The Abacus Prompt - May 2016 Issue

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Stock Market

  • The KSE-100 index increased by 3.81% MoM, closing at 36,062 pts
  • Average daily turnover increased ~16% MoM to 272 mn shares
  • After 10 consecutive months of net selling, foreigners reported a net buy of USD 3.6 mn in May
  • Stock market performance was driven by expectations that MSCI would re-classify Pakistan in its Emerging Markets index
  • Top growing sectors during the month were the Telco (8.2% MoM), IPP’s (5.7% MoM) and E&P (5.5% MoM) sectors

Currency and Commodity Markets

  • The PKR depreciated by 0.07% MoM against the USD, but appreciated 0.48% MoM against the GBP and 2.71% MoM against the EUR during May
  • Domestic Gold prices decreased 3.52% MoM, but Silver prices remained unchanged
  • WTI Crude increased by 8.43% MoM. Domestic HSD and Motor Spirit prices –set during the first of May – remained unchanged
  • Cotton (KCA) prices remained unchanged at PKR 5,600/maund
  • Urea prices decreased about 2% MoM to PKR 1,819/bag
  • Cement dispatches were 3.62 mn tons, up 2.00% MoM and up 18.52% YoY. Prices decreased marginally by 0.06% to close at PKR 512.88/50kg bag

Macroeconomic Profile

  • The SBP cut the policy rate by 25 bps to 5.75%
  • Forex Reserves increased by USD 0.81 bn MoM to USD 21.60 bn
  • CPI Inflation was recorded at 3.17% YoY
  • Exports increased by 6.4% MoM to USD 1.83 bn and imports increased by 4.2% MoM to USD 4.01 bn; resultantly, the trade deficit widened by 2.5% MoM to USD 2.18 bn
  • Foreign remittances increased by 8.6% MoM to reach USD 1.80 bn 
  • Federal tax collection was recorded at about PKR 298 bn
  • FDI was recorded at USD 64.3 mn, up from USD 58.9 mn last month

News Highlights

  • The Federal budget FY2016-17 was unveiled by the GoP. Broad-based salient features include a total budget outlay of PKR 4,894.9 bn (10% higher YoY), revenue collection of PKR 3.601 tr (16% higher YoY), and a budget deficit of 3.8% of GDP (down from 4.2% in FY 16). Additionally, 78.5% of federal spending is budgeted for Current Expenditures, whereas 21.5% is allocated for Development Expenditure. The budget also introduces a new taxation regime and outlines support for certain agriculture/industrial sectors; these are expected to be the drivers behind the GoP’s 5.7% GDP growth target for FY 17 (against 4.7% in the budget for FY 16)
  • The Cabinet Committee on Privatization approved the divestment of  the GoP’s Shareholdings in KAPCO and MPCL
  • Rodrigo Duterte won the 2016 Philippine general election
  • Sadiq Khan was elected the first Muslim Mayor of London