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Wednesday, 28 December 2011

Daily Stock Market update: 29th Dec,2011


Karachi Stocks Up  24.69 Points:
KARACHI, Dec 29: The KSE-100 index was at 11377.28, up 24.69 points. (today 11.48 am)

December 28, 2011

Nestle Pakistan
Rs 155.92
Rs (18.00)
Unilever Pakistan
Rs 80.23
Indus Dyeing
Rs (15.55)
Rafhan Maize
Rs 49.11
Biafo Industries
Rs (3.21)
Bata Pakistan
Rs 15.55
Rs (3.05)
Wyeth Pakistan
Rs 13.38
Shell Pakistan
Rs (2.30)

KSE 30 – Shares Index
Previous 10,275.60, Wednesday’s 10,288.20, plus 12.60 points
KSE 100 – Shares Index
Previous 11,311.38, Wednesday’s 11,352.59, plus 41.21 points
Previous Rs 2,934.468, Wednesday’s 2,945.488bn, plus 11.020bn
Hub-Power 13.817m, Fatima Fertiliser 5.193m, Bank of Khyber 3.356m, Bank of Punjab 2.043m, Sui Southern Gas 2.026m shares.
TONE: steady, total listed 638, actives 314, inactives 324, plus 104, minus 106, unchanged 104

Karachi Stocks lack trading interest on year-end
KARACHI, Dec 28: Share values on the stock market on Wednesday again lacked normal trading interest as leading investors were still in an indecisive mood and could not precisely decide whether or not to go for proverbial year-end, widely known as year-end window dressing operations.
During the previous couple of years, the last week of the fading year used to be hummed with activity as portfolio adjustments were at its peak as everyone was inclined to witness the robust new year opening, said a leading analyst.
But the current year, a terrible victim of political standoff between the major contenders on various issues, will be known as one of the bleakest in its history on more than one counts, he added.
The KSE 100-share index managed to finish with gain of 41.21 points at 11,352.59 points as compared to 11,311.38 a day earlier as some of the leading base shares managed to finish with modest gains under the lead of food group.
Floor brokers said during the last sessions of the current financial year it may add some more points to the closing figure but the widely speculated level of well above the 12,000 points was nowhere in sight.
“News from the political and judicial fronts, notably the memogate issue and a standoff between the major political parties took a massive toll of both turnover and the price decline, keeping the market in uncertain mood,” they added.
Unlike the previous years, payout by some of the sugar mills were on the higher side but failed to generate fresh buying even in their respective sector, some others said.
A final cash dividend at the rate of 50 per cent by Al-Abbas Sugar and 20 per cent final by the Thal Industries Corporation was well-received in the market and omission by the Kohinoor Sugar Mills was ignored.
Prominent gainers were led by Nestle Pakistan and Unilever Pakistan, up by Rs155.92 and 80.23, while among the top losers Dreamworld and Indus Dyeing, off Rs18.00 and 15.55 were leading.
Traded volume showed a sharp rise thanks to strong foreign buying in Hub-Power, up 39 paisa at Rs34.50 on 14m shares followed by Fatima Fertiliser, lower by 45 paisa at 22.54 on 5m shares, Bank of Khyber, up one rupee at 5.40 on 3m shares, Bank of Punjab, firm by 27 paisa at 5.20,on 2m shares, Sui Southern Gas, steady one paisa at 19.46 on also on 2m shares, NIB Bank, steady by three paisa at 1.49 on 2m shares, and JS & Co, lower five paisa at 4.02 on 1.5m shares.
They were followed by Fauji Fertiliser Bin Qasim, lower by 66 paisa at 45.66 on 1.434m shares, Engro Corporation, off 56 paisa at 97.41 on 1.425m shares and Dawood Hercules, up Rs1.97 at 41.55 on 1.077m shares.
FUTURE CONTRACTS: Both the settlements of Engro Corporation were again traded lower by 52 and 37 paisa at 98.52 and 97.67 respectively on renewed selling on 0.661m, and 0.652m shares, followed by Fauji Fertiliser Bin Qasim, off 70 paisa at 45.75 on 0.276m shares, while its January settlement was marked by 61 paisa at 46.09 on 0.243m shares.
Fauji Fertiliser also came in for fresh selling and was marked down by Rs1,35 at 153.03 on 0.257m shares.
DEFAULTER COs: The active list was led by Genertech Power, easy one paisa at Rs0.26 on 13,210 shares followed by Dost Steel, steady by six paisa at 1.16 on 12,056 shares and SS Oils rose by 15 paisa at 6.65 on 4,000 shares.

MTS rules relaxed to improve volumes on bourses
ISLAMABAD, Dec 28: The Securities and Exchange Commission of Pakistan (SECP) has relaxed the Margin Trading System (MTS) with the expectations that it would improve volumes in capital markets of the country.
The government of Pakistan has allowed amendments to the Securities (Leveraged Markets and Pledging) Rules, 2011, which has allowed the corporate sector regulator to make the cash margin requirements rules lenient.
After the amendments, individual investors can also participate as financiers in the Margin Trading System (MTS). However, the eligibility criteria and requirements for the individual investors to participate in the MTS are expected to be finalised by the SECP next week.
“The minimum requirements and risk management issues will be considered in formulating the eligibility criteria,” an official of the SECP said.
“The individual investors would also be required to establish network and prove that they are serious investors who can sustain shocks of the markets.” Currently only the corporate investors are allowed to participate as financiers in the MTS.
The SECP said that the relaxation in the MTS rules would support liquidity for the small investors in the stock markets which would encourage trading activities and improve investor confidence.
The rules, which were promulgated by the Federal Government earlier in February, prescribe a broad regulatory framework for Margin Financing, Margin Trading, and Securities Lending and Borrowing.
The SECP has said that the purpose of introducing these leverage products has been to help boost trading activity in the market and to cater to the financing needs of the capital market while providing retail investors with an easy access to financing against shares.
The amended rules also relax the earlier mandatory condition of depositing at least 25 per cent equity participation in the form of ‘cash only’ by those obtaining the finance in MTS. The commission is expected to finalise the new minimum cash margin requirement in the coming week.
“The new requirements would be 15 per cent cash participation and 10 per cent collateral in the form of shares to be deposited by those borrowing finance under MTS,” said an official of the commission. “But these shares will be in selected companies with necessary ‘haircut’.” Haircut terminology is used to determine the value of shares at lower than the market rates.
The amendments also remove the mandatory condition of prescribing minimum liquidity requirement for selecting securities eligible for Margin Financing (MF), and the SECP expects that it will encourage more securities to be available for funding under MF and generate more trading activity.
“A balance is required in the market under the prevailing conditions,” the official said adding, “while liquidity is required in the market, the need for effective risk management cannot be ignored.”

KSE loses 670 points in 2011
KARACHI, Dec 28: Two sessions remaining to the end of 2011, the Pakistani stocks are seen to have lost 6 per cent in the year 2011 with the KSE-100 index down by 670 points, closing Wednesday at 11,353 points.
Along the year, market participants attributed the dismal market conditions to various factors, the outstanding among them being economic morass, political uncertainty, law and order situation and country’s relationship with the US.
But irrefutable reasons for the dismal market performance that continued throughout the year were low daily trading volumes and foreign sale of equity.
During the year, net foreign portfolio outflow amounted to $122million. A small net buy of $0.47 million by overseas investors on Tuesday, after weeks of net sale triggered a bit of excitement, but resumption of sale of $0.33 on Wednesday poured cold water over hopes of rejuvenation of foreigners’ interest or at least putting a plug to the outflow.
“In any case, Fund managers would be celebrating the Christmas and New Year holidays. No mood change should be expected until their return to the trading desk in Jan,” says an analyst.
Mohammad Imran, head of equity sales at Arif Habib Limited, however, offers some comforting words. He points out that Pakistan stocks were not the only to be plummeted by the bears.
“Major regional indices witnessed a decline of approximately 20 per cent,” says he.
The ongoing European sovereign debt crisis and slowdown in US economic growth has made stocks a riskier class of asset, weakening both developing and emerging markets.
Compared to other regional and emerging markets, the Pakistani equity loss, therefore, looks but a pittance. It was the nervousness over global equity sell-off that seeped into the local market, resulting in accelerated foreign sale.
For stock brokers, the year has been a nightmare with volumes of trade contracting by 34 per cent in 2011 over the previous year. Daily volume dipped to 80 million shares, from 121 million shares last year.
“Most brokerage houses find it difficult to make two ends meet,” says a stock broker, who closed down the research department to cut costs.
A couple of liquid stocks have managed to attract much of the volume.
On Wednesday the stock in Hub Power Company saw trading in 13.8 million shares that accounted for as much as 37 per cent of the day’s aggregate volume of 46 million shares.
A day earlier, the market had seen business slump to over a year low at 19.6 million shares.
“Compared to around a billion shares traded prior to the crash of 2008, consider the market as closed,” says a broker.
Late on Wednesday evening, an announcement by the Securities and Exchange Commission of Pakistan was made to the effect that the apex regulator had allowed relief to the Margin Trading System (MTS) market with relaxed cash margin requirements and participation of individual investors as financiers.
The Regulator observed that the amendment in the Securities (Leveraged Markets and Pledging) Rules, 2011 rules were made as “continuous efforts to develop the capital market in the country and to support liquidity for encouraging trading activity and engendering investor confidence.”
The amended rules would empower the regulator to prescribe lenient cash margin requirements and allow individual investors to participate as financiers in the MTS. That had been one of the long standing demand of market participants.
“It has, however, to be seen if the step helps to generate volumes, going forward,” said a cautious, levelheaded broker.

Mohammed Saleem Mansoori

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