Karachi Stock Fizzles Out
Monday, September 8, 2008 at 4:45 pm
KARACHI:An early rally in Karachi stocks fizzled out and the rupee fell despite initial hopes that a presidential election would reduce uncertainties, as investors wanted to see concrete action to bolster the economy.
Asif Ali Zardari, swept to victory in a presidential election on Saturday to replace former army chief Pervez Musharraf, who stepped down last month rather than face impeachment.
Prime Minister Yousaf Raza Gilani, a Zardari nominee, formed a coalition led by the Pakistan People’s Party five months ago. Last month, former army chief Pervez Musharraf, who came to power in a coup in 1999, stood down rather than face impeachment.
“Since investor confidence has not yet been fully restored, cautious investors are booking profits at higher levels,” said Shuja Rizvi, director of broking at Capital One Equities Ltd.
The Karachi Stock Exchange (KSE) benchmark share index ended 0.49 percent lower, or 45.91 points, to 9,296.23, having rallied more than one percent in early trade.
KSE index which rose for six consecutive years from 2002, and was one of the top performers in Asia during that period, but plunged 41 percent from a lifetime high in April and is down more than a third since the start of the year due to political uncertainty and weak economic fundamentals.
The authorities have taken a series of measures to stop the freefall since mid-year.
On Aug. 28 they put a floor of 9,144 on the index to stop the rot, and this limit will be reviewed at a meeting on Monday due to start at 2:45 p.m. (0845 GMT).
Among the most active companies, Oil and Gas Development Co Ltd was flat at 97.93 rupees, Engro Chemicals fell 4.02 percent to 180.44 rupees, and Nishat Mills shed 4.75 percent to 46.71 rupees.
State Bank Of Pakistan buys 13.36bn of T-bills
Monday, September 8, 2008 at 4:42 pm
KARACHI:The State Bank of Pakistan (SBP) bought back 13.36 billion rupees ($175 million) of Treasury bills on Monday under five-day reverse-repo contracts at 12.25 percent to inject liquidity into the money market.
The National Bank of Pakistan Summons Board Meeting On Sept 12
Monday, September 8, 2008 at 4:38 pm
ISLAMABAD:The National Bank of Pakistan (NBP) has called its board meeting on September 12 in Karachi.
The board is expected to review the repurchase of its share available in the market, it was said in a statement issued by the bank in Karachi Stock Exchange (today) on Monday, private news channel Geo reported.
According to analysts, the decision is aimed at stabilizing sliding stock as better prices are offered by the treasury stocks in comparison with market.
The date for share’s purchase and volume will be announced after the board meeting.
Trading Remains Dull On KSE
Monday, September 8, 2008 at 8:55 am
KARACHI:The Karachi share market witnessed dull trading during the week ended on September 6, 2008 due to emergency measures to set a floor on share prices, coupled with the beginning of Ramazan. Unable to fall below the floor set at 9,144 points, the KSE-100 index inched up by 133.93 points, or 1.5 percent, to close at 9,342.19 points.
The free float market capitalisation based KSE-30 index registered a meagre gain of 43.20 points on weekly basis and settleed at 10,241.25 points level. The market witnessed low trading activity and the average daily volume of ready market declined by 67 percent to 22.776 million shares as compared to previous week’s average of 69.6 million shares. The average daily turnover of the futures market decreased by 90 percent to 1.774 million shares against 17.416 million shares last week.
Market capitalisation increased by Rs 40 billion to Rs 2.921 trillion. Foreign investors remained net sellers of shares and withdrew $3.305 million from the country’s equity market.
Dull trading was evident from the first day of the week due to investors’ lack of interest and the KSE-100 index witnessed a meagre gain of 1.89 points to close at 9,210.15 points level on Monday. The index increased by 19.36 points to close at 9,229.51 points on Tuesday.
On Wednesday, the index gained 9.64 points to close at 9,239.15 points level, while the index remained almost flat on Thursday to close at 9,239.26 points, up by only 0.11 points. However, trading activity increased on the last day of the week and the index surged by 102.93 points to close at 9,342.19 points level on Friday.
Bilal Hameed, an analyst at JS Global Capital, said that after the regulators decided to implement a price floor on share trading on August 27, 2008, very little activity was witnessed at KSE. Although the market gained 134 points, average daily volume made a 9-week low to 22.776 million shares. KSE imposed this floor in order to provide a breather to the investors. However, this measure was not liked by certain sections in the local as well as foreign community. Worsening balance of payments situation continued with its pressure on the forex reserves which fell to $9.13 billion, more than five year low. All eyes were on the presidential elections as market expects things to stabilise and political uncertainty will remove, he added.
Oil Prices Rebound Sharply In Asian Trade Over Hurricane Threat
Monday, September 8, 2008 at 8:54 am
SINGAPORE:World oil prices rebounded sharply in Asian trade on Monday on worries Hurricane Ike will threaten production facilities in the oil-rich US Gulf Coast, analysts said.
In Asian morning trade, New York’s main contract, light sweet crude for delivery in October rose 2.37 dollars to 108.60 dollars a barrel from its close in New York floor trading on Friday.
Brent North Sea crude for October surged 2.57 dollars to 106.66 dollars a barrel.
The hurricane slammed into Cuba on Sunday, becoming the second major storm to hit the island in little over a week, making landfall in the eastern province of Holguin, weather officials said.
Ike, packing 120 mile (195 kilometre) per hour winds, earlier left dozens of people dead in a rampage across Haiti.
“Oil prices are reacting to the threat of Hurricane Ike, which is heading toward the Gulf of Mexico,” said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.
“In the short term, hurricanes will determine the price direction of crude oil,” he added.
Prices had been declining due to weakening energy demand as global economies slow down.
Shum said the market was also closely watching the results of a policy meeting on Tuesday by oil ministers of the Organisation of Petroleum Exporting Countries (Opec) in Vienna.
OPEC ministers are expected to wrestle with the issue of falling oil prices. Some analysts were expecting the ministers to agree to trim output to help keep crude above 100 dollars a barrel.
$750 Million Economic Aid Plan For Pakistan Drawn Up
Monday, September 8, 2008 at 8:49 am
WASHINGTON:The Democratic vice-presidential candidate, Senator Joe Biden, has drawn up an excellent long-term plan for the United States to help Pakistan economically, thereby strengthening the state against Islamist extremism.
The problem is, however, that Pakistan may not be able to wait that long.
He and others have warned that mass anger at rising food prices and lengthening electricity cuts could combine with hostility to the government’s campaign against the insurgents and to Pakistan’s alliance with America.
Pakistan’s new president, Asif Zardari of the Pakistan People’s Party (PPP), is already hated by much of the population, in part because he is seen as too pro-American.
Sharif’s popularity has soared in recent months, partly due to his opposition to Pakistani help to the Americans in Afghanistan and criticism of the Pakistan Army’s campaign against the insurgents.
This does not mean that the United States should treat Sharif as an enemy. If he comes to power, he will probably follow a course of pragmatic cooperation with Washington.
America should give emergency aid to the hundreds of thousands of people displaced by the Pakistani military offensives in Bajaur in the Federally Administered Tribal Areas (FATA) and Swat in the North West Frontier Province.
These should be focused on the North West Frontier Province. The planned $750 million for the tribal areas is a good idea in itself, but given the security situation and lack of basic infrastructure in these areas, it will be many years before this money can be spent effectively. Meanwhile, the North West Frontier Province itself is in grave danger from the militants.
Pakistan To Get $810mln Power Sector Loan: ADB
Monday, September 8, 2008 at 8:47 am
MANILA:Pakistan will receive 810 million-dollar loan to help address its growing electricity needs, the Asian Development Bank said on Sunday.
The loan is to be released in several instalments over 10 years to support Islamabad’s 5.2 billion-dollar power distribution enhancement programme, the Manila-based lender said.
National power grid is short of generating capacity, and suffers from poorly maintained transmission and distribution systems that lead to supply disruptions, ADB said.
System losses from distribution companies range between 10 and 33 percent.
“A secure and predictable electricity supply will lead to social and economic benefits and improve conditions for schools, hospitals and other social services,” said ADB energy specialist Rune Stroem.
The funding will focus on the distribution sector, which is burdened with worn out and overloaded infrastructure, power losses, capacity shortfalls and other constraints.
2.2 Percent Rise In Investment Under CFS Mk-II
Monday, September 8, 2008 at 8:45 am
KARACHI:Investment under CFS Mk-II on Karachi share market during week ended on Sep 6, 2008 increased by 2.2 percent to close at Rs 22.5 billion on Friday as compared to Rs 21.99 billion of previous week. The CFS rates went up 125 bps to close at 18.18 percent, depicting a higher risk perception in the market, Romessa Mirza, an analyst at Invest Capital Securities said.
The top 5 scrips, by CFS investment, were AHSL, JSCL, OGDC, NBP and BAFL, which cumulatively accounted for 35 percent of total CFS investment. Open interest at the futures counter stood at Rs 2.90 billion, an increase of 14.67 percent, or Rs 0.37 billion. Top 5 scrips, by futures investment, were JSCL, Engro, ANL, AHSL and ATRL, cumulatively contributing 29 percent of total futures investment.
LSE Equities Stay Range-Bound
Monday, September 8, 2008 at 8:44 am
LAHORE:The decision of the Karachi Stock Exchange (KSE) board of directors to cap the market at August 27 level badly affected the trading volumes on the Lahore Stock Exchange (LSE) where equities remained range-bound amid lacking interest on the part of investors and institutions because of the rapidly changing political situation in the country.
The LSE-25 index marginally improved by 29.60 points and closed at 2901.61 as compared to previous Friday’s closing of 2872.01, while transaction volume significantly reduced to 7.686 million shares as compared to 31.914 million shares of the last trading session of the previous week.
The unabated foreign selling discouraged the investors, who kept themselves at distance throughout the week, while the KSE board’s decision to cap the market also contributed to the market sluggishness. The bearish sentiments remained intact during the entire week and investors adopted ‘wait and see’ policy to avoid any loss.
On Monday, the market witnessed a record dull trading day and the index could just show a marginal gain of 1.69 points while shares volume also declined to considerably low of 1.237 million shares. All the shares were closed with marginal loss or marginal profit at the end of trading. The sentiments remained upset also because of the rising outflow, which can be evident from the depleting special convertible rupee account that registered a withdrawal of $213 million by the end of August 2008. The experts believed that artificial measures could not rescue the market for long-term and it has to move according to the market mechanism.
On Tuesday, the market remained once again under the grip of foreign sellers who kept on putting their offloading on sale at every level. However, the artificial measures adopted in a bid to check free-fall helped restrict market in narrow range that also resulted in low trading volumes. The deteriorating law and order situation, worsening balance of payment, and rapid decline in the rupee’s value were among the negative factors that kept the market under pressure. The investors also started eyeing on the results of the presidential elections so as enable to take their position in future.
On Wednesday, the market took start on positive note and kept on moving in the green zone throughout the day. Because of the artificially introduced measures, the market was forced to stay in green zone but it kept on moving around the opening level. Majority of the investors remained at distance and did not take interest in buying.
The market amid bullish sentiments fractionally improved by 0.23 points with slight increase in trading volume to 1,032 million shares. Among other factors, the rising interest rate also encouraged the investors to get out of the market, which did not remain more attractive for them as compared to banks’ profit.
The market kept on moving down on Thursday with insignificant increase in transaction volume. All the prime shares, including MCB Bank, Engro Chemical, PSO, Allied Bank, Kot Addu Power, Pioneer Cement, Bosicor Pakistan, and Pakistan Cement Company remained under pressure and closed with losses. The experts were of the view that market is unlikely to take direction till September 6 and its future mainly depends upon the post-election scenario.
The political instability has shattered the investors’ confidence very badly while the foreign investors have been persistently offloading their holdings since the worsening of the political situation. The investors were expecting that after the presidential election, the government would focus on improving the economic situation and also ensure political stability.
On the last trading session - Friday, the changing situation helped market recovery by over 36 points with marginal improvement in the trading volume. The market after opening on positive note kept on moving in narrow range due to lack of interest on the part of investors. The equities suffered losses for a short time, but aggressive buying in selective shares dragged the market into green zone during last 45 minutes’ trading.
The sentiments are likely to change in the current week mainly because of Asif Ali Zardari, who has been elected as 12th President of Pakistan. The experts were of the view that the single party government would be in a better position to evolve business-friendly policies and ensure their implementation. The Friday closing has also reflected the expected upward move on Monday.
Besides, the KSE board is also expected to hold its meeting on September 8 to review its earlier decision under which market was capped at August 27 level. Because of the celebration of presidential election, the market is expected to continue Friday’s bullish sentiments on Monday.
40 Percent Cash Dividend To Shareholders Be Mandatory For Companies: KSE Proposal For Market Solvency
Sunday, September 7, 2008 at 12:06 pm
KARACHI:The Karachi Stock Exchange (KSE) has proposed a mandatory 40 percent cash dividend for shareholders of all listed companies and shares buyback by sponsors of private sector listed blue chips companies as strong supportive measures for the market at this level, it is learnt.
In a letter to the Ministry of Finance, the KSE suggested that 40 percent cash dividend should be mandatory for all listed companies for their shareholders as it was imposed in the year 1999-2000. It has also proposed to the ministry to regularise the equity market opportunity fund to support the market and to request the State Bank of Pakistan to ease liquidity by reducing discount rates, cash reserve requirements (CRR) and SLR requirements.
Sources said that the KSE Board of Directors wants to ensure some supportive measures to mitigate the potential technical risks before removing the floor on stock prices imposed since August 28.
In this regard, the board is considering to convince the sponsors of the private sector blue chips companies to buy back shares of their listed stocks to support the market at this crucial time. According to a director, the step to buy back shares by the private sector blue chip companies will be a strong supportive measure for the market.
It is learnt that the KSE board of directors will meet Federal Finance Minister Naveed Qamar in the next few days. The board will discuss all these issues with the minister before taking any decision regarding floor mechanism.
An informal general meeting of KSE members has also been called on Monday, September 8, to discuss the prevailing market condition. The members will give their recommendations over the issue. The KSE board of directors is also scheduled to meet on Tuesday to take any decision to remove or maintain the floor on stock prices.
The KSE board had set floor on stock prices on August 28, 2008, “as a stabilisation measure to save the investors from further losses, and the floor will enable the investors to settle their dues and avoid default”.
After imposing the floor, dull trading activity has persisted in the share market, as the average daily volumes of ready market declined to 22.776 million shares last week as compared to the previous week’s average of 69.6 million shares and 193 million shares a week earlier.
The board said that the decision to set a floor on stock prices was taken after consultations with all stakeholders to ensure market solvency. The board is not giving a timeframe for the removal of the measure. However efforts are in place to make sure that it is as short as possible.
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