During
the week ended 20th April, 2017, Panama case verdict cleared political
uncertainty along with upcoming MSCI inclusion, positive sentiments are likely to
prevail going forward. Ongoing results season is likely to accelerate momentum,
while budgetary proposals can direct market performance accordingly. The key
news flow during the week included: 1) Net foreign direct investment (FDI)
soared 12.4%YoY to US$1.6 billion during first nine months of current financial
year, 2) FY18 federal budget would be presented on May 16’17 as announced by
Finance Minister, 3) Current account deficit increased by 161%YoY to US$6.13 billion
during nine months of current financial year, 4) ASTL announced expansion in
steel melting/rolling mill capacity by 200,000/270,000 tons per annum and 5) GoP
rejected all bids in the latest PIB auction held on 19th April. Average
daily trading volume increased by 62.44%WoW to 277.66 million shares where
volume leaders of the week were: EPCL, TRG, KEL, ASL (63.4mn shares), and 5)
BOP (48.5mn shares).Top performers during the week were: SNGP, ASTL, CHCC, HASCOL,
and HCAR, while from the main board only MCB ended up in the red zone.
The
current account deficit (CAD) reduced to US$562 million in March’17 from US$822
million in February’17 (down 32%MoM). Despite slight increase in trade deficit (+0.85%MoM),
the monthly improvement came on the back of higher remittances in March’17 amounting
to US$1.69 billion, recording sequential rise of 20%MoM. However, current
account dynamics remain considerably weaker on YoY basis, with US$122 million
surplus recorded in March'16, due to continued escalation in imports (+34%YoY
to US$4.3 billion) particularly on higher auto/machinery imports and higher
crude oil prices. The cumulative CAD for 9MFY17 surged to US$6.1 billion,
posting an increase of 161%YoY bringing the deficit close to 1.9% of the GDP.
This reflects weak trade dynamics. Going ahead, current account is expected to
continue its downward slide on account of falling exports, rising imports and
remittances remaining flat.
FFBL is
scheduled to announce earnings for 1QCY17 on Monday, 24th April
where AKD Securities expects the company to post net loss of Rs97 million (LPS: Rs0.10)
as compared to a net loss of Rs514 million (LPS: Rs0.55) for 1QCY16. This
reduction in loss is expected on the back of: 1) a 19% YoY increase in topline
to Rs5.24 billion reflecting 54%YoY likely increase in DAP off‐take to 109,000 tons
and 2) improvement in gross margin (GM) to 12.7% for 1QCY17 due to significant
decline in phosphoric acid prices diluting the effect of significant reduction
in DAP prices due to depressed international prices.
EFERT
is also scheduled to announce its quarterly financial results on the same day.
The brokerage house expects EFERT's earnings to nosedive to Rs1.19 billion
(EPS: Rs0.90), down 44%YoY. The decline in earnings is expected on the back of:
1) GM declining to 33.2% on account of reduction in urea prices (down 9%YoY)
due to depressed farm economics and low international prices, down by 10%YoY to an average of US$210/ton in
1QCY17.
