PSX Daily Market Review - 26th July 2017

Foreign Investors remained in a net selling position of 3.35 million shares and net value of Foreign Inflow dropped by 1.11 million US Dollars. Categorically, Foreign Corporate and Overseas Pakistani investors remained in net selling position of 2.08 and 1.28 million shares. On the other side Local Individuals remained in a net buying  position of 12.29 million shares but Local Companies, Banks, NBFCs, Mutual Funds and Brokers remained in net selling position of 2.47, 0.55, 0.13, 4.6 and 2.84 million shares respectively.

Asian stocks steadied on Wednesday and the dollar held firm as investors awaited the Federal Reserve policy decision later in the day for more clues on its tightening plans. The Fed concludes a two-day meeting later on Wednesday, and is widely expected to keep interest rates unchange. Australian stocks gained 1 percent with a smaller-than-expected rise in local inflation supporting views that interest rates will remain at record lows for some time to come. The Australian dollar slipped 0.3 percent to $0.7918. Japanes Nikkei added 0.5 percent after the dollar rallied against the yen overnight to pull away from seven-week lows. MSCI broadest index of Asia-Pacific shares outside Japan was little changed, but drew mild support after the S&P 500 climbed to an all-time high overnight on well-received results from McDonald and Caterpillar in addition to bank share gains.
Oil production of Pakistan grew three per cent to 88,189 barrels per day (bpd) in 2016-17, according to a research note issued by Topline Securities on Monday. Temporary shutdowns suffered by some major oil companies affected production at the start of 2017. As a result, oil production averaged 95,000bpd initially. Oil production went up 10pc year-on-year to about 91,000bpd during June. However, on a month-on-month basis, it was up 11pc, owing to the low-base effect. Nashpa field, which accounts for 26pc of Pakistan’s total oil production, experienced a brief shutdown in May. Although oil production growth of the country in 2016-17 was just 3pc, major listed exploration and production companies registered an increase of 9-11pc.
Interior Minister Chaudhry Nisar Ali Khan on Tuesday ordered the Securities and Exchange Commission of Pakistan (SECP) to carry out an audit of all foreign companies operating in Pakistan. The directives were issued following the receipt of the report of a joint investigation team (JIT) formed to probe the kidnapping of a Chinese couple from Quetta, according to a statement issued by the ministry. The audit would be aimed at identifying companies that are not filing tax returns, or are involved in unauthorised activities. Such companies or firms would have their registration cancelled, the statement said. A foreign company has to register itself with the SECP — the corporate sector regulator — before it can operate in Pakistan.
The government allowed on Tuesday unparalleled tax breaks to a $2.1 billion power transmission line being executed by Chinese contractors and approved a Rs193bn financing arrangement to meet liabilities of the power sector. These decisions were taken at a hurriedly called meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by Finance Minister Ishaq Dar. Sources said the execution of the 878-kilometre Matiari-Lahore transmission line project worth about $2.1 billion was facing troubles because of differences among stakeholders over taxation issues and the revolving fund for payments to Chinese contractors. The Federal Board of Revenue (FBR) was insisting on higher taxes under the existing tax laws while the power ministry demanded lower rates.
Foreign companies operating in Pakistan sent abroad profits and dividends amounting to $2.1 billion in 2016-17, putting additional burden on the economy that already faces a current account deficit of over $12bn. Profit repatriation has been increasing every year. The outflow of reverse remittances was close to the inflow of foreign direct investment (FDI) in 2016-17. Although FDI in the last fiscal year rose to $2.4bn, it was still the lowest as far as regional countries are concerned. FDI was negligible compared to those recorded by neighbouring India and China over the same period.

The Market is expected to remain volatile today. We advise Traders to exercise caution. Buying on dips and booking gains on strength is recommended.