Pakistan#Stock#Exchange

 Things to Know Before Market Open

23rd August, 2023

1. Inflows improved in July; IMF SBA gives comfort level to multilaterals, bilaterals: MEA officials

2. Land acquisition of Dasu dam substantially completed: WAPDA

3. Pakistan’s power generation up nearly 5% year-on-year

4. SNGPL looks to add 100mmcfd by year-end

5. Oil prices ease on concerns over rate hikes, China gloom

6. TBills Auction Today, Maturity PKR 2.25 trillion, Target PKR 2.46 trillion.

7. PIB Floater auction Today, Target PKR 140 bn 

Market Outlook: Govt Borrowing: Maturities and Auctions

Today's Treasury Bill auction holds significant importance with maturing funds amounting to PKR 2.4 trillion and a government target of raising PKR 2.25 trillion. However, prevailing challenges including persistent currency devaluation, anticipation of higher inflation in the coming months, and the potential for increased interest rates make this fundraising endeavor a difficult task. It is expected that the auction will necessitate higher cutoff rates compared to previous auctions.

Within this context, the bulk of participant interest is likely to gravitate towards the 3-month Treasury Bills. This preference can be attributed to the cautious approach of investors who seek to wait and observe before committing to longer-duration instruments. Nonetheless, drawing parallels with the preceding auction and in alignment with IMF guidelines, the government can consider extending maturities to longer durations. This can be achieved by surpassing the target in PIB Floaters, the auction for which is also scheduled for today. The PIB Floaters' target is set at PKR 140 billion.

The auction calendar reveals substantial maturities in the next month, with Tbills amounting to PKR 4.45 trillion maturing by September 20, 2023. The magnitude of funds to be raised from Tbills, totaling PKR 6.7 trillion including today’s auction amount, in conjunction with additional amounts from PIBs, underscores the challenge of securing these sums at the previous cutoff levels. This challenge is further amplified by the prevailing market sentiment that anticipates a forthcoming increase in interest rates. As such, today's auction participation levels will be a reflective gauge of market expectations regarding future interest rates.

Shifting focus, the energy sector remains a focal point, consistently attracting investor attention. Both Exploration and Production (E&P) companies and Independent Power Producers (IPPs) have garnered substantial trading volumes. The energy sector has been a recurrent subject in newspapers, with the caretaker setup engaging in discussions and initiatives aimed at reforming this sector. Investors are cautiously optimistic about the gradual implementation of energy sector reforms.

In addition to these market dynamics, key corporate results are on the horizon today. Companies such as Pakistan State Oil (PSO), Bank AL Habib Limited (BAHL), and International Industries Limited (INIL) are poised to announce their financial outcomes today. Positive payouts that exceed market expectations have the potential to foster a favorable market sentiment and set an upbeat tone for trading activities.

Top Picks

OGDC, MARI, POL, MEBL, BAFL, FABL, BAHL, HMB, LUCK, MLCF, CHCC, PIOC, FCCL, HUBC, NPL, MUGHAL, ISL, AGP, CPHL, PSMC, SYS, ILP, GATM, EFERT and FFC. 

Important Board Meetings Today

PSO, JSBL, IGI LIFE, BAHL, INIL, DAWH, EFGH, SCBPL, IGIHL, CYAN

Corporate Briefing

MCB

Last day of entitlement

BESTWAY CEMENT (BWCL- PKR 6 DIVIDEND), PAK GEN POWER (PKGP- PKR 15 DIVIDEND)