KSE-100 closed at a positive number on Friday. The indexes closed at 49,851 due to the investor’s interest in the heavyweight stocks. Engro Polymer and Chemical Ltd were the market leaders. The interesting part was the market value rose to Rs 17.8 billion to 15.4 billion in a day.
What will be the major political, economic and financial factors that will affect the stock market next week? Let’s take a look:
Political and the military tension continues
After Panama, the Dawn leak continues to build panic in the ranks of PML-N. According to the recent news, the military has demanded: “all those behind the dawn leaks will be punished under the Official Secrets Act 1923”. The army is not happy with the PM office order issued on April 29. An official of ISPR has said that” who planted and fabricated the Dawn leak story is missing in that order?” The speculation is, the dawn leak is a breach of national security and damaging the reputation of armed forces.
Remember that, the PML-N government is once rattled by the Army in 1999. The relation of Nawaz government and the military has not a positive history. Will this scandal lead to the fall of Nawaz government because of the army once again? This question is increasing the concerns of the investors, which will continue to show negative impact on the stock market next week.
How will depreciated currency contribute to high exports?
Pakistan rupee continued to depreciate in the first quarter of 2017. According to the SBP, the rupee continues to fall against all the major currencies except the Iranian rial. This depreciation will affect the inflation rate of Pakistan. But, one thing that will benefit most from this fall is the value of the exports.
How will weak currency help to boost the exports? In Pakistan, most of the export is traded in USA dollar, once the rupee depreciates the value of the dollar increases.Ultimately, the profitability of the exporter’s increases.
Pakistan main exports are from the textile, cement sectors. That news will increase the confidence level of the investors in these major sectors.
Netsol is Back
Pakistan investors don’t show much interest in the IT sector. But, in this age of Information technology, it’s impossible to grow without this sector. However, the IT giant Netsol strikes back in the fiscal year 2017. The reason for top line growth is the lease finance software product. This product was purchased by a European carmaker for worth $100 million. The company also earned from the “other income” head. The major earning was from the bank deposits and the dividends.
So, Netsol is giving investors the chance to diversify their risks in the IT sector of Pakistan.
Telecom sector seek reduction in Withholding and Sales tax
One of the growing sectors of Pakistan is the telecom. This sector is paying the highest range of withholding tax of 14 pc. However, In the year2013 budget, the rate climbed from 15 pc to 10 pc. The Federal board of revenue has collected Rs 48 billion as WTH in 2015-2016 from mobile phone users.
Moving forward, now the companies are seeking some relief in the upcoming budget. The lower WHT and the sale tax will reduce the cost of the telecom firms. Still, this speculation will help to invest in some major telecom names of Pakistan like PTCL and world call telecom limited.
HASCOL stock scooting up!
Another company who has shown a phenomenal performance in its financial statements is the HASCOL. The share price of the company has increased five times since its IPO in 2014. The oil marketing company (OMC) is young to the stocks but gained a foothold in no time.In the most recent financial performance of CY16, the company net earnings increased by 71% years-on –year. Inventory gains and retail fuel margin have contributed to the gross profit.
Relatively a new OMC, the rally is still storming. As the company Board of director of HASCOL has announced a lube oil blending and grease plant project with the collaboration of Germany. The cost of the project is Rs 1.8 billion.Other than PSO, HASCOL has all the ingredients to attract the investors.