The market remained under pressure the past week, falling by 599pts and settling below the 45k mark. Selling pressure was largely a product of rising COVID-19 cases, sparking fears of a lockdown. The market, however, found support at lower levels as investors likely feel that the long-term value theme is intact.
KASB Market View
Rising infection rates have overshadowed the result season as despite companies exhibiting strong earnings growth, the stocks have been unable to perform. With talks of a total lockdown on the table, we believe the market’s performance will remain capped. The long-term macroeconomic theme, however, remains intact as we continue to recommend long positions in cyclical stocks including cements and automobiles.
National News
Govt hints at imposing countrywide lockdown
The government has hinted at imposing a complete lockdown in the country if the current Covid-19 situation does not improve in a week. Addressing newsmen in Karachi on Saturday, Federal Minister for Information and Broadcasting Fawad Chaudhry said the government will ponder over slapping a complete lockdown in the country if the coronavirus cases do not come down in a week. “Pakistanis have a window of one week to strictly follow the SOPs and help in bringing down the number of the deadly disease,” he added.
https://www.brecorder.com/news/40087550/govt-hints-at-imposing-countrywide-lockdown
Circular debt to remain over Rs1.1tr by 2023
Despite repeated tariff increases, buying out several old independent power plants (IPPs), fuel conversions, tax rationalizations and timely subsidy payments over the next two years, the power sector circular debt would stay above Rs1.1 trillion by end of fiscal year 2023 against about Rs2.55tr estimated at present.
https://www.dawn.com/news/1620414/circular-debt-to-remain-over-rs11tr-by-2023
Indian offer led to ‘quiet’ talks on all major issues
India approached Pakistan in December 2020 with an offer to reduce tension and offered backchannel talks on all outstanding issues, including Jammu and Kashmir, and Pakistan reciprocated favorably, fresh information emanating from official quarters has confirmed.
https://www.dawn.com/news/1620230/indian-offer-led-to-quiet-talks-on-all-major-issues
Current account shows $959m surplus for first nine months
The country posted a current account deficit of $47 million in March for the fourth month in a row, but the first nine months of FY21 remained in surplus territory, raising hopes the fiscal year would not end with an overall deficit.
https://www.dawn.com/news/1619964/current-account-shows-959m-surplus-for-first-nine-months
Largest LNG-fired project: Financial close documents signed by PPIB, PTPL
Private Power & Infrastructure Board (PPIB) and Punjab Thermal Power (Pvt) Limited (PTPL) Friday signed financial closing documents of Pakistan’s largest LNG-fired 1,263 MW PTPL power project to be established at a cost of $708 million. The power plant, whose approval sailed through, located near Trimmu Barrage; District Jhang is based on re-gasified liquefied natural gas (RLNG) and is so far the largest RLNG based power generation project under Power Generation Policy 2015.
Fiscal deficit falls to 2.9pc in 7MFY21
The country’s fiscal deficit fell to 2.9 per cent of GDP in the first seven months of FY21 compared to 3.2pc in the corresponding period last year mainly due to substantial increase in net federal revenue receipts and effective management of expenditures.
https://www.dawn.com/news/1620236/fiscal-deficit-falls-to-29pc-in-7mfy21
CPEC Kohala Hydel Project: Chinese firm to invest $2.4bn
The government of Azad Jammu and Kashmir (AJK) and Chinese Three Gorges Company on Friday signed agreements related to 1,124 megawatt Kohala Hydel Power Project- Implementation and Water Usage under China Pakistan Economic Corridor (CPEC).
https://www.brecorder.com/news/40087372/cpec-kohala-hydel-project-chinese-firm-to-invest-24bn
SPI declines 0.40pc WoW
The Sensitive Price Indicator (SPI) for the week ended April 22 recorded a decrease of 0.40 percent due to decline in the prices of food items including tomatoes (30.22 percent), onion (8.12 percent), eggs (5.81 percent), sugar (2.68 percent), and non-food items including diesel (2.02 percent) and petrol (1.58 percent), says the Pakistan Bureau of Statistics (PBS).
https://www.brecorder.com/news/40087371/spi-declines-040pc-wow
PM lauds Overseas Pakistanis as Deposits in RDAs cross $1bn mark
The deposited amount in Roshan Digital Accounts (RDA) has crossed the $1 billion mark during the eight months. As per the State Bank of Pakistan (SBP), the increase comes on the back of an inflow of $ 194mn in April. Inflows have been accelerating every month since the RDA launch in September 2020.
Pakistan heading towards acute oxygen shortage, warn producers
Pakistan may also face shortage of oxygen gas for the treatment of respiratory insufficiencies like India during the third wave of COVID-19 if the life-saving gas continues to be supplied for the industrial sector, oxygen producers warned on Friday, saying at the moment, bulk of the oxygen being produced in the country is being supplied for the treatment of COVID-19 patients.
World Bank approves $400m for K-P
The World Bank has approved a new loan of $400 million for Khyber-Pakhtunkhwa (K-P) province for addressing staff and budget issues in education and health sectors – the tasks that can be performed without contracting more debt.
https://tribune.com.pk/story/2296400/world-bank-approves-400m-for-k-p
Discos management contracts in sell-off process: PC to propose to CCoP to include provincial stakes
The Privatisation Commission (PC) is to propose to the Cabinet Committee on Privatisation (CCoP) to include provincial stakes in the management contracts of power Distribution companies (Discos) as envisaged in the sell-off process.
US closes inquiry into Pakistani firm
The US State Department has closed its sanctions-related inquiry into two shipments for Byco Petroleum Pakistan Limited (BPPL).
https://tribune.com.pk/story/2296513/us-closes-inquiry-into-pakistani-firm
Govt awards six exploration blocks
The government on Friday awarded six exploration blocks to oil and gas exploration and production companies to attract a minimum $24.68 million in firm work commitment.
https://tribune.com.pk/story/2296406/govt-awards-six-exploration-blocks
Urea sales jump 37pc in 1QCY21
Urea off-take during IQCY21 swelled by 37 per cent to 1.398 million tonnes from 1.024m tonnes in the same period last year.
https://www.dawn.com/news/1620018/urea-sales-jump-37pc-in-1qcy21
IT exports soar 58% during March 2021
Similar to the textile sector, Covid-19 proved to be a blessing in disguise for Pakistan’s technology exports as well given that IT exports soared 58% during March 2021 against the corresponding period of last year.
https://tribune.com.pk/story/2296527/it-exports-soar-58-during-march-2021
Blue-Chip
-Word of the Day-
Blue chip, meaning “a stock issue of high investment quality that usually pertains to a substantial, well-established company,” was first noted in the late 19th century. From this meaning extended senses developed, such that blue chip applies to a consistently successful and profitable venture or enterprise, an outstandingly worthwhile and valuable property or asset, and an athlete rated as excellent or as an excellent prospect.
