LAHORE - The Karachi Stock Exchange lacked vibrancy during the outgoing week with the upcoming long weekend keeping investors sentiments jittery. The benchmark KSE 100-index closed flat weekly with average daily volumes clocking in 11 per cent lower at 162 million shares per day. Net foreign portfolio investment witnessed an outflow of $2.6 million during the week. Textile sector performed better than others on the back of incentives announced by the government for the sector, while banking stocks too garnered investors’ interest on strong corporate results. On the other hand, cements and fertilizers suffered on news of government assuring IMF about another gas tariff hike in January 2016. Other major highlights of the week were: (1) Government failing to push through Anti-Money Laundering Bill ahead of the next IMF review, (2) IMF seeking plausible explanation on textile and farm sector incentive packages, (3) US approving $900 million annual assistance under a new mechanism (replacing CSF) for Pakistan, (4) China agreeing to finance another 660MW coal fired power plant in Thar block, (5) Power shortfall rising to 5,000MW, (6) Government announcing Rs500/bag and Rs218/bag subsidy on DAP and NP respectively and (7) Cotton arrivals declining by 12.7 percent.

According to experts, an uninteresting week was seen at the bourse as the KSE-100 closed flat WoW to close at the 33,945 index level. Average daily volumes declined by 11 percent, while traded value was down 5 percent to Rs8.2b/$78.4 million.

During the outgoing week, individuals and mutual funds were major net buyers of $4.9 million and US$2.6 million, respectively, while foreigners were net sellers of $2.6 million, taking the total YTD 2015 foreigners’ net selling to $209 million.

Pharma and biotech, software & computer services, real estate investment, multi-utilities and industrial transportation were major gainers, rising by 6.4 per cent, 5.3 per cent, 4.1 per cent, 3.5 per cent and 3.0 per cent, respectively. While, support services, leisure goods and fixed line telecom were the major losers, falling by 14.6 percent, 7.4 percent and 4.5 percent, respectively. Pakistan’s current account balance posted a surplus of $306 million in Sep 2015 versus a deficit of $240 million in Aug 2015. In 1QFY16 (Jul-Sep), current account deficit stood at $109 million (0.1 percent of GDP) versus $1.63b in 1QFY15 (2.4 percent of GDP).

As per a KSE notice, MCB has announced that the State Bank of Pakistan (SBP) has issued a certificate of commencement of business to newly established MCB Islamic Bank (MCBIB) and notified it as a scheduled bank. Moreover, board of directors of MCB has approved the scheme by which all the existing operations of Islamic Banking Group within MCB will be demerged from MCB & merged into MCBIB w.e.f. Sep 30, 2015.

K-Electric (KEL) has obtained a loan of $250 from Citi bank, for the period of 10 years, to upgrade its power grid and improve transmission system capacity by 33 percent. Aforementioned projects will help the company to curtail its line losses.

Allied Bank (ABL) declared 3Q2015 profits of Rs4.5b (EPS Rs3.9), up 1 percent YoY. Earnings increase was led by growth in net interest income (NII) which grew by 35 percent YoY to due to bank’s holding in high yielding Pakistan Investment Bonds. Although PBT grew by 7 percent to Rs 6.9b, rise in effective tax to 35 percent in 3Q2015 restricted bottom-line growth.

Kot Addu Power Company (KAPCO) posted 1QFY16 earnings of Rs2.1bn (EPS Rs2.4) as against Rs2.4b (EPS Rs2.7). Earnings declined as revenues fell due to 1) subdued load factor and 48 percent YoY fall in furnace oil (FO) prices.

Experts preview 1QFY16 financial results of power companies i.e. KAPCO, HUBC and NPL, where they expect the power producers to cumulatively post net earnings of Rs5.7b compared to Rs6b in previous quarter. During 1QFY16, country’s total power generation is expected to reach 31,572 GWh, up 18 per cent compared to 26,823 GWh in 4QFY15. The average cost of generation is also anticipated to decline by 20 percent QoQ to Rs4.4/KWh from Rs5.5/KWh.