Low inflation numbers and SECP clarification injected optimism into the bourse
The stock market enjoyed a sharp mid-week recovery and managed to recoup earlier losses as the benchmark KSE 100-share index posted a 146-point (0.4%) gain to close at 32,969 points during the week ended October 2.
The market finally managed to break the bearish spell after the announcement of low inflation numbers and clarifications by the Securities and Exchange Commission of Pakistan (SECP) about broker investigations, sparking optimism among investors resulting in a strong end of the week.
News of a successful Eurobond issue and recovery in regional markets also helped the local market’s cause as volumes picked up sharply and foreigners also turned net buyers.
It was not a smooth sailing, however, as the opening two days saw a sharp drop in the KSE-100 index. The benchmark index fell 608 points and dipped to as low as 32,025 points during intra-day trading, coinciding with a slump in regional markets.
Things turned around in the middle of the week after the National Accountability Bureau and the SECP issued a joint statement clarifying their position regarding the ongoing investigation into the conduct of brokers.
The news was soon followed by the announcement of surprisingly low inflation figures, which brought life into the market and the KSE-100 rose 755 points in the latter half of the week to close at 32,969 points on Friday. The surprise of the week was the inflation reading for September 2015, which stood at 1.3%, much lower than market consensus. With the inflation remaining low since the start of the fiscal year, investors are now hopeful of further discount rate cuts in the future.
Investors rushed to buy high-yielding shares as a result and Fauji Fertilizer Company and Hub Power Company led the way, contributing 78 points to the KSE-100’s rise. Similarly, value buying was also recorded with the heavyweight oil and gas sector being the major beneficiary, resulting in a boost to the entire market.
The week saw the successful issue of Eurobonds amounting to $500 million by the government of Pakistan and the finance minister announcing that the country’s foreign exchange reserves now stood at $20 billion, which also contributed to the positive mood at the bourse.
Foreigners finally turned net buyers after three consecutive weeks of net selling. Heavy foreign buying was witnessed in the final two days and total net buying for the week amounted to $0.22 million as opposed to $1.1 million net selling in the previous week.
Average daily volumes posted a healthy gain of 43.3% and stood at 178 million shares. Similarly, average daily values also shot up 41.5% and were recorded at Rs7.97 billion.
The Karachi Stock Exchange’s capitalisation was Rs7.06 trillion ($66.9 billion) at the end of the week.
Winners of the week
TRG Pakistan Limited
TRG Pakistan operates as an information technology company. The company provides business support and software services to companies. TRG Pakistan manages call centers and offices located in Pakistan and elsewhere throughout the world.
Pak Elektron Limited
Pak Electron Limited manufactures and sells a variety of electrical products and domestic appliances. The group’s power products include transformers, energy meters and switchgears. Their appliances consist of a range of deep freezers and air conditioners. The group also has an agreement with Sony Pakistan (Pvt) Limited, for which Pak Electron will manufacture Sony brand televisions.
Arif Habib Corporation Limited
Arif Habib Corporation Limited is a holding company. The company holds interests in the securities brokerage, investment and financial advisory, investment management, commercial banking, commodities, private equity, cement and fertiliser industries.
Losers of the week
Pakistan International Bulk Terminal
Pakistan International Bulk Terminal is being setup as the country’s first terminal for handling coal, clinker and cement on build, operate and transfer (BOT) basis at Port Qasim Authority.
Searle Company Limited
The Searle Company Limited manufactures and sells pharmaceutical and healthcare products. The company also sells a range of food products and consumer items.
Jahangir Siddiqui and Company Limited
Jahangir Siddiqui and Company Limited is an investment company, offering share brokerage, money market, advisory and consultancy, underwriting and portfolio management services.
Published in The Express Tribune, October 4th, 2015.
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