7 minute read
What’s up on the PSX?
The stock market performance
By Saad Tanvir
Advertisement
The outgoing week witnessed a bearish tread in the local bourse primarily subject to the announcement on Wednesday of the Consumer Price Index (CPI) for May, declaring consumer prices growth by 13.8% MoM. This drove market sentiment downwards. As per the IMF’s conditions, the government has committed itself to removing subsidies on fuel prices. Amidst the economic turmoil, food prices have witnessed a 17.3% increase while the government has increased fuel prices twices in the past 10 days..
Apart from this, we witnessed a 55-75 BPS increase in yields from the T-bills auction held on Wednesday. This took yields to as high as 15.5% for 12 month securities. This can be used to build expectations regarding the next Monetary Policy Statement by the Statebank where a 50 to 100 basis point increase is anticipated. To further add to the fire, we witnessed a downgrade of Pakistan’s credit outlook by Moody’s Investor Services from ‘stable’ to ‘negative’ in its latest credit assessment on Thursday, June 02,2022. After Moody’s credit rating review on June 20, 2018, this was the first time that Pakistan was subject to such a drastic demotion in its outlook. While the credit rating remained at ‘B3,’ which itself is a junk rating, the downgrade in outlook was primarily pertaining to the new regime’s inability to revive the International Monetary Fund’s bailout package and the nation’s weak institutional capacity. In a statement, Moody’s clarified that the decline in risk outlook was essentially subject to Pakistan’s “is driven by Pakistan’s heightened external vulnerability risk and uncertainty around the sovereign’s ability to secure additional external financing to meet its needs”. Market experts anticipate that this alteration is likely to cause an impact on the banking sector in the upcoming week.
Pakistan seeks to unlock external financing from the international market including Saudi, Dubai and China by first unlocking the IMF’s 7th tranche of $1 billion and complying to its conditions formulated in the next budget. Market sentiments with relation to uncertainty, political instability and heightened risk drove the PSX last week. Despite these challenges, the PKR showcased a stark recovery against the greenback and appreciated by 1.25% during the week to close at PKR 197.6/USD. On the flip side, the index moved from 43,040 to 41,315 points going as high as 43,078 points on Tuesday pertaining to the government’s first step towards removal of petrol subsidies.
FX reserves have declined to $15.7 Billion as of last week-end, where reserves with SBP stood at $9.7 Billion mainly on account of high external debt servicing and rising import bill. This showcased a decline of $366 million of reserves held by the SBP WoW.
Moreover, heightened global oil prices are putting a major dent on the government’s fiscal space given the fact that the government is still providing a subsidy of Rs9 per liter on petrol, where the prevailing free market price is Rs218 per liter. Economists have recommended that the government let the markets decide on petroleum prices in order to curb the financial budget and enhance Pakistan’s credibility.
Cordoba Logistics and ventures signs agreement with foodpanda to provide motorcycles to its riders
In a brisk filing on the PSX, Cordoba Logistics and Ventures Limited announced on Thursday that it has signed a Memorandum of Understanding with R-Sc Internet Service (Private) Limited (also known as Foodpanda Pakistan), for the provision of motorcycles to Foodpanda’s riders. Foodpanda Pakistan, a subsidiary of Delivery Hero, which is a global leader in food delivery services involved in the delivery of fresh cooked food as well as grocery.
Mari petroleum discovers gas at Bannu west - North Waziristan
Mari Petroleum Company Limited (MPCL) notified on Wednesday that it had successfully managed
to discover gas at the Bannu West-1 ST-1 Exploration Well drilled in Bannu West Block, located in North Waziristan, KP. The well, initially spud-in on June 06, 2021, was part of Joint venture between Mari Petroleum Company Limited (MPCL), Oil & Gas Development Company Limited (OGDCL) and Zaver Petroleum Corporation (Pvt.) Limited with 55%, 35% and 10% ownership respectively, where MPCL was the operator. A similar notification was also filed on Thursday by OGDCL.
Silkbank receives an offer to acquire majority stake from Park View Enclave
Park View Enclave (Pvt.) Limited, a company associated with the Vision Group from Lahore has shown interest in acquiring 51% of shareholding in Silkbank Limited for a total sum of upto Rs12 billion. The announcement came in the form of a notification on the PSX on Tuesday. It stated that the Board of Directors of Silkbank formally met on Monday to review the proposal and granted an in-principle approval to its management to pursue the proposal further. The management is required to discuss the matter with Park view enclave further, finalize terms & conditions and the necessary documentations to submit to the Board for a final approval. Other than the board, the transaction is subject to the approval of the shareholders, the SECP, the Competition Commission of Pakistan and the State Bank of Pakistan.
The Manager to the Offer, Arif Habib Limited, in a notification filed on the same day presented that Park View Enclave intends to acquire Silkbank either directly or indirectly, through an SPV or a consortium led by itself, through fresh equity injection and acquire additional shares from minority shareholders through public offer.
NetSol Technologies continues its share repurchase
NetSol Technologies, the IT giant of Pakistan, as per its annoucnement on May 10, 2022, continues the process of shares repurchase at the ruling market/spot price with the face value of Rs10 each: buyback of 251,000 shares announced on Monday;. buy-back of 151,000 shares announced on Tuesday; buy-back of 143,000 shares announced on Wednesday; and buy-back of 190,000 shares announced on Friday. The announcement said that the buy-back would improve the company’s Earning Per Share (EPS), future dividends and share break-up value.
Maple Leaf Cement continues its shares buy-back streak
Maple Leaf Cement Factory Limited, one of the largest cement manufacturers in Pakistan, as per its special resolution dated May 17, 2022, continues the process of shares repurchase with: buy-back of 1.5 million shares announced on Wednesday; and buy-back of 1 million shares announced on Friday.
Board of Treet Corporation recommends working capital loan to First Treet Manufacturing Modaraba
After a meeting between the Board of Directors of Treet Corporation Limited, the board has recommended a loan of Rs3000 million to one of its associated companies, First Treet Manufacturing Modaraba (FTMM). Upon approval by the high court, the loan shall be transferred to another subsidiary, Treet Battery Limited
Board of Reliance Weaving Mills approves conversion of loans from Fatima Transmission to preference shares
In a notification on Wednesday, Reliance Weaving Mills Limited (RWML) maintained that it had gotten the approval to convert loans and advances from Fatima Transmission Company Limited (FTCL) amounting to Rs73 million into “unlisted, non-voting, non-cumulative, participatory, convertible and redeemable preference shares” at a face value of Rs10 per share.
Fazal Cloth Mills to convert loans from Fatima Transmission Company to preference shares and merge with Impartial Textile Mills
Fazal Cloth Mills Limited (FCML) announced on Tuesday that it had gotten the approval to convert loans and advances from Fatima Transmission Company Limited (FTCL) amounting to Rs128 million into “unlisted, non-voting, non-cumulative, participatory, convertible and redeemable preference shares” at a face value of Rs10 per share.
Alongside this, the company also announced board approval to merge Impartial Textile Mills Limited - a subsidiary - into Fazal Cloth Mills Limited.
Resolution passed to amalgamate G3 technologies into Ghani Chemical Industries
The shareholders of G3 technologies successfully passed a resolution pertaining to the consolidation of G3 technologies Limited, which is a manufacturer of Calcium Carbohydrate, into Ghani Chemical Industries Limited.
Ghani Global Holdings arrangement with bleeding DadaBhoy Sack while Modaraba Al-mali presents revival strategy
As part of DadaBhoy Sack Limited’s (DBSL) revival plan, Ghani Global Holdings Limited (GGHL) or its subsidiaries/ associate may invest in DBSL’s future rights issue of upto 45 million shares or 30% stake. GGHL has made arrangements with DBSL to establish a joint E-commerce/online shopping business either by way of setting up a green-field project within DSBL or to buy the business from collaborating partners. Modaraba Al-Mali (MODAM), a private equity firm, in a notification on Tuesday, announced its arrangement with DBSL for its restructuring and rehabilitation. MODAM notified that it has set a target of December 31, 2022 to complete DBSL’s “Revival Business Plan.”
Engro Powergen Qadirpur confirms PPIB’s recommendations for allowance to operate on RLNG
In a filing on the PSX, Engro Powergen Qadirpur Limited (EPQL) has confirmed that the Project Committee of Private Power & Infrastructure Board (PPIB) has made certain recommendations regarding the 226.5MW power plant of EPQL which may be allowed to operate on commingled RLNG with available permeate gas till 2025, however, with certain conditions. The recommendation is currently under consideration by the Board of Directors of the company.
Balochistan Glass suspends tableware glass operations in Kot Abdul Malik
In accordance to an announcement made by the management of Balochistan Glass Limited, the company has decided to suspend its tableware glass operations located at Kot Abdul Malik (Unit – 3) temporarily, due to rising RLNG pricing alongside numerous other market pricing issues. The company maintain that it has sufficient stock to cater to the demand for this summer season. n
