LAHORE

Volatility at the Karachi stock market continued during the last week as fears of continued selling by foreign investors, further depreciation of rupee, volatile oil prices, sector-specific concerns, and expectations of selling by local CPPI funds continued to deter fresh buying in the market. As a result, KSE 100-index remained range-bound and fell down slightly by 0.6 per cent WoW to close at 33,673 points with average traded volumes down 29 percent WoW to 206m shares. Moreover, concerns over MPS announcement at the weekend by SBP also kept fresh buying at bay as investors continued to adopt a ‘wait and watch’ approach with bearish investors liquidating their positions.

Some positive developments on macroeconomic front were observed with remittances up 5.4 per cent YoY in 2MFY16 to $3.2b, FX reserves rising by $101m to $18.6b (week ending August 28, 2015), and trade deficit shrinking by 8 per cent YoY in 2MFY16. Of the key sectors, oil & gas (-1.3 per cent WoW), chemicals (-3.0 per cent WoW) and multi utilities (-5.6 per cent WoW) remained key losers whereas banks (+0.4 per cent WoW) and pharmaceuticals (+1.7 per cent WoW) ended positive at the end of the week. Other key highlights of the week were: (1) Army chief’s reiteration of firm stance to complete CPEC, (2) ADB’s agreement to invest $500m in the farm sector, (3) record increase in Aug-15 cement dispatches (10.2 per cent YoY to 3.061m tons) and (5) decrease of 25bps in PIBs cut-off yields.

Experts said that index fell by 0.6 percent as volatility was seen in emerging markets ahead of US FED meeting.

Average daily volumes declined by 29 per cent WoW, whereas traded value declined by 26 per cent to Rs9.2b/$87.9m).

Local mutual funds and companies remained major sellers in this week as they sold shares worth $11.4m and $10.1m, respectively. Foreigners also remained net sellers by selling shares worth $7.6m during the week.

Major decline was seen in sectors such as financial services (6.4 per cent), multi-utilities (5.6 per cent), media (5.1 per cent), chemicals (3.0 per cent), automobile & parts (3.0 per cent) and oil & gas (1.3 per cent) while major gainers were pharma & bio tech (1.7 per

As per the KSE notice, Avanceon (AVN) through its wholly owned subsidiary Avanceon FZE UAE, has recently entered into contracts with its UAE based clients (Empower Energy, Ali Sons Oilfield and Drake & Skull) worth $1.46m for development of network system.

In Pakistan Investment Bond’s (PIB) auction held during the week, govt has raised Rs94b against target of Rs150b.Yields on 3-year, 5-year and 10-year PIB bonds settled at 7.35 per cent, 8.33 per cent and 9.34 per cent respectively as cut off yields came off by 7-25bps.

According to the latest data released by State Bank of Pakistan (SBP), home remittances in Aug 2015 increased by 13 per cent YoY to $1.5b versus 7 percent growth in Aug 2014. Samin Textile (SMTM) board of directors has decided to divest its investment of 6.5m ordinary shares in Security General Insurance Company (unlisted) at Rs95/share.

Expert said that after devaluation of Yuan by China in the month of Aug, 2015, Asian currencies fell in the range of 3-8 per cent against US Dollar (US$). Pak Rupee slid from 101.8 to 104.4 against US$ while Japanese Yen (JPY) fell from 0.82 to 0.85 against PKR from Aug 1, 2015 to date. Thus, weak currency outlook likely to erode margins of Pakistan auto assemblers. Experts have revised down earnings forecast of Pak Suzuki (PSMC) by 3 percent/5 percent and Indus Motors by 4.6 percent/9.0 percent.