BMA Weekly Synopsis
The outgoing week witnessed significantly better volumes at the local bourses (229mn shares) compared to last week (157mn shares). However, the index after touching an intra-day high of 10,000 points took a dip and closed at 9,774 points, 1.5% lower WoW. LOTPTA turned out to be the volume leader for the week in addition to being the top price performer (+20% WoW).
Foreign portfolio investment remained flat with net outflow recorded at USD0.05mn compared to an inflow of USD6.9mn last week. On the other hand, banks/DFIs recorded major net outflow of USD13.3mn while local companies clocked in net buying of USD6.0mn.
The overstretched Pakistan army has announced that it will not launch any new offensive against militants for next six to twelve months. In the meantime, it plans to consolidate the gains in the areas taken back from the militants and make them completely secure for the inhabitants.
Country’s overall external account recorded a surplus of USD1.4 during 1HFY10 compared to a deficit of USD4.7bn in 1HFY09. This improvement was a result of a considerable compression in current account deficit as well as an increase in the financial account surplus. In addition, a rebound in all sub accounts including trade, services, income and current transfers also led to the FOREX reserves showing stability (PKR12.24bn).
ENGRO Corporation announced its CY09 on Friday, January 22, 2010. The result was in line with our expectations; the company reported a PAT of PKR3,957mn (EPS: PKR13.3) compared to PAT of PKR4,240mn (EPS: PKR14.2) for last year registering a decline of 7% YoY. The company announced a dividend of PKR2/share (taking the full year payout to PKR6/share) with 10% bonus issue.
We maintain a positive outlook on Pakistan equities, targeting KSE100 to breach 11,500 during the current calendar year; while our high conviction investment ideas remain PSO, PPL, HUBC and ACPL.
Technical Outlook: In case of continued selling pressure, bulls can be seen retracing towards the major support level of 9,400 – 9,550. We suggest liquidating short term trading positions on slide below 9,700 and/or adding more on sustained closing above the psychological 10k level.
BMA Capital
January 22 2010
