FINANCIAL MARKETS

CONSOLIDATED REPORT OF FOUR WEEKS

STOCK/COMMODITY TRADING

Submitted to:
SAMIR AHMED

Submitted by:
Fatima Mir 23010050
Asma Faizan 23010073
Ali Hussnain 23010104
M. Asif Shan 23010007
 WEEK-1
Commodity Name: Brent Crude Oil
Trade Day and Time: Friday - Nov 11, 2022
Trade position and price: Long @ 95.49
Underlying Reasons for the above trade position
Considering the ongoing inflationary wave and recent hike of interest rates last week we decided
to enter into a buy position at above mentioned level. Generally, Oil market remains sensitive to
interest hikes and supply constraints. Since the last hike of 0.75% by FED Oil prices have been on
a rise amid some more future hikes. In addition to that, looming EU ban on import of Russian Oil
is not going to get away sooner or later which means a consistent supply shortages of Oil from
Russian Oil. Moreover, China, which has been facing a record rise in COVID cases, has announced
on Friday to ease the restrictions including shortening quarantines by two days. It means that there
would be no demand cuts from China hence here again the consistent demand levels mean more
pressure on Oil prices. Lastly, Saudi Arabia, the leading producer in the Oil Cartel (OPEC), was
pushed by the Baiden Administration last month to increase the supply but they decided against it.
Resultantly, the Oil prices have gone up by more than ten dollars since their last meeting and this
trend is expected to remain same until or unless OPEC decides to increase the supply overall.

Stock Name: Systems Limited

Trade Day and Time: Friday - Nov 11, 2022
Trade position and price: Long @ 452
Underlying Reasons for the above trade position
The IT sector has been on boom in Pakistan from a while. Although after the regime change, a lot
of sectors have been performing negatively, the IT is one of the few sectors that have continued to
perform well despite the distressed circumstances. In the tech sector, System is the only company
growing through multiple means, organically, inorganically and at the same time tapping into
international market. In just last quarter, when the economy has been facing downturn, the
company registered 82% revenue growth. Since the company now is increasingly operating in
international market, the local currency depreciation is also playing a role in the overall revenue
growth. Over the last year, earnings grew by 120%, while the same is forecasted to grow by
32.35% over the next year, as forecasted by Simplywall and many other local brokerage houses.
 WEEK-2
Commodity Name: Brent Crude Oil
Trade Day and Time: Friday - Nov 18, 2022
Trade position and price: Long @ 89.93
Underlying Reasons for the above trade position
We will sustain our long position because we anticipate that the prices oil prices will retrace after
the dip. This is driven by our observation of market behavior where price appreciation is followed
by a decrease earlier. Moreover, the decrease in demand owing to the increasing Covid-cases in
China will be cancelled out by two major supply disruptions. News about Russia’s missile attack
on Poland has increased the risks of further sanctions on Russia by the U.S., EU and allies, which
may worsen oil supply issues, putting upside pressure on the oil prices. Moreover, Attack on an
oil vessel in Oman Gulf region also caused disrupted delivery to Europe reducing supply. Overall,
the shortage of LNG in the region might pose oil as a good energy alternative increasing its
demand. This impact of increased demand along with sustained oil prices till November 30 in case
of Pakistan will have a positive impact on prices.
Stock Name: Systems Limited
Trade Day and Time: Friday - Nov 18, 2022
Trade position and price: Long @ 457.99
Underlying Reasons for the above trade position
The market closed at 42,730, shedding 363 points (or 0.84%) week-on-week. Technology &
communications, chemical and fertilizers were the only positive contributors. The Stock price for
systems limited has increased by 1.10% since the past week that ended at 452. In the technology
and communications segment, Systems limited has the highest increase in share price whereas
volume traded is amongst the lowest. Similarly, other players like TPL, TRG and Octopus had an
increase in share price, and a comparatively higher traded volume, thus it may be a sector wise
boom and increase with Systems benefiting the most. An aspect that might have boosted the
emerging IT sectors growth is the recent talks within the government regarding ease of doing
business in IT exports. This originated from Pakistan’s looming economic crisis where IT & IT
enabled services are the only industry seen to potentially stabilize Pakistan’s economy. In FY
2021-22, IT exports were $2.6 billion and the only industry with 77% trade surplus and highest
exports in the service sector. Thus, business segments and government officials’ recent outcry on
easing business might have positively favored Systems. Pakistani Rupee has lost further value,
where US$ appreciated to PKR 222.45, and considering Systems limited majority share of clients
are international players, the US dollar appreciation works in their favor by increasing their share
value and revenue.

WEEK-3
Commodity Name: Brent Crude Oil
Trade Day and Time: Friday - Nov 25, 2022
Trade position and price: Short @ 83.87
Underlying Reasons for the above trade position
We remained in the long position for straight two weeks but for this week we have decided to short
it considering the changing global dynamics and mounting threat of another recessionary wave
globally. Prices of Brent crude have declined by more than 14% from its recent peak of $100 owing
to softening of demand in the wake of another outbreak of pandemic in China. It is pertinent to
mention that China which is one the largest importers has started to experience some mobility
measures from various cities to curb the outbreak. Moreover, in another development European
Commission is considering to place a CAP on Russian oil along with G7 member to reduce the
Russian revenues directed towards its war ambitions in Ukraine. According to media reports, oil
could be capped at around $65 - $70 per barrel. However, there is a debate that this cap should be
lower than this but this may lead to disruption of supply as a retaliatory move by Russia. Therefore,
in case of CAP setting Russian oil supply is expected to increase hence pushing the prices further
downward.
Stock Name: Systems Limited
Trade Day and Time: Friday - Nov 25, 2022
Trade position and price: Long @ 491.95
Underlying Reasons for the above trade position
The stock price has increased tremendously since last Friday where it closed at 453.77. We have
taken the long position, with systems stock closing at Rs. 491.95. A surprising element in the
stocks was the tremendous increase in volume traded which was last week around 150,000 and has
currently risen to 665,044. I believe the increase in volume complemented by price is due to the
recent reports from Ministry of IT showcasing a positive forecasted 5-year CAGR to be 23%,
followed with IT ministry to increase the set target of IT exports to $3billion for FY23. In addition
to IT exports, other segments that often compliment IT growth is telco and computer service
sectors which have also shown a growth of 38% and 8% respectively. Although the price also
fluctuated several times during the week, going up to 497.75 and dropping down to 465. We
believe the reason can be regarding recent discussions concerning removing the 100% tax
exemptions from IT sector and economic slowdown coupled with inflationary pressure which
might lead to government reducing IT spending to 1%. However, there are no formal policy
announcements yet.

WEEK-4
Commodity Name: Brent Crude Oil
Trade Day and Time: Friday - Dec 02, 2022
Trade position and price: Short @ 85.42
Underlying Reasons for the above trade position
We are continuing with our short position that we entered into last week. During the week Brent
crude price hit its lowest level in last 12 months owing to a possible lockdown threats in China in
the wake of rising COVID cases. In another development OPEC+ meeting is due to take place on
Sunday 4th December to discuss output cuts ahead of Russian sanctions and proposed price CAP.
There are rumors that oil supply reduction by 2 million barrels on Sunday may come a surprise
move by OPEC to sustain the dipping oil prices. On the contrary, as per a report of The Wall Street
Journal, an output increase of 500,000 barrels per day will be under discussion in the coming
meeting of OPEC+. Any such development would put a downward pressure on Oil prices further.
It is pertinent to mention that uncertainty regarding Russian Oil CAP has sustained the oil price
throughout the last week despite the new set of sanctions on Russia by European Commission
starting by 5th December. Further, India and China are crucial for the success of these sanctions
but they have already given their verdict in favor of Russia. Therefore, it seems oil prices will
remain under pressure in the weeks to come.
Stock Name: Systems Limited
Trade Day and Time: Friday - Dec 02, 2022
Trade position and price: Long @ Rs. 497.33
Underlying Reasons for the above trade position
The political noise and risk of bankruptcy are weighing highly on the stock market. Other factors
including increase in policy rate coupled with fast depleting reserves also impacted the index
negatively. Interest rate hike of 100 basis point has shaken the confidence of entire market. The
index remained under the shadow of this unexpected hike all week. At large, the current hike hits
the attractiveness of equities vs fixed income securities. However, the IT sector showed mixed
performance. Systems International has continued to perform well over the week, the share price
climbed by approximately 2%. The company fundamentals currently are very strong. Since the
company is operating mostly in international markets, the depreciating local currency and the
expanding business of the company make it a strong buy as per most of the financial analysts. We
also continue to stay long in this stock for the next week.