Any further development on IMF front along with receiving Chinese rollover of USD$2.3bn is likely to reduce pressure on external front with reserves standing at USD$4.19bn. However, the delays in IMF front and high external financing requirements of around ~USD$28bn will likely lead to further PkR depreciation. We advise investors to take a cautious approach while building positions in the market and we continue to advocate the stocks with dollar-denominated revenue streams (Technology and E&P sector), to hedge against the currency risks or companies with healthy forward dividend yields.
Market’s activity remained lackluster & overall range bound during the outgoing week declining by 1.53%WoW. With regards to IMF situation Officials expects china to rollover more than USD$2bn out of USD$3.7bn due next month that would help Pakistan avert immediate default. Furthermore, SBP FX reserves fell by US$119mn to US$4.19bn as at 19 May 2023, with the import cover still remaining below a month. As per data release by PBS, Pakistan’s GDP growth has been provisionally estimated at 0.29% in FY23 from 6.10% recorded in FY22 amid major decline in agricultural and industrial sector. The KSE-100 index lost -1.53% points during the week, closing at 40,965 points. Participation in the market also witnessed a decline of 9.8%WoW, with volumes averaging at 117.72mn shares compared to 130.5mn shares in the previous week.
Other major news flows during the week included: i) Country receives $15.4bn in financing during Jul-Apr, ii) FY24 Budget: Rs9.2trn tax collection target expected, iii) Textile group exports dip 14pc to $13.7bn YoY, iv) Petroleum group imports show 17.96pc negative growth and v) RLNG prices rise by up to 1.3 percent in May and vi) Per capita income plunges to $1,568. Sector-wise, the top performing sectors were; i) Leasing companies (+5.5%WoW), ii) Cement (+3.5%WoW), and iii) Food & Personal care products (+3.0% WoW), while the least favorite sectors were; i) Close- End mutual funds (-11.1%WoW), ii) Technology and Communication (-5.9%WoW) and iii) Tobacco (-4.9%WoW). Stock-wise, top performers were; i) PGLC (+25.8%WoW), ii) GATM (+24.2%WoW), iii) GADT (+14.2%WoW), iv) LUCK (+7.5%WoW), and v) UPFL (+7.3%WoW), while laggards were; i) HGFA (-13.2%WoW), ii) SEARL (-12.6%WoW), iii) AVN (-11.7%WoW), iv) TRG (-10.4% WoW), and v) AIRLINK (-8.3%WoW). Flow wise, Banks/DFI were the major buyers with net buy of US$2.41mn, followed by Individuals (net buy of US$1.28mn), while Mutual funds were major sellers during the week, with a net sell of US$3.47mn.