The Abacus Prompt - April 2018 Issue

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Stock Market

  • After touching a high of 1,077 pts in March18, the market reversed all of its gains, ending flat at 45,489 pts, down by 0.2% MoM.Graph April 18
  • The benchmark index was unable to sustain the rally despite rising oil prices, anticipation of a populist budget particularly with regards to taxation and amnesty scheme.
  • Performance at the mainboard remained dismal with majority of the key sectors (Cements, Banks, Textile, etc) ending in red.
  • Foreigners were net sellers during the month primarily on account of OGDC deal (35mn shares offloaded at PKR164/share).
  • The average daily volume increased by 9.4% MoM to ~210 mn shares from 192 mn shares in March18.
  • KSE 100 currently has a P/E multiple of 8.52, indicating the market is trading at a significant discount to regional economies.

Currency MarketsCurrency April 18

  • The PKR landed flat against USD in the interbank market. Whereas, speculations and rumors have increased the gap in the open markets where USD was trading at a high of 118 against PKR.
  • USD was at 3-month high against Euro due to weaker than expected German retail sales and anticipation of a tighter monetary policy by ECB. GBP remained low due to weaker than expected economic growth data for the first quarter.
  • CNY depreciated slightly against PKR by 1% due to China FX reserves falling by USD 17.97 bn during the month.
  • SAR and AED both depreciated by 0.11% MoM matching increase of USD against PKR, with both currencies being pegged to the USD.

Commodity Markets

  • International gold prices declined due to higher US bond yields and easing tensions on Korean peninsula resulted in stronger dollar. Locally gold and silver prices followed the international trend.
  • WTI crude oil prices rose at the end of month due to the expectations of renewed US sanctions on Iran, declining output in Venezuela, continuing strong global demand and the Saudi desire to generate additional cash flow. Commodity April 18
  • Local prices of HSD and Motor Spirit increased by ~2% as the government absorbed the price hike through reduction in sales tax.
  • Total cement dispatches were recorded at 4.19mn tons in April, down by 10% MoM and up by 17% YoY. Local dispatches were 3.71mn tons, up 5% MoM and 12% YoY. Strong recovery on export front, where total export dispatches clock in 0.476 mn tons up by 21% MoM and 65% YoY.
  • Cotton prices increased by about 2.7% MoM due to consistent demand, as the supply shortage of quality cotton kept prices rigid.
  • Urea prices observed a slight increase of 0.5% MoM, Rising domestic production of the commodity limited trading activity in the international market.

News Highlights

  • As government completes its tenure at the end of May due to upcoming elections, GoP announced the Economic Survey FY18 and Budget FY19, earlier than usual, at the close of the month.
  • Pakistan received another loan of USD 1 billion from the China Development Bank to meet its FX reserves of USD 11 billion mark.
  • After much delay the new Islamabad International airport was inaugurated on April 20 by the PM, which is set to start operations in May 2018.
  • Lucky Cement Limited announced new international and local investments of around PKR 30 billion to enhance production capacity.
  • SNGPL plans to invest PKR 361 billion to expand its network as the utility envisages more than a million new connections in next 5 years.