BMA Today for July 20, 2018 
 
     FRIDAY 20 July 2018 
 
 

 

   

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At a Glance

Previous Market Session

Local Market    
 KSE 100 N.A N.A
 KSE T. Value PKRbn N.A N.A
 10YR PIB N.A N.A
 6M KIBOR N.A. N.A.
 PKR/USD N.A. N.A.
Asia Pacific    
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Middle East    
 DFM GENERAL N.A N.A.
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 MSM30 INDEX N.A N.A.
 KUWAIT SE WEIGHTED N.A N.A.
 DSM 20 INDEX N.A N.A.
Global Markets    
 OIL (NYMEX) N.A. N.A.
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In Focus
Pakistan Textiles: Spinners likely to end FY18 on a high note

   Spinners seem to be enjoying a fruitful year on the back of (i) favorable cotton/yarn price movements, (ii) availability of duty drawback, and (iii) depreciation of PKR. We estimate that yarn primary margins during FY18 would average ~PKR108/Kg (USD0.98/Kg), up 9% YoY on the back of 8% rise in yarn prices (driven by demand from domestic downstream sector) racing ahead of increase in cotton prices. While an increase in cotton prices would raise the cost of production for manufacturers, weakness in the PKR is expected to provide the much needed cushion to margins and profits of textile companies. With external account under pressure, the govt. is likely to continue or even increase incentives for exporters in order to plug the trade deficit. In this environment the listed textile sector stands to benefit the most. Within BMA textile space, we maintain our preference for NCL due to its (i) high sensitivity to exchange rate movement, (ii) reliance on low cost power generation, and (iii) ongoing operational optimization initiatives. Outside of BMA textile space, GATM and CRTM also stand to benefit.

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Media Watch

Economy: Pakistans growth outpaces ADBs forecast in 2017/18 / The News
National: Army to render duties according to ECP code of conduct: CoAS / Business Recorder
National: Nawazs conviction: petition referred to larger LHC bench / Business Recorder
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DISCLAIMER
This memorandum is produced by BMA Capital Management Limited and is only for the use of their clients. While the information contained herein is from sources believed reliable, we do not represent that it is accurate or complete and should not be relied upon as such. Opinions expressed may be revised at any time. This memorandum is for information only and is not an offer to buy or sell, or solicitation of any offer to buy or sell the securities mentioned.