BMA Today for May 25, 2018 
 
     FRIDAY 25 May 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    
 BSE SENSEX 30 N.A N.A.
 NIKKEI 225 N.A N.A.
 STRAITS TIMES INDEX N.A N.A.
 KUALA LUMPUR N.A N.A.
 JAKARTA COMP. N.A N.A.
 THAI SET 50 N.A N.A.
Middle East    
 DFM GENERAL N.A N.A.
 TADAWUL ALL SHARE N.A N.A.
 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.
 US 10YrBOND N.A. N.A.
 LIBOR6MTH N.A. N.A.
 FTSE 100 N.A N.A.
 DOWJONES N.A N.A.
 S&P 500 N.A N.A.
       
 
In Focus
Pakistan Cements: Hefty underperformance warrants a second look at the sector

   Our recent discussions with asset managers reflect broad concerns on the fate of cement sectors margins and earnings post abrupt capacity additions in South and KPK regions. We take this opportunity to analyze if the emerging risks (new supply, weak demand period, rising cost) are strong enough to justify 13% underperformance of the cement sector over the past one-month. While we do not rule out the possibility of further downside volatility in cement stock prices driven by expectations of weak margins (further 2-3ppt dip expected) in the next two quarters, we expect further downside to be limited and should be seen as an opportunity for fresh entry. Firstly, prevailing implied retention prices reflects 2-18% discount to 3Q actual retention (see table), indicating negatives have largely been priced-in. Secondly, demand dynamics remain strong with exports being a key swing factor, which may help absorb fresh supply in medium-term. Based on recent underperformance, strong fundamentals and diversification benefits, our top picks are DGKC, LUCK and MLCF in order of preference.

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Media Watch

World: TAPI gas pipeline project: Pakistan to sign transportation transit fee agreements next fiscal year / The News
Economy: Foreign reserves reach below $17 billion mark / Business Recorder
Sectoral: Power companies ordered to refund Rs6.5bn for April / Dawn
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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.