakistan has formerly rejected IMF conditions for the package, further delay will only dampen the sentiments of the investors. Moreover, the clock is ticking on the implementation of 27 actionable plans of FATF that Pakistan has to comply by Dec 15, 2018, which if Pakistan fails to achieve may have serious ramifications for the economy. 2

3 News This Week Economic highlights & Data points Forex reserves drop to USD14bn (The News): Pakistan s foreign exchange reserves fell nearly 4%WoW to USD14bn during the week ended November 30, the central bank said on Thursday. SBP hikes interest rate to 10% on inflation fears (The News): State Bank of Pakistan on Friday hiked key interest rates by 150bps to 10% and sharply cut growth forecasts, warning that the economy faces mounting headwinds from rising inflation and high current account and fiscal deficits. Consumer inflation clocks in at 6.5% in November (The News): Annual consumer price inflation clocked in at 6.5% for November, which remained below the market consensus and the last month reading, as perishable food prices tumbled during the month, official data showed on Tuesday. FBR needs to collect PKR586bn more in Dec 18 (The Nation): The Federal Board of Revenue (FBR) will have to collect mammoth PKR586bn in current month (December) to meet the tax collection target of PKR1.96tn set for the first half (July to December) of ongoing fiscal year (FY19). Foreign debt up 13%YoY in JulySept to USD96.7bn (The News): Pakistan s outstanding foreign debt and liabilities rose 13%YoY in the first quarter of the FY19 fiscal year to USD96.7bn, the central bank data showed on Tuesday. The external debt and liabilities (EDL) came at USD85.6bn at the end of September last year. Sector and Corporate highlights Cabinet approves PKR25.7bn gas subsidy for exporters (Dawn): Two months after the supplementary budget , the federal cabinet on Thursday approved another PKR25.7bn supplementary grant to provide subsidized gas to five zerorated export sectors in Punjab. Government allows furnace oil export (The News): Government has allowed export of furnace oil and decided to stop the fuel import in a bid to help oil refineries ease their surplus that threatened to break down petroleum supply chain. 48 Punjab sugar mills agree to start cane crushing (BR): 48 sugar mills of Punjab have agreed to start much delayed sugarcane crushing season following an understanding between the government and sugar mills association Punjab chapter. Cement sales fall 7.1%YoY on construction slowdown (The News): Cement sales fell 7.1%YoY to 3.3mn MT in November as its demand decreased on slowdown in construction and development activities, industry data showed on Tuesday. Auto sector assured of continuity of current ADP (BR): Ministry of Industries and Production (MoI&P) on Monday assured the auto sector that the current Auto Development Policy (ADP) will continue to be implemented and it does not allow granting Greenfield status to any existing company. Honda jacks up bike prices for sixth time (Dawn): Atlas Honda Ltd (AHL) has increased the prices of bikes for the sixth time this year by PKR2,6008,000 from Dec 1. 3

4 Sep09 Jan10 Jun10 Nov10 Apr11 Sep11 Feb12 Jul12 Dec12 May13 Oct13 Mar14 Aug14 Jan15 Jun15 Oct15 Mar16 Aug16 Jan17 Jun17 Nov17 Apr18 Sep18 Stock Market Outgoing week in pictorals Chart 1: KSE100 Index 40,000 Chart 2: KSE Advance/Decline Ratio , , , , , Chart 3: Pak Foreign Portfolio Flows (US$mn; US$=PKR130) (13.9) 0.7 (19.2) (4.7) 7.6 (5.4) (10.5) (0.5) 6.1 (1.1) (7.2) Inflow Outflow Net Chart 4: KSE Volume & Value Shrs mn Volume Value PKRmn 12,000 10,000 8,000 6,000 4,000 2,000 0 Chart 5: Price to Money Ratio Chart 6: Off market activity 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% PKRmn 1, shrs ('000) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Value Traded (PkRmn) Turnover ('000) 4

5 Dec13 Apr14 Aug14 Dec14 Apr15 Aug15 Dec15 Apr16 Aug16 Dec16 Apr17 Aug17 Dec17 Apr18 Aug18 Dec18 Oct14 Dec14 Feb15 Apr15 Jun15 Aug15 Oct15 Dec15 Feb16 Apr16 Jun16 Aug16 Oct16 Dec16 Feb17 Apr17 Jun17 Aug17 Oct17 Dec17 Feb18 Apr18 Jun18 Aug18 Oct18 Dec16 Jan17 Feb17 Mar17 Apr17 May17 Jun17 Jul17 Aug17 Sep17 Oct17 Nov17 Dec17 Jan18 Feb18 Mar18 Apr18 May18 Jun18 Jul18 Aug18 Sep18 Oct18 Nov18 Dec18 Sep14 Nov14 Jan15 Mar15 May15 Jul15 Sep15 Nov15 Jan16 Mar16 May16 Jul16 Sep16 Nov16 Jan17 Mar17 May17 Jul17 Sep17 Nov17 Jan18 Mar18 May18 Jul18 Sep18 Nov12 Mar13 Jul13 Nov13 Mar14 Jul14 Nov14 Mar15 Jul15 Nov15 Mar16 Jul16 Nov16 Mar17 Jul17 Nov17 Mar18 Jul18 Nov18 Economy Watch Chart 7: Revenue Collection (PKRbn) Chart 8: Forex Reserves (US$mn) 30,000 25,000 20,000 15,000 10,000 5,000 Chart 9: Import & Export (US$mn) 6,000 5,000 4,000 3,000 2,000 1,000 Chart 10: Foreign Exchange Rate (PKR/US$) Import Value Export Value Chart 11: 6mth TBill Yield (%) 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% Chart 12: Yield Curve (%) 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 0.00% 2.0% 3m 6m 1 yr 3 yr 5 yr 10yr 15 yr 20 yr 30 yr Nov18 Nov17 Nov16 5

6 Stock Market Synopsis Last week This Week Change 1M 3M 12M Mkt. Cap (US $ bn) % Avg. Dly T/O (mn. shares) % Avg. Dly T/V (US$ mn.) % No. of Trading Sessions KSE 100 Index 40, , % 38, , ,784.7 KSE ALL Share Index 29, , % 28, , ,672.7 Chart 13: KSE100 Active Issues (ADTOmillion shares) Chart 14: KSE100 Least Traded Issues (ADTO shares) KElectric Limited. Colgate Palmolive (Pak) Ltd. Bank Of Punjab. Maple Leaf Cement Factory Ltd. Jubliee Life Insurance Co Ltd. Pakistan Tobacco Co Ltd. Pak Elektron Ltd. Engro Polymer & Chemicals Ltd. Bata Pakistan Ltd. Nestle Pakistan Ltd Chart 15: KSE100 Top Gainer (% change) Chart 16: KSE100 Top Losers (% change) Philip Morris (Pakistan)Ltd. Attock Refinery Limited. Shifa Int. Hospital Ltd. Attock Petroleum Limited. Standard Chartered Bank Pak Ltd. Hascol Petroleum Ltd. Atlas Honda Limited. Kohinoor Textile Mills Ltd. Gatron (Industries) Ltd. Pioneer Cement Ltd. 0% 4% 8% 12% 15% 12% 9% 6

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