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_: MARKET REVIEW
The market sentiment this week remained positive at large as market closed 1.47% higher at 33,968, driven by (1) proposed regulations by SECP in a bid to improve market liquidity, and (2) upcoming result season. Foreign Institutional Portfolio Investment (FIPI) witnessed a net inflow of US$27.6mn (including US$28mn regarding Vitol's purchase of 15% shares in Flascol) vs US$9.6mn outflow last week. The key highlight for the week was impressive volumes in the second-tier stocks as average traded volume/value witnessed jumped by 97%/44% to 275mn shares and US$100mn respectively.
The SECP has directed listed companies with a paid up capital of 5mn shares or more to increase their free float to at least 25%. Meanwhile the PSX is contemplating increasing circuit breaker to 10% from current 5%; which would eventually increase liquidity as well as volatility. According to data released by All Pakistan Cement Manufacturers Association (APCMA), cement dispatches for Mar-16 increased by 4% MoM, while exports rebounded rising 21% YoY in the month. In sharp contrast, fertilizer off-take performed dismally in the month. As per our channel checks, total industry urea off-take is expected to clock-in at ~100ktons in Mar-16, a drop of 76% YoY. Total urea inventory has climbed above lmn tons. On the other hand, DAP continued to perform well due to government subsidies. In a surprising move, the govt, forwarded a proposal to various industries for removal of incentives offered to refineries for plant upgrade, due to significant delays incurred by the companies.
In other news, power sector collections jumped to 93.1% from 90.7% due mainly to efforts for recovery of arrears, better load management and providing incentives to collectors.
On macro front, details in the IMF's 10th review report suggested stable macro outlook, despite setbacks in privatization agenda. The government now is faced with challenging legislative reforms, related to banking, anti-money laundering, and privatization. The government's talk with opposition over PIA Bill which seeks to convert PIA to public limited company, concluded successfully with the Parliamentary approval of the Bill now in sight. This paves the way to removal of big stumbling block to PIA's strategic sale plan. Finance Minister Mr Ishaq Dar also gave positive statements on the state of economy, saying that the country does...