PSX posts record rise after ceasefire with India

Pakistan Stock Exchange (PSX) witnessed a historic day on May 12, 2025 with benchmark KSE 100 index rising by 9.45% in a single day, highest rise after 26 years.

As per Bloomberg, KSE-100 index is the 3rd best performing market in last 12 months in the world.

Market capitalization rose to RKR14 trillion (US$49.8 billion), from RKR12.9 trillion (US$45.8 billion) an increase of 8.7%DoD.

According to Topline Securities, the unwavering optimism was led by immediate/ surprise ceasefire announced between Pakistan and India with mediation from United States on Saturday, May 10, 2025.

Along with this, approval of the first review of EFF program by IMF, unlocking US$1 billion tranche also boosted investors’ confidence.

Amidst Indo Pak turmoil starting from April 22, 2025 incident in Pahalgam, Kashmir, and the market had lost 12.5% in subsequent 12 sessions before recovering 3.5% on May 09, 2025.

The geopolitical tensions also clouded various positive developments of Pakistan market and economy including all time low inflation reading at 0.3%YoY, for April 2025 scheduling of Pakistan’s first review of EFF on IMF board meeting agenda for May 09, 2025 and a surprise cut of 100bps in policy rate to 11% by central bank of Pakistan.

Trading at PSX was halted within 5 mints of its opening, after the benchmark Index opened 9.26% positive. Based on exchange rule, trading is halted for an hour, if the benchmark index moves 5% in either direction and remains in that territory for five consecutive mints.

PSX witnessed trading value of PKR30.4 billion in ready market, up 5.3% higher than previous day.

Surprisingly, at the upper circuit, investor bids totaled PKR13 billion in both ready and future market, with the majority of interest seen in PPL, MLCF and PSO.

According to the brokerage house, local individual investors who had been net sellers in the recent past were aggressive buyers during the session directly and through local mutual funds.

Pakistan’s dollar denominated bonds maturing in 2025 and 2026 increased by 1.2% and 2.0%, respectively.

Similarly, yields on the 2025 and 2026 bonds have decreased to 9.93% and 10.19%, down from 13.27% and 12.56% on Friday.

Local bonds also posted a positive trend, with the 3-year bond yield falling by 8bps, while the 5-year yield also declined by 15bps.

According to annual strategy released in November 2024, Topline Securities had mentioned, approval of first review of IMF in March 2025 would be a key trigger in re-rating of market multiple to historic average.

The brokerage house maintains its base case Index Target of 127,000 for December 2025. However, with higher liquidity, index can cross 150,000 mark assuming successful IMF reviews and political/ geopolitical stability.

PSX benchmark index up 2.14%WoW

Pakistan Stock Exchange (PSX) regained momentum amid easing concerns over tariff tensions and stability in global crude oil prices. This recovery was further supported by improved corporate earnings. The KSE-100 index closed the week on Friday April 18, 2025 at 117,315 points, marking a gain of 2,462 points, up 2.14%WoW.

Average daily traded volume remained low, down by 18.2%WoW, to 455.8 million shares as compared to 557.3 million shares traded a week ago. Commercial banks were key contributors to the market’s rally, driven by stronger-than-expected earnings from UBL.

Moreover, Fitch upgraded Pakistan’s rating to ‘B-’ from ‘CCC+’, amid expectations that continuation of stable economic policies will persist in supporting accumulation of foreign exchange reserves and contain external funding needs.

Alongside, news that the government and commercial banks have signed a term sheet for PKR1.2 trillion, as part of efforts to eliminate circular debt.

On the macroeconomic front, remittances by overseas Pakistanis for March 2025 touched a record high of US$4.1 billion, taking the current account surplus to US$1.2 billion —the highest monthly surplus on record.

Power generation in March 2025 was reported at 8,411GWh, up 5%YoY.

Other major news flow during the week included: 1) Pak-IMF technical-level talks to commence next week, 2) Budget to offer relief for salaried class, 3) IT exports surge to US$2.8 billion in 9MFY25, 4) Kuwait extends oil credit facility for two years, and 5) Urea and DAP sales drop by 54%YoY each during March 2025.

Vanaspati & Allied Industries, Leasing Companies, and Jute were amongst the top performing sectors, while, Woollen, Synthetic & Rayon, and Tobacco were amongst the laggards.

Major selling was recorded by Insurance Companies with a net sell of US$35.9 million. Individuals and Other Organizations absorbed most of the selling with a net buy of US$30.9 million.

Top performing scrips of the week were: PGLC, UBL, ATLH, SAZEW, and KTML, while laggards included EPCL, AGL, BNWM, IBFL, and HALEON.

Lower oil prices and favorable standing among exporting peers amid reciprocal tariffs are likely to support the economy and strengthen the outlook for a return to single-digit interest rates in CY25.

According to AKD Securities, the KSE-100 index is anticipated to sustain its upward trajectory, with a target of over 165,000 points by end December 2025. This expectation is primarily based of strong earnings in Fertilizers, sustained ROEs in Banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and structural reforms.

Top picks of the brokerage house include, OGDC, PPL, PSO, FFC, ENGROH, MEBL, MCB, HBL, FCCL, INDU, ILP and SYS.

 

 

PSX benchmark index down 3.27%

The Pakistan Stock Exchange (PSX) plunged by 3,882 points on Monday amid global market turmoil following China’s retaliatory tariffs against the United States. The benchmark KSE-100 index plunged by 3,882.18 points, or 3.27% to 114,909.48 from the previous close of 118,791.66.

Trading was earlier halted at the PSX for an hour after the benchmark index plummeted by 6,000 points triggering the suspension, only to drop another 2,000 points when trading resumed.

The automatic circuit breakers are designed to prevent panic selling and provide investors time to reassess during extreme market volatility.

The benchmark KSE-100 index initially declined by 6,287.22 points, or 5.29% by 11:58am (PST), before trading was halted. Shortly after reopening, it declined by a cumulative 8,687.69, or 7.31%, from the last close to 110,103.97 at 1:15pm.

At 2:02pm, the index was at 113,154.63, down by 5,637.03 points or 4.75%, from the last close.

The previous time that the PSX had seen such a massive slump was on December 19, 2024 when the KSE-100 index shed 4,795.31 points amid rising political noise and missile program-related US sanctions on Pakistani companies.

Awais Ashraf, director research at AKD Securities, attributed the decline to “investors’ fears that tariff hikes could lead to global recession through weaker demand”.

“We believe being an import-led economy … the imposition of US tariffs would benefit us due to possible decline in global commodity prices,” he added.

Mohammed Sohail, chief executive of Topline Securities, also attributed the decline to the global market crash.

He noted that the stock market had halted after falling 5pc to cool down around 12pm.

He said that the oil and gas exploration sector, technology, and textile sector were expected to be affected as they were either linked to global commodity prices or global aggregate demand.

Arif Habib Limited, in a note, said this was a historic day-on-day decline, leading to a market halt.

Yousuf M. Farooq, director research at Chase Securities, said markets were broadly down on fears of a global recession. About the initial decline, he had noted that the index had witnessed a relatively modest drop compared to other regional markets.

He noted that there was notable selling pressure in oil and banking stocks.

“Lower oil prices are expected to negatively impact earnings for oil exploration companies,” he stated, highlighting that at the same time, textile exporters could “face headwinds from new US tariffs”.

“While these tariffs pose short-term risks, particularly for the textile sector, the overall impact of the US trade policy may prove neutral to positive for Pakistan — especially if commodity prices stay low,” he added.

On the government’s role, he stressed that the federal government would have to “move quickly and start negotiations for the removal of tariffs from Pakistani products”.

PSX experiences slight pullback

Pakistan Stock Exchange witnessed a slight pullback during the week, retreating after reaching its highest-ever closing a week ago. The benchmark index closed at 117,806 points, down by 635 points or 0.54%WoW as compared to last week's closing at 118,442 points.

Average daily trading volume also dropped by 38%WoW, to 317 million shares, as compared to 508 million shares traded a week ago.

The profit taking was driven by substantial selling by Insurance companies, alongside month-end rollovers, which added to investors’ unease before Eid holidays.

Several positive developments emerged during the week, as IMF confirmed reaching the Staff Level Agreement (SLA) with the authorities in the first review of EFF, supplemented with a 28-month arrangement of US$1.3 billion under Resilience and Sustainability Facility (RSF), pending approval of the IMF’s Executive Board.

GDP growth for 2QFY25 was recorded at 1.7%YoY, with Agriculture recovering by 1.1%YoY amidst a 5.4%YoY decline in crops growth.

PKR largely remained stable against the greenback throughout the week.

Other major news flow during the week included: 1) IMF team due in May to finalize FY26 budget, 2) GoP to slash power tariffs soon, 3) Turkiye, Denmark to support climate fight, 4) Net metering contract term limited to 5 years, and 5) Pakistan receives US$9.77 billion via RDA as of February 2025.

Tobacco, Glass & Ceramics, and Vanaspati & Allied Industries were amongst the top performing sectors, while Leather & Tanneries, Paper & Board, and Technology & Communication were amongst the laggards.

Major selling was recorded by Insurance Companies with a net sell of US$8.8 million. Individuals and Other Organizations absorbed most of the selling with a net buy of US$9.3 million.

Top performers during the week were: PAKT, UBL, ATLH, NPL, and ABOT, while laggards included: PKGP, SRVI, KTML, CHCC, and NML.

According to AKD Securities the arket is expected to remain positive in the coming weeks, with the recent announcement of a staff-level agreement serving as a key trigger for momentum.

The benchmark index is anticipated to sustain its upward trajectory, primarily driven by strong earnings in fertilizers, sustained ROEs in Banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and economic stability.

Top pick of the brokerage house includes, OGDC, PPL, PSO, FFC, ENGROH, MEBL, MCB, HBL, LUCK, FCCL, INDU, ILP and SYS.

 

PSX benchmark index up 5.6%WoW

At Pakistan Stock Exchange (PSX) positive momentum continued, with the benchmark KSE-100 index posting a weekly gain of 6,236 points or 5.6%WoW and closing at 117,587 points on Friday, January 03, 2025. The rally was led by the Banks, Fertilizers, and Investment & Securities cos.

The removal of ADR tax and implementation of additional taxation resolved uncertainty over the taxation regime, fostered optimism as banks would shift focus toward deposit growth.

Higher dividend expectations from fertilizer stocks and ongoing restructuring further bolstered investors’ confidence.

On the macro front, inflation eased to a 7-year low of 4.1%, taking real positive interest rates to 890bps, implying further potential rate cut in the upcoming Monetary Policy Committee meeting. Statements from the Finance Ministry and the Prime Minister hinting at interest rates dropping to single digits further fueled this optimism.

A 14%YoY increase in imports widened the trade deficit to US$2.4 billion at end December 2024. Meanwhile, 1QFY25 GDP growth stood at 0.9%, driven by Agriculture and Services sector growth of 1.2% and 1.4%, respectively, while the Industrial sector contracted by 1.0%.

Prime Minister launched home-grown Economic Revival Plan during the week, targeting GDP growth of 6% by FY28, boosting exports to US$60 billion, and taking immediate measures to reduce electricity cost.

Market participation also improved significantly, with average daily traded volume rising by 32%WoW to 1.04 billion shares from 0.79 billion shares a week ago.

Foreign Exchange Reserves held by State Bank of Pakistan (SBP) declined by US$143 million WoW to US$11.7 billion as of December 27, 2024.

Other major news flow during the week included: 1) FBR falls PKR386 billion short of revenue target in first half of the current financial year, 2) Sale of 15% stake in Reko Diq to be finalized soon, 3) OMC volumes for the month of December were up 3%YoY while 1HFY25 volumes were up 4%YoY, 4) Local cement sales decline 4.8%YoY in December, and 5) IMF refuses reduced sales tax rates for refinery sector.

Engineering, Textile Spinning and Banks were amongst the top performers, while Sugar & Allied and Tobacco sectors were laggards.

Major selling was recorded by Companies and Other organizations with a net sell of US$11.3million and US$9.1 million, respectively. Mutual Fund absorbed most of the selling with a net buy of US$16.9 million.

Top performing scrips of the week were: i) PGLC, PSX, EFERT, DAWH, and MTL, while laggards included: TRG, FCCL, AICL, INDU, and PABC.

Market is expected to maintain its positive trajectory, driven by an anticipated shift of funds from fixed income securities to equities amid falling fixed income yields.

With easing inflation, the upcoming MPC meeting will remain a key focus.

Over the medium term, the KSE-100 is anticipated to sustain its upward momentum through CY25, where Pakistan’s leading brokerage house, AKD Securities forecasts KSE-100 Index to reach 165,215 points by December 2025, primarily driven by the strong profitability of fertilizer companies, higher sustainable ROEs of banks and improving cash flows of E&Ps and OMCs, benefitting from falling interest rates.

PSX benchmark index up 5%WoW

Pakistan Stock Exchange (PSX), despite experiencing volatility recorded a hefty increase of 5,248 points in benchmark index. Market closed at another high of 114,302 points, marking an increase of 5%WoW on Friday, December 13, 2024.

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.

 

PSX benchmark index up 3.5%WoW

Pakistan Stock Exchange (PSX) continued its positive momentum, buoyed by last week’s key catalysts of interest rate cut and Pakistan’s inclusion on the IMF executive board agenda. Consequently, the benchmark index reached an all-time high, closing at 82,074 points with a weekly gain of 2,741 points, up 3.5%WoW.

Overall, the bullish sentiment was predominantly driven by high-dividend-yielding sectors including Banks, E&P, and Fertilizers, as falling fixed-income yields led to a rerating of these sectors.

Current account balance for August 2024 posted a surplus of US$75 million, largely underpinned by a 40%YoY increase in remittances. Additionally, exports also remained higher during the month, with growth largely supported by an annual increase of 13% in Textile and 40% in Food exports.

Subsequently, LSMI activity also rose by 2.4%YoY in July 2924, with Textiles and Food driving output expansion.

The GoP reduced POL prices for the fourth consecutive time, lowering these by over PKR80/liter compared to same period last year. This consistent decline in POL prices is expected to further alleviate inflationary pressures.

The rejection of all bids in recent T-Bills auction and the less-than-target acceptance in the PIB auction, along with declining yields, would potentially shift liquidity toward equities.

On the international front, the US Federal Reserve cut interest rates after four years by 50bps.

Market participation declined by 22.6%WoW, with the average daily traded volume dropping to 469 million shares from 607 million shares in the earlier week.

On the currency front, PKR largely remained stable against the greenback, closing the week at 277.8/US$.

Other major news flows during the week included: 1) ADB assures Pakistan US$2 billion annually in loans, 2) FDI rises to US$350 million in first two months of the current financial year, 3) Power demand slumps 17%YoY in August, and 4) In PIBs auction PKR111 billion was raised against PKR200 billion target.

Top performing sectors were Pharmaceuticals, Commercial Banks, and Fertilizer, while Woollen, Cable & Electrical Goods, and Engineering were amongst the laggards.

Major net selling was recorded by Foreigners with a net sell of US$23.2 million. Mutual Funds absorbed most of the selling with a net buy of US$15.5 million.

Top performing scrips of the week were: MARI, SHFA, HBL, MEBL, and MCB, while laggards included: SML, YOUW, WFUG, TGL, and PIBTL.

IMF Executive Board’s approval, along with continued monetary easing would keep equities in focus, with the market trading at an attractive P/E of 3.7x and a DY of 13.2%. The completion of the FTSE rebalancing would further boost investor confidence.

AKD Securities recommends sectors benefiting from monetary easing and structural reforms, particularly high-dividend-yielding stocks, which are expected to relate as yields align with fixed-income returns.

PSX average daily trading volume up 28.5%WoW

The benchmark index of Pakistan Stock Exchange showed signs of weakness earlier in the week since Pakistan was not included in the IMF’s executive board meeting agenda, which led to a weekly loss of 0.4%WoW, closing at 78,488 points.

The Government of Pakistan (GoP) has requested Saudi Arabia to increase it’s lending by US$1.5 billion from existing US$5 billion and are also seeking US$4 billion from Middle East based commercial banks to seize the external financing gap.

The global rating agency Moody’s upgraded Pakistan’s debt ratings to Caa2 from Caa3 which instilled positivity among investors.

Market participation remained elevated, with the average daily traded volume rising to 602.12 million shares from 468.06 million shares a week ago, up 28.6%WoW.

According to news flows FBR is likely to miss August 2024 collection target by PKR50 billion.

Foreign exchange reserves held by State Bank of Pakistan (SBP) rose by US$112 million on a weekly basis to US$9.4 billion as of August 23, 2024.

During the week secondary market yields saw a marginal increase, which brought the 3-month yield to 18.05% and 1-year to 16.95%.

Furthermore, PKR largely remained stable against the greenback throughout the week, closing the week at PKR278.54/US$. 

Other major news flows during the week included: 1) Punjab extended PKR14/unit power relief to federal capital, 2) finance minister announced incentives to attract foreign direct investment, 3) CPEC debt re-profiling plan amounting to US$8 billion prepared, 4) ECC approved two remittance incentive schemes and 5) Foreign investors repatriate US$139 million in July 2024.

Jute, Transport, Exchange Traded Funds, Food & Personal care products and Textile Weaving were amongst the top performing sectors, while Textile spinning, Leather & Tanneries, Vanaspati & Allied Products, Real Estate Investment Trust and Paper & Board were amongst the worst performers.

Major net selling was recorded by Banks/DFI with a net sell of US$3.85 million. Individuals absorbed most of the selling with a net buy of US$5.84 million.

Top performing scrips of the week were: NBP, COLG, GLAXO, MTL, and MARI, while top laggards included: ABOT, AVN, SRVI, SML, and PSX.

Looking ahead, market is expected to continue its positive momentum with anticipated August 2024 lower inflation reading, upcoming MPC result and any development on the IMF deal remaining in focus.

Analysts opine that sectors benefiting from monetary easing and structural reforms would remain in the limelight. With declining fixed income yields, high dividend-yielding stocks are expected to remain favorable.

 

Pakistan Stock Exchange posts 2.8%WoW decline

Pakistan Stock Exchange remained lackluster throughout the week ended on June 07, 2024, closing at 73,754 points with benchmark index losing 2,124 points or 2.8%WoW.

The downward pressure was primarily driven by concerns over the potential elimination of the final tax status for CGT and dividends, which would align their tax rates with the normal income tax rate.

Additionally, Moody’s statement suggesting a status quo in the upcoming Monetary Policy Committee (MPC) meeting also exerted some pressure on the market. These negatives overshadowed positive developments during the week.

On the macro front, inflation in May'24 eased to a 30-month low of 11.8%YoY, resulting in positive real interest rates exceeding 1,000bps. This fueled market participants' expectations for rate cuts in the June 10 MPC meeting.

Furthermore, the announcement of monetary easing from developed economies, including the European Central Bank and the Bank of Canada, amplified this sentiment.

May trade deficit shrank by 15%MoM to US$2.1 billion, while record-high remittance inflows of US$3.2 billion, hinting at another potential current account surplus, raising expectations that FY24’s current account could close in surplus.

As the FY25 budget approaches, new tax measures have surfaced with the IMF demanding an additional PKR2.0 trillion in revenue, while the local officials considering additional taxation of PKR1.4 trillion.

With an overall volatility in market, participation also decreased by 5.3%WoW, with the average daily traded volume falling to 423 million shares as compared to 447 million shares a week ago.

On the currency front, PKR appreciated by 0.05%WoW to close at 278.2/US$.

Other major news flows during the week included: 1) FBR tax collection in May exceeded target by RPK15.21 billion, 2) Pakistan has to repay US$10 billion by July, 3) May Petroleum products sales was up 7% to 1.39 million Tons YoY, and 4) Cement sales was Up by almost 8% during May.

Top performing sectors included: Paper & Board, Jute, and Textile spinning, while the laagered included: Inv. Banks/ securities cos., E&Ps and Refinery

Major net selling was recorded by Individuals with a net sell of US$8.9 million. Insurance and Banks/ DFI absorbed most of the selling with a net buy of US$7.0 million and US$6.8 million.

Top performing scrips of the week were: YOUW, SHEL, MTL, SEARL and TRG, while the laggards included: CEPB, FFBL, PSX, PIBTL and OGDC.

Looking ahead, the upcoming MPC meeting on June 10th will be in the spotlight, with any rate cut expected to shift the market’s focus towards cyclical sectors.

Additionally, the Federal Budget 2025 will significantly influence investor sentiment. Given the prevailing uncertainties, the market is likely to remain volatile in the short run, with clarity expected to emerge after the budget announcement. Until then, AKD Securities advises investors to adopt a wait-and-see approach, although any corrections should be seen as opportunities for value buys.

 

Pakistan Stock Exchange witnesses bullish trend throughout the week

Pakistan Stock Exchange (PSX) witnessed persistent bullish run during the week ended on November 10, 2023. The benchmark index closed at 55,391 points, up 4.27%WoW, with daily trading volume averaging at 544.05 million shares, up 20.8%WoW.

The sentiments were driven by an overall positive atmosphere owing to IMF’s review under the SBA, after the completion of technical talks, followed by policy level discussions scheduled to begin on Monday.

Overall, discussions seem to be on a positive trajectory with IMF mostly questioning the fiscal targets and delay regarding gas price revisions. On the macro front, expectations of a reduction in CAD during FY24 to US$4.5 billion, alongside healthy agri output to boost exports are the positive triggers.

Further, crude oil prices continue to slide amidst uncertainty over China’s economic recovery and stability in US reserves, Arab light/ WTI/ Brent being traded at US$84.7/ US$76.7/ US$81.1 per barrel.

On the currency front, US$/PKR slid for the second straight week, ending at 287.03, down 0.95%WoW amidst rising import demand, alongside concerns regarding IMF talks.

Furthermore, PIB auction held during the week saw yields declining, with 3/ 5/ 10 year bond yields slipping to 17.39%/ 15.95%/ 15.10% (down 180/ 100/ 15bps), reinforcing expectations of an end to further monetary tightening.

Other news for the week were: 1) SIFC assessed Sinopec’s interest; 2) US$3 billion projects approved for flood-hit areas; 3) IMF talks uncovered major gaps; 4) Cotton production jumps by 83%; 5) Reko Diq deal with Saudi firm to be signed this year; 6) Nepra allowed Discos PKR0.4/unit tariff hike under FCA for September 23.

Top performing sectors included Chemical and Cement, while Close-end Mutual Fund saw major selling. Flow-wise, major selling was recorded by Insurance with a net sell of US$16.9 million, while Banks/DFI absorbed the selling with a net buy of US$16.3 million.

Top performing scrips were: CNERGY, KOHC, CEPB, FCCL, and KTML, while laggards included HGFA, UNITY, BNWM, EFUG, and ABOT.

Top volume leaders were: CNERGY, PRL, HUMNL, KOSM, and WTL.

Going forward, analysts maintain an optimistic outlook of the market and believe the present rally to continue, albeit with episodes of profit taking. This stance stems from an expected positive conclusion of the IMF’s review amidst improving macro indicators and fading uncertainty over the upcoming elections, even though the country faces tough economic decisions in the near future.

Overall, brokerage houses advise their clients to focus on fundamentals, with exposure in high dividend yielding scrips.

Pakistan Stock Exchange benchmark index posts 1.4%WoW gain

The week ended on April 28, 2023 was marred with political uncertainty. The United States asked Pakistan to move ahead on stalled reforms by the IMF, while promising technical help in worst economic times. The IMF awaits clarity on the cross fuel subsidy scheme. In addition to this, foreign exchange reserves inched by US$30 million to US$4.5 billion as on April 20, 2023, culminating to an import cover of less than a month.

The KSE-100 index closed the week at 41,581 points, posting 1.40%WoW gain. Participation in the market was a pleasant surprise, daily trading volumes averaging a little above 208 million shares during the week as compared to around 105 million shares in the prior week depicting 98%WoW gain.

Other major news flows during the week included: 1) Saudi Arabia expected to sign deal for US$2 billion deposits after Eid, 2) GoP cuts growth rate to 0.8 percent, 3) profit repatriation during first 9 months of the current financial year plunges by 82% to US$233 million, 4) CPPA-G seeks positive adjustment of PKR1.17/unit, 5) regulator asks DISCOS to freeze capacity payments and 6) GoP bank borrowings surge 182% to PKR3 trillion.

Top performing sectors were: Vanaspati & Allied Industries, Tobacco, and Investment Banks, while the least favorite sectors included: Close End Mutual Funds, Leasing Companies, and Glass & Ceramics.

Top performing scrips were: POML, SRVI, DAWH, UBL, and MUREB, while laggards included: PGLC, HGFA, KAPCO, BOP, and PIBTL.

Flow wise, Companies were the major buyers with net buy of US$15.9 million, followed by individuals with net buy of US$14.17 million, while Mutual Funds were major sellers during the week, with a net sell of US$1.63 million.

According to media reports, Saudi Arabia and UAE have intimated IMF on financing support giving a relief on external financing shortfall of US$6 billion will dictate the market performance in near term. Moreover, political situation will be in limelight till general elections are held. Keeping that in view, analysts continue to advise scrips that have dollar-denominated revenue streams which hedges the investor against the currency risk, that include the Technology and E&P sectors.

Pakistan Stock Exchange benchmark index declines 9% in CY22

Economic and political issues badly affected Pakistan Stock Exchange (PSX) in 2022. The benchmark index, KSE-100 index, declined 9% during the year. With PKR depreciating 22% against greenback, Index was down 29% in US$ terms.

According to Pakistan’s leading brokerage house, Topline Securities, 2022 was also a turbulent year for global stock markets as US$18 trillion were wiped out in 2022 with drop of approx 20% in MSCI World Index which is worst performance since the 2008 crisis. MSCI EM fell 22%, while MSCI FM was down 29% in 2022.

According to Bloomberg data, Pakistan’s KSE-100 Index was amongst worst performing market in US$ term in 2022.

Due to macroeconomic issues, activity at PSX also remained dull. Average traded volume (ready/cash) per day at PSX was down 52% to 230 million shares/day.

Similarly, average traded value per day was down 59% to PKR7 billion/day which was lowest since 2019.

In futures market, total traded volume and value per day were also down by 33% and 56% to 94 million shares and PKR3.6 billion, respectively.

KSE-100 Index also underperformed as compared to other asset classes in 2022 including Gold (+45%), one-year US$ denominated Naya Pakistan Certificate (+36%) and greenback (+28%).

T-Bills, Money Market Fund and Property indices posted return in the range of 12% to 14% in 2022.

Initial public offering (IPO) market was also impacted due to eroding equity values as only 3 IPOs raised funds in 2022 as against 8 IPOs in 2021. The number of IPOs was also the lowest in 2019 when Pakistan saw just one IPO at PSX.

Selling by foreigners continued in 2022 with net selling of US$127 million. In last 7-years, foreign corporates have sold shares worth of US$2.5 billion at PSX.

Local Mutual Funds and Insurance Companies also trimmed their position in 2022, with Mutual Funds selling US$166 million, while Insurance Companies sold US$128 million.

Selling was absorbed by Local Individuals, Banks and Companies with net buying of US$138 million, US$117 million, and US$78 million respectively.

 

Top performing sectors and scrips of year 2022

Let me and you accept the harsh reality that 2022 was a bad year for Pakistan’s capital market. Market value (market capitalization) of companies listed at Pakistan Stock Exchange (PSX) declined 17% to RKR6.4 trillion. In US$ terms it plummeted 35% to US$28 billion. Still there are some islands of excellence.

Real Estate Investment Trust (REIT), Synthetic & Rayon, and Sugar were the top performing sectors in 2022 as their market cap increased by 12%, 6% and 5% respectively, despite bad market conditions.

Technology sector was up 2% and outperformed the market despite fall in global listed technology stocks.

As against these, Engineering, Automobile Parts, and Miscellaneous sectors remained the worst performing sectors posting decline of 45%, 41% and 34% respectively.

REIT sector that has only one listed company gained in 2022 due to stable dividend yield coupled with changes in regulations on REITs investment for banks. To recall, State Bank of Pakistan (SBP) recently allowed banks to count their investments in shares issued by REIT towards achievement of housing and construction finance targets.

Synthetic & Rayon also posted strong performance led by rally in Ibrahim Fiber Limited (IBFL).

Sugar sector performance was led by JDW Sugar Mills (JDWS) that announced buy back.

Engineering sector (mainly steel related companies) was badly impacted due to economic slowdown and subdued construction activity.

Automobile parts sector also remained amongst worst performing sectors primarily due to import restrictions, high financing rates and lackluster demand.

For its analysis, Pakistan’s leading brokerage house, Topline Securities assumed sectors with minimum market capitalization of US$100 million adjusted for new listings including Adamjee Insurance (AICL), and Telecard Limited (GEMSNL).

Lotte Chemical (LOTCHEM) doubled while Airlink was down substantially in 2022. LOTCHEM was the top performing stock of the market in 2022 where the scrip gained more than 100%. Investors were excited over potential sell off by Lotte Chemical Corporation South Korea (parent company of LOTCHEM) and subsequent public offer for minority shareholders.

LOTCEHM was followed by Faysal Bank (FABL) and Unilever Pakistan Foods (UPFL). The strong stock performance by FABL is on announcement to convert into an Islamic Bank followed by a special dividend.

Similarly, UPFL stock was up 34% as the company posted strong profitability growth of 33%YoY in 9M2022.

Systems Limited (SYS), Pakistan’s largest listed IT firm remained amongst the top performing stocks for the third consecutive year as the company continued to post strong profitability growth in spite of economic challenges.

Air Link Communication (AIRLINK) declined 54% due to low profits led by lower volumetric sales.

Gul Ahmed Textile Mills (GATM) also reported decline by 52% amid slowdown in textile exports.

Searle Company Limited (SEARLE) was down 52% due to lower profits led by falling gross margins driven by significant jump in raw material cost and company’s inability to immediately pass full impact on to consumers.

 

Pakistan Stock Exchange benchmark index witnesses 2.5%WoW decline

Pakistan Stock Exchange (PSX) remained under pressure during the week ended on September 23, 2022, driven by renewed weakness in the PKR against the USD and concerns regarding the country’s fiscal health.

Participation in the market remained lackluster, with average daily traded volumes averaging 166.1 million shares during the week under review as compared to 183.2 million shares a week ago.

The benchmark index, KSE-100 Index lost 1,059.28 points during the week, depicting a 2.5%WoW decline. The PKR continued to lose value against the US$, depreciating 1.2% during the week.

Furthermore, the SBP conducted the T-Bill auction this week, where the central bank raised PKR1.3 trillion against a target of PKR1.5 trillion. The cut-off yields for the 3-month and 12-month tenors remained largely flat, whereas the yield for 6-month increased by 15bps to 16%.

Other major news inflows during the week were: Saudi Fund for Development confirmed a one-year extension of US$3 billion deposit, 2) Initial estimates pointed towards flood losses to be US$30 billion, 3) IMF announced that it would support Pakistan’s flood relief, reconstruction efforts under the current program, 4) Russia agreed to provide petrol to Pakistan on deferred payments, 5) In July 2022, LSMI output was down by 16.5%MoM, 6) SPI was down by 8.11%WoW, and 7) CAD dropped 42%MoM to US$703 million in August 2022.

The top performing sectors were: Tobacco, and Synthetic & Rayon, while the least favorite were: Close-End Mutual Fund and Oil & Gas Exploration Companies.

Top performing stocks were: PAKT, IBFL, UNITY, TRG and NESTLE, while laggards were: TGL, HGFA, CEPB, KEL and PPL.

Foreign investors emerged the major buyers with net buy of US$5.1 million, followed by Individuals (US$1.5 million). As against this, Insurance Companies were the biggest sellers with US$3.3 million, followed by Mutual Funds (US$2.4 million).

Going forward, the easing off in international commodity prices, particularly oil is expected to be a welcomed development as the pressures on the external account start to recede.

On the flip side, the strength in the US$ following the 75bps policy rate increase in the US is expected to put pressure on the exchange rate, which could murk sentiment.

Investors will be looking towards any policy action in the upcoming Monetary Policy, scheduled for October 10, 2022.

However, the economic slowdown—an intended outcome of the SBP’s contractionary policies—and effects of floods across the country could adversely affect sentiment going forward. Investors are to stay cautious, while building new positions in the market.

Pakistan Stock Exchange announces names of Top 25 Best Performing Companies

Pakistan Stock Exchange (PSX), on Monday announced the much awaited list of the recipients of the Top 25 Companies Awards for the year 2021. The Top 25 Companies Awards, initiated in the year 1978 are presented to the companies listed at PSX posting outstanding performance. 

The key pre-requisites for companies competing for this prestigious award include minimum dividend distribution of 30%, trading of shares for at least 50% of the total trading days during the year, and the company not being on the Defaulters’ Segment of the Exchange or not having trading in its shares suspended on account of violation of Listing Companies & Securities Regulations of the Exchange during the said year. Specific weightages are also included for reporting on Sustainable Development Goals (SDGs) as well as for Diversity & Inclusion to qualify for the PSX Top 25 Companies Award.

Companies which have shown outstanding performance in terms of corporate governance, financial performance, increasing shareholder value and have reported on sustainability make it to the Top 25 Companies list. Specifically, companies who have outperformed others in terms of their Profitability & Liquidity Ratios, Dividend & Solvency Payout Ratios, TSR, Free Float of Shares, Turnover of Shares, and specific quantifiers of Corporate Governance & Investors Relations, including metrics such as reporting on Corporate Social Responsibility (CSR), Sustainable Development Goals (SDGs), and Diversity & Inclusion are selected for the PSX Top 25 Companies Award.

Speaking at the occasion of announcement of the PSX Top 25 Companies Awards 2021, the Managing Director and Chief Executive officer of (PSX) Farrukh H. Khan, stated, “On behalf of Pakistan Stock Exchange, I warmly congratulate the recipients of the PSX Top 25 Companies Awards 2021. At a time when we need positive economic news and role models in Pakistan, the PSX Top 25 Companies Awards showcases the best of the best in corporate performance, profitability, governance, and reporting on sustainability in Pakistan’s industry and business world. This Award presents a positive image of Pakistan’s business and economy, both domestically and internationally. These companies are not just best in class in Pakistan but also compare with the best global companies.”

The companies that made it to the Top 25 Companies Awards list in 2021, in order of their performance ranking, are:

 

1         Fauji Fertilizer Company Limited

2         Engro Corporation Limited              

3         Systems Limited                                                              

4         Ferozsons Laboratories Limited

5         Engro Fertilizers Limited                                               

6         Security Papers Limited

7         Dawood Hercules Corporation Limited                   

8         Habib Bank Limited

9         TRG Pakistan Limited                     

10     Meezan Bank Limited

11     The Hub Power Company Limited                                            

12     MCB Bank Limited

13     Cyan Limited                                     

14     EFU Life Assurance Limited

15     Pakistan Oilfields Limited             

16     Bank Alfalah Limited

17     Jubilee Life Insurance Company Limited                                

18     International Industries Limited

19     Engro Polymer & Chemicals Limited

20     Mari Petroleum Company Limited

21     Gadoon Textile Mills Limited                      

22     International Steels Limited

23     Pakistan Cables Limited

24     Packages Limited

25     Adamjee Insurance Company Limited 

 

Pakistan Stock Exchange posts 2.6%WoW decline

During the week ended on June 24, 2022, news flow was dominated by the accord between the Government of Pakistan (GoP) and the International Monetary Fund (IMF). 

On Friday, the Prime Minister announced that a 10% super tax will be imposed on large sectors in FY23, causing the Pakistan Stock Exchange benchmark index to lose 1,665 points in one day, closing the market at 41,052 points or 2.6%WoW decline.

Earlier on Tuesday, it was announced that an agreement had been reached, in which the GoP revised the FBR collection target for FY23 to PKR7.4 trillion from PKR7.0 trillion.

Average volume for the Index surged to 300.5 million shares, up 72.6%WoW mainly due to Friday’s grand sell-off.

Other major news flows during the week were: 1) loan agreement signed with consortium of Chinese banks for US$2.3 billion, 2) FDI shrank 29%YoY in May, 3) cost of power generation surges by 131% YoY due to high fuel costs, 4) May banking spread plunges 42bpsMoM, 5) GoP mulled pledging five federal assets to issue Sukuk, and 6) ECC approved PKR149 billion in payments to IPPs and KE.

The top performing sectors were: Vanaspati & Allied industries, Power, Tobacco, Insurance, and Refinery, while the least favorite sectors were: Automobiles, Textile, Cement, Close-end mutual fund, and Banking.

Stock-wise, top performers were: POML, EFUG, KEL, SML, and PAKT, while laggards were: CHCC, KTML, GATM, MLCF, and JVDC.

Flow-wise, Insurance companies remained as the net sellers, offloading US$8.4 million followed by Foreigners (US$2.4 million), Mutual funds (US$1.1 million), NBFCs (US$0.7 million), and Companies (US$0.1 million), while Individuals (US$7.0 million), Banks (US$2.1 million), Brokers (US$0.2 million), and Other organizations (US$3.4 million) were on the buying side.

The super tax imposed on large sectors has come as a major shock to all players in the market. With profitability of these sectors decreasing by 10%, the market sentiment is surely negative as players look to liquidate their positions. Add inflationary pressure and rising interest rates to the mix, and this creates a strong bearish environment for the market. With that being said, the agreement with IMF is crucial for the country, with further financing now expected to be available from World Bank, China, and Saudi Arabia which will alleviate the downward pressure on the currency along with supporting the depleted foreign exchange reserves, hence having the potential to trigger a bull-run in the short term.

Pakistan Stock Exchange down 8.34%WoW on coronavirus hype

The benchmark index of Pakistan Stock Exchange (PSX) continued its slide during the week ended on 27th March 2020, closing at 28,110 points, down 8.34%WoW on coronavirus hype. State Bank of Pakistan (SBP) announced a policy rate cut of 150bps taking the cumulative rate cut to 225bps. There was also an announcement of Rs1.2 trillion stimulus packages, but market sentiment remained bearish. To a large extent PSX also remained insulated to the announcement of massive economic stimulus by the US, as opposed to visible cheering by the other stock markets around the globe. Stocks generating the highest volumes during the week included:  KEL, UNITY, BOP, HASCOL and MLCF, while laggards were: HASCOL, PSMC, PSO, ASTL and DGKC.

Major news flow during the week included: 1) announcement of Rs100 billion refunds to export sectors along with deferred payment of principal and interests on bank loans, 2) Rs100 billion for deferred payment of loans for small and medium enterprises (SMEs), agriculture and concessional loans, 3) reduction in the prices of petrol, diesel and kerosene with immediate effect, 4) divestment from government debt instruments by foreign investors reaching some US$1.8 billion, 5) Pak rupee depreciating 4.3% against greenback over the week, 6) ministry requesting OMCs to halt petroleum imports and increase their offtake from local refineries, and 6) GoP considering to approach multilateral lending agencies for additional financial assistance for fighting adverse economic impact of pandemic. Resulting from reduced market timings, average daily trading volumes declined 37.3%WoW to 150 million shares. While the market sentiments in the upcoming week are likely to be dictated by how GoP grapples with rising coronavirus cases in Pakistan, sectors relatively insulated from direct economic impacts may manage to remain afloat. The benchmark index has already shed 33.5% CYTD.

Reinvigorating capital market of Pakistan

The newly installed government in Pakistan faces a mammoth task of reinvigorating capital market of the country. This should be among the top five most important items of the economic agenda. The fiscal consolidation requires some other unpopular measures that include: 1) improving tax collection to bridge budget deficit, 2) containing extravaganzas for spending more on development, 3) boosting exports by making Pakistani manufacturers/exporters competitive in the global markets and 4) privatizing state own enterprises to save one trillion rupees which these units swallow annually. Since the role of the government is to facilitate the business community in making fresh investment for the creation of new job, stock exchange is one of the most important institutions that play a key role in the mobilization of capita. An effort has been made to review the factors affecting the performance of Pakistan Stock Exchange (PSX) and suggest the impetus to make it more vibrant. To read details please click http://www.pakistaneconomist.com/2018/09/03/reinvigorating-capital-market-of-pakistan/

Pakistan stock market witnesses 12 percent increase in daily trading volume

Exhibiting signs of investor weariness and mixed responses to earnings releases, the benchmark index of Pakistan Exchange (PSX) closed the week ended 10^th February 2017 at 49,925 points. Market participants’ response to earnings announcements swayed greatly, with investors continuing to favor higher payouts over earnings growth, and corporate action, particularly in cements kept the sector in the limelight. Average traded volumes rose to 414 million shares, up 12%WoW. Key news flows were: 1) PSMC launched imported luxury sedan Suzuki Ciaz at competitive price, 2) International Steel Limited (ISL) stated in a filing that the National Tariff Commission (NTC) has decided to impose definitive anti‐ dumping duties on galvanized steel coils/sheets for a period of five years, 3) PSO's receivables from different enterprises, particularly power companies, have swelled to Rs277 billion, and 4) As per State bank of Pakistan foreign exchange reserves of the country declined by US$413 million to US$22.03 billion by 3^rd February and the external sector faces increased pressure as its trade deficit widened by 29%YoY to US$17.4 billion during 7MFY17 due to paltry exports and double digit growth in imports. Top performers at the bourse were: LOTCHEM, NBP, ASTL, NML, whereas laggards were: PTC, HUBC, AGTL and ABL. Volume leaders for the week were LOTCHEM, KEL, POWER and TRG. Oil is set to grab the spotlight in the coming week, where crude benchmarks are beginning to inch upwards on positive reviews of the OPEC and non‐OPEC output freeze. Results will remain the center of gravity, where companies reporting in the coming week include AGTL, HBL, FCCL, MLCF, DGKC, UBL, ENGRO and OGDC.

Commencing this week, commercial banks are scheduled to declare their CY16F/4QCY16F results. The first was MCB (8^th Feb), followed by ABL (9^th Feb) HBL (15^th Feb). As a group, the Big‐6 banks are likely to post cumulative profit after tax of Rs127.5 billion for CY16 as compared to Rs129.7 billion for CY15, a decline of 2%YoY. Top‐line growth is likely to be constrained on account of lower yield on earning assets amid ongoing PIB substitution and lower banking spreads (4QCY16 spreads lower by 26bps YoY). However, improvement in credit quality has restricted the earnings decline with provisioning charges for the Big‐6 down by a sizable 81%YoY for CY16. That said, revaluation surplus likely to improve by a significant Rs176 billion, where higher utilization of the same can cause earnings expectations to deviate particularly in case of banks like MCB, NBP and ABL that have sizeable equity portfolios in addition to the bonds portfolio. While CY16 results are expected to remain flattish, price performance should remain hinged upon the following: 1) higher than expected payouts, 2) earlier than expected monetary tightening, 3) formal inclusion into MSCI EM with HBL, UBL and MCB likely to make it to the list.

Latest APCMA data showed that cement dispatches during January'17 remained relatively flat at around 3 million tons, while it fell 12.86%MoM due to heavy rainfall/snowfall impacting local construction activity (domestic demand, a decline of 14.56%MoM to 2.722 million tons in January'17). Exports also remained subdued during the month and declined by 2.71%YoY/+1.85%MoM) due to rising fuel prices/other input costs and import/anti‐dumping duties making it more difficult for Pakistan's exported cement to compete against the indigenous cement. Greater intensity of seasonal effect has slowed down the cumulative domestic demand growth was 9.52% in 7MFY17 as compared to 15.66% in 7MFY16. Though, analysts expect exports growth to remain flat due to prevalence of aforementioned issues, they also believe that domestic demand growth will likely resume double digits growth as construction activity is expected to pick pace due to relatively greater proportion of PSDP releases in second half of fiscal year and record level growth in private sector credit related to construction activity, up 25.25%YoY.

Two of the largest IPPs of Pakistan HUBC and KAPCO are also scheduled to announce their half yearly financial results. HUBC is anticipated to post profit after tax of Rs5.25 billion for 1HFY17 (down marginally) on the back of muted generation, Pak Rupee remaining firm against greenback and picking up of RFO prices. Expensing of higher O&M charges, inflated admin expenses and investment in associate related expenses are expected to taper profitability, while the higher receivables burden is expected to raise financial costs. KAPCO is forecast to post 1HFY17 net profit of Rs4.67 billion up 8%YoY, from lower generation, slight improvements in generation on gas and below the line expenses remaining in check. Devoid of major movement on the expansion front (financial close of CPHGC, TEL, KAPCO Energy) IPPs are expected to remain in the sidelines, for the time being.

Pakistan Stock Exchange outperforms global equity markets

Inching towards another milestone of 48,000 level, benchmark of Index of Pakistan Stock Exchange (PSX) closed the week ended on 30^th December 2016 at an all‐time high of 47,807, up 2.52%WoW. Activity at the bourse tapered 15.06%WoW with average daily volume at 286 million shares. The volume leaders were DSL, BOP, KEL, DCL and TRG.

Key news flows during the week included: 1) Ogra recommended increase in POL prices, 2) CNG prices increased across Sindh, the first hike following the GoP’s decision to deregulate the country’s CNG market, 3) GoP rejected all the bids in PIB auction, 4) ECC of the cabinet approved export of 225,000 tons of sugar without any rebate and allocation of 26MMCFD gas to EFERT old plant and 5) Lahore High Court nullified the auction of DTH license carried out by PEMRA after striking down the rules and regulations which barred broadcasters from applying/participating in the bidding process.

Performance leaders during the week were: EFOODS, HCAR, FCCL, SHEL and SNGP; while laggards included: HMB, AICL, PSMC, POL and PTC. Foreign participation continued its negative trend with US$17.9 million outflows compared to US$45.5 million in the last week.

After a phenomenal end to the calendar year, PSX posted remarkable return of 45.7% in CY16, outperforming the world equity markets. The market is likely to continue its positive trend in the near term in the absence of any negative trigger. However, room for volatility in the next week remains where risk could emerge in the form of: 1) international oil price swings on potential concerns on the rising US inventories and 2) resumption of Panama leak case proceedings.  

Following its previous month performance, fertilizer offtake remained promising during November'16 as well on the arrival of Rabi season coupled with continued support from subsidy package announced in FY17 budget. After declining significantly during 5MCY16 (down 32%YoY), fertilizer offtake rose 28%YoY during June‐November 2016. According to latest figures released by NFDC for November'16, total fertilizer sales increased to 1.58 million tons against 1.32 million tons sold in November'15, up 20%YoY/68%MoM). Urea sales increased to 764,000 tons during November'16, up 23%YoY. On a cumulative basis, total fertilizer sales posted a growth of 3%YoY to 7.83 million tons during 11MCY16, whereas urea offtake was 4.59 million tons (down 4%YoY). On arrival of Rabi season, DAP sales continue to show great strength in November'16, registering an increase of 17%YoY/32%MoM to 631,000 tons, of which imported DAP sale was 421,000 tons (up 10%YoY/61%MoM). Near‐term factors affecting fertilizer industry are: 1) Rabi season to continue driving demand, 2) favorable ruling from SHC against GIDC imposition, 3) international pricing dynamics (urea prices rebounded to US$235/ton in December’16 and 4) decision on export of excess urea inventory.

Latest banking sector data for November'16 indicates that banks' balance sheet (BS) continues to grow at strong levels by 9%YoY to Rs12.3 trillion. With banks lowering their preference for risk‐ free GoP securities (investments down 9% since June'16, private sector credit growth picked up pace, posting an encouraging growth of 11.7%YoY during November’16. Consumer financing grew by a healthy 20.%YoY (10.3% of the private sector loans) as banks look to re‐focus on high margin auto finance and personal loans in the current lower inflationary environment. Expecting spreads to bottom out this year as interest rates rise next year, analysts retain their liking for banks due to: 1) the room to benefit from loan growth, 2) an adequate CAR buffer, 3) achieved economies of scale and 4) a strong non‐interest income franchise. Playing this theme, we like HBL and UBL however, post price‐bull run over the last 6 months.

According to provisional data, cement dispatches during December'16 declined by 0.8%YoY/8.9%MoM to 3.414 million tons. Weaker domestic demand growth during December'16 could be attributed to seasonal slowdown in construction activity and decline in PSDP expenditures in December'16. Exports also declined, likely due to the seasonality factor. While industry's dispatches growth remained dismal, CHCC dispatches were up to 119,000 tons in December'16, indicating the commencement of its 1.32 million tpa Brownfield expansion during the month. On a cumulative basis, industry's dispatches grew by 7.9%YoY in 6MFY17 as compared to 9.9% in 5MFY17 due to recent month's decline in dispatches. Seasonal slowdown in winters may keep dispatches growth rate lower, where we expect domestic demand growth to pick up ahead of summers as construction activity and PSDP releases increase.