With the CPI remaining below the 5% threshold and T-Bills
yields in the recent auction dropping to 12% for the 3-months and 6-months
paper, down 100bps and 89bps respectively, investors’ optimism has been
bolstered, fueling expectations for continued monetary easing in the upcoming (MPC)
meeting scheduled for December 16, 2024.
The news about potential imposition of additional tax on
banks put the sector under pressure.
Automotive industry sales for November 2024 were reported at
13,856 units, up 37%YoY.
Workers’ remittances grew to US$2.9 billion, up 29.1%YoY.
Foreign exchange reserves held by the State Bank of Pakistan
(SBP) increased by US$13 million to US$12.0 billion as of December 06, 2024.
Average daily trading volume declined by 19.0%WoW to 1.4 billion
shares, from 1.7 billion shares traded in the earlier week.
PKR remained stable against the greenback, closing the week
at PKR278.12 to a US$.
Other major news flow during the week included: 1) assets
under management mutual funds exceeded PKR3 trillion mark, 2) Petroleum
Division will soon start issuing notices to CPPs for disconnecting gas supply,
3) Punjab government to give free solar panels to 100,000 households, 4)
National Savings reduces profit rates by up to 250bps and 5) PAF announced to
buy PIA engineering unit for PKR6.5 billion.
Oil & Gas Exploration companies, Mutual Funds, Oil &
Gas Marketing Companies, Refinery and Miscellaneous were amongst the top performers,
while Commercial Banks, Modarabas, Textile Spinning, Synthetic & Rayon and
Automobile Parts & Accessories were amongst the laggards.
Major selling was recorded by Brokers with a net sell of
US$3.3 million, while Mutual Funds absorbed most of the selling with a net buy
of US$8.6 million.
Top performing scrips of the week were: MARI, SHEL, ATRL,
NML, and PSO, while laggards included: ABL, BAFL, MEBL, BAHL and BOP.
Continuation of monetary easing due to disinflationary
environment and improving macroeconomic environment would make investment in
equities more appealing, currently trading at P/E of 5.7x and DY of 8.7%.
Aforementioned factors, along with declining external
financing requirement under the IMF program, would keep foreigners’ interest
alive.
AKD Securities recommends sectors that benefit from monetary
easing and structural reforms. However, modest economic recovery may limit the
upside for cyclicals.
Top picks of the brokerage house include, OGDC, PPL, MCB,
HBL, FFC, PSO, LUCK, MLCF, FCCL and INDU.
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