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Sunday, 21 August 2011


Karachi Stocks Down 246.25 Points:
KARACHI, Aug 19: At close of trading, the KSE-100 index was at 10882.27, down 246.25 points.

August 19, 2011

Nestle Pakistan
Rs 8.13
Uni Lever Pak
Rs (79.40)
Rs 7.47
Siemens Pak
Rs (30.47)
AL-Ghazi Tractor
Rs 3.65
Shell Pakistan
Rs (10.86)
Rs 3.12
Attock Petroleum
Rs (10.72)
BOC (Pak) Ltd.
Rs 1.96
National Refinery
Rs (10.52)

KSE 30 – Shares Index
Previous 10,618.82, Friday’s 10,351.41, minus 267.41 points.
KSE 100 – Shares Index
Previous 11,128.52, Friday’s 10,879.82, minus 248.70 points.
Previous Rs.2,963.634bn, Friday’s 2,899.475bn, minus 64.159bn.
Lotte Pakistan 3.723m, Fatima Fertiliser 2.890m, J.S.& Co 2.431m,Fauji Cement 2.113m, Lucky Cement 2.051m shares.
TONE:bearish,total listed 638,actives 279,inactives 359,plus 38,minus 158,unchanged 83

Stocks caught in whirlwind of global sell-off
KARACHI, Aug 20: The shares at the Pakistan`s main bourse dipped below the level of 11,000 points on Friday, representing 3.4 per cent fall over the earlier week and a 39 week low.
Most analysts believe that the Karachi Stock Exchange has been caught in the whirlwind of global sell-off. But just as most markets in Asia, the fall in equity values has been less severe than seen in the bears` trample of Wall Street and other developed markets.
Sana Hanif, analyst at JS Global said that average daily volumes at KSE had also plunged by 49 per cent week-on-week to 36 million shares.
“Dull volumes are also attributed to the Ramazan factor and deteriorated law and order situation in Karachi”, said the analyst. Recalling the 2008 stock crash, the dip in the index has sent shivers down the spine of many small investors, but several stock strategists are offering comforting words.
“Some of the timid investors fear that in line with the previous stock crisis of 2008, the Index can fall by 50 per cent as was seen in early 2009 when the benchmark touched record low level of 4,815 on Jan 26, 2009″, said a leading broker.
He added that such a theory could be split apart for two major reasons: “Firstly, because the current crisis is different from the 2008 meltdown. Secondly, the valuations in relation to earnings are getting close to the 2009 crisis”.
Analysts explained that the current “fire-sale” of Pakistan stocks is an outcome of ongoing turmoil in global financial markets and, therefore, has no direct link with the country`s economy or market situation, as was in the 2009 meltdown.
An analyst elaborated that in 2009 the problems in equity markets around the world were exacerbated by the country`s economic crisis.
The current account deficit stood at 8.7 per cent of GDP and the rupee had then lost value by 25 per cent.
All of that was made worse for investors by the imposition of infamous “price floor” that closed exit doors of the bourse for almost three-and-a-half months, shaking the investors confidence to the core.
The analyst went on to comfort: “This is not the case with Pakistan this time where current account is in surplus and forex reserves adequate for six months of imports”.
Also the stock market is open albeit volumes are thin, thanks to the absence of investor-friendly leverage products. Most recall that the “badla” was at the heart of the crisis at the time.
Also to set at rest the investors` fears, analysts contend that the Pakistani stocks were trading at forward price-to-earning (p/e) of 4 times with dividend yield of 16 per cent (6-month T-bill was at 13.9 per cent), at the time stocks had hit the pit in 2009.
At the moment the Pakistani stocks are trading on forward p/e of 5.2 times (without OGDC) with dividend yield of 11 per cent and 6-month T-bill yield of 13.2 per cent. All of that showed that if the index were to come close to 8,000 points, it would be at same level as seen in Jan 2009.
“That is because of earnings growth and dividends and the fact that KSE index being a total return index assumes re-investment of dividends”, said this market guru, adding that compared to the regional markets which are “price-only”, KSE 100 Index is total return basket which overestimate the headline index by incorporating the cash dividends. That nonetheless explained the worst case scenario.
Analysts and brokers said that they do not fear the fall of index to anywhere as low as 8,000 because local institutions had adequate funds at their command and could absorb all of the foreign selling–the one big potential event that gives small investors the nightmares.
Investors are likely to ignore attractive KSE valuation for the time being in anticipation of more selling from foreign funds. Before the imposition of price floor in 2008, foreigners commanded shares worth $2.6 billion (25 per cent of the free float) compared to estimated $2.5bn now (30 per cent of free float).
And ever since US debt limit issue erupted, foreigners on net basis had sold stocks worth $39m in last three weeks– far less than the equity they sold-off in 2009 crisis when overseas investors had dumped $200 million worth stock in two months after the lifting of the `price floor`
Mohammad Sohail, CEO at Topline Securities, who offers the most comforting words, said that the uncertainty in global markets and investors risk aversion may result in more selling by offshore investors in Pakistan market, which was why his house was recommending gradual buying of shares having little or none of foreign ownership.
Out of $2.5billion worth of Pakistani stocks held by foreign investors at this time, three stocks (OGDC, MCB and PPL) make up more than 50 per cent of their aggregate portfolio, which dictates caution before jumping into those stocks.
KSE doubles stocks in DFC to support volumes
KARACHI, Aug 19: In a bid to support the sagging volumes at the Karachi Stock market, the bourse on Friday announced that from September 2011 contract; the number of stocks in the Deliverable Futures Contracts (DFC) had been doubled to 28 from 14.
A stock broker, in the know of things, said that prior to 2008, the volume of future trades amounted to one-third of the aggregate turnover for the day. “It has now faded to one-tenth of the total volume,” said the broker, which ostensibly had
pushed regulators to place more stocks on the future contracts.
The new scrips added to the list on Friday included: Arif Habib Corporation; Adamjee Insurance; Askari Bank; Azgard Nine; Bank Alfalah; Bank Al-Habib; Lotte Pak PTA; Nishat (Chunian); Netsol Technologies; Nishat Power; OGDC; Pak Re-Insurance; PSO.
These would be in addition to the 14 scrips already in the contract, which include: Attock Refinery; D.G. Khan Cement; Engro Corp; Fauji Fertiliser Bin Qasim; Fauji Fertiliser Co; Hub Power Company; Lucky Cement; MCB Bank; NBP; Nishat Mills; Pakistan Oilfields; Pakistan Petroleum; PTCL and UBL.
The dip in volumes has touched the pockets of most stakeholders. Just to recall, six years ago, on March 9, 2005, investors at the KSE had gasped for breath as the volume of share traded that day had jumped to worth Rs216 billion. The traded value on Friday was an insignificant Rs1.8 billion. There could no better translation of the market rot.
The incessant fall in stock prices has put traders, brokers and investors in a state of panic. The index on Friday let go the 11,000 support level to plunge by another 249 points or 2.23 per cent, closing at 10,880 points.
But most analysts thought that the sell-off mainly by local investors was on the unfounded fear of foreign selling. “In all of the current month, foreigners have sold equity net worth of just $11 million,” said one analyst and argued that it was normal even before the current bear run on the global markets began.
He compared the net selling by foreign fund managers in regional markets, which in August had run up to $25 billion. The analyst also pointed out that the net buying of local equity by foreign investors in all of last year had stood at $500 million.
“The sale, even comparing to that sum, is just a pittance,” said the analyst.
But another analyst made a fairer comparison saying that the inflow of foreign portfolio investment in Indian market last year was a colossal $30 billion. “So naturally, the outflow in Dalal Street was also that much more.”
Some were concerned and wondered if the spilling of blood on the streets of Karachi had led to blood bath in KSE equity values. But veterans shook their heads at such an idea, saying that the market had mostly remained immune from bomb blasts, riots, civil commotion and political headwinds.
“The impact, if at all should be trifling,” said one sage. He believed that stocks also do not necessarily move down in the holy month of Ramazan for a possible lack of investor interest.
“The faithful do keep one eye on the stock index while praying and making best efforts to seek divine blessings,” said the guru pointing to the last 10 year-trend, which began with rallies that did not cool off in the holy month.
All of which brought most analysts to conclude that the “fear factor” was at the heart of the current bear run. The world financial markets were still in turmoil with stocks failing to find a firm foothold.
“Is the foreigner going to sell the next day?” was the worry that prompted locals to dispose of the stock a day earlier. In the heat of the moment, investors were ignoring the fact that the Pakistani equities had dropped to valuation of 6.5 times the forward earnings, which was at an attractive one-half the regional average.
Meltdown on stock market, index loses 248 points
KARACHI: The stock market on Friday took a massive plunge as benchmark suffered a fall of 2.23 per cent or 248.70 points at 10,879.82 followed by across the board selling by all and sundry partly in sympathy with the global downturn and partly to the city violence.
The breach of the psychological barrier of 11,000 points is very significant in more than one ways and most analysts believe the 38-week low could be further eroded by the next week as negative news on all fronts outweigh the positive ones.
“The renewed global meltdown again affected the local bourse,” said a leading analyst Samar Iqbal. Fears griped the locals that some of the foreign funds may indulge in selling to compensate for the global losses.
He said much of the selling was confined to entire oil sector in which foreign funds have a big stake, notably Attock Refinery, National Refinery, Shell Pakistan, PSO, Pakistan Oilfields and Engro Corporation, which suffered fall ranging from Rs5.86 to Rs10.86.
Even index-heavyweight OGDC also followed the general line of action and was off by Rs4.79 contributing more than 100 points to the total fall in the index.
Analyst Ahsan Mehanti said Morgan Stanley’s forecast of slow US economic growth and concerns about the Euro-debt crises seemed to have accelerated the pace of panic selling.
He said renewed wave of killings in the city personal security concern limited institutional support, leaving bears in the field which mauled the market as they wished.
Minus signs again dominated the list under the lead of Unilever Pakistan and Siemens Pakistan, off by Rs79.40 and Rs30.37, while gainers were led by Nestle Pakistan and Sanofi-Aventis, up by Rs8.13 and Rs7.47.
Traded volume was maintained at the overnight level of 41m shares but losers extended their lead over the gainers at 158 to 38, with 83 shares holding on to the last levels.
The active list was topped by Lotte Pakistan, lower 41 paisa at Rs10.72 on 3.723m shares followed by Fatima Fertiliser, easy by 28 paisa at Rs15.95 also on 3m shares, JS & Co, easy by 23 paisa at Rs5.41 on 3m shares, Fauji Cement, lower 29 paisa at Rs3 on 2m shares, Lucky Cement, off 91 paisa at Rs71.02 on 2m shares, Engro Corporation, sharply lower by Rs5.86 at Rs111.86 on 1.664m shares and Azgard Nine, easy by 26 paisa at Rs4.43 on 1.535m shares.
They were followed by National Bank, which passed through another lower circuit breaker, off Rs2.17 at Rs41.30 on 1.492m shares, Fauji Fertiliser Bin Qasim, lower 63 paisa at Rs46.64 on 1.415m shares and Fauji Fertiliser, easy 98 paisa at Rs153.27 on 1.363m shares.
FUTURE CONTRACTS: Pakistan Oilfields led the active list on this counter, off Rs8.39 on 0.562m shares followed by Engro Corporation, sharply lower by Rs5.90 at Rs112.19 on 0.501m shares and D.G. Khan Cement, lower by 67 paisa at Rs20.08 on 0.350m shares.
They were followed by Attock Refinery, off Rs3.45 at Rs114.26 on 0.321m shares and Fauji Fertiliser, lower 93 paisa at Rs153.52 on 0.221m shares.
DEFAULTER COMPANIES: The activity on this counter was slow owing to weekly closure but prices stayed mixed amid fractional either-way changes.
Dadabhoy Cement led the list of actives easy one paisa at Rs2 on 12,004 shares followed by Genertech Power, lower three paisa at 45 paisa on 10,002 shares and Shakarganj Foods, higher by 61 paisa at rS6.71 on 8,500 shares.

Mohammed Saleem Mansoori

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