Karachi Stock Exchange leaves Wall Street and the City of London trailing

[Lazarus]

Ladies and Gentlemen,

The hottest Emerging Market on the globe has arrived, and it is spelled "PAKISTAN".

If you have a copy of today's Times (UK) you would have noticed (front page of the Business Section) that the flag of Pakistan is bang right in the center stage, along with Stars n' Stripes and the Union Jack.

What is more, if you had bought stocks portfolio worth a USD100 at the start of the year at Karachi Stock Exchange, you would be looking at a whopping 36% profit.

On the other hand, if you had purchased a similar portfolio on Wall St or in the City you would be staring down at a loss of 22% and 28% respectively.

As a Brit of course I wish that the City had done as well as KSE . But it is a rare moment of jubilation in the major league for KSE. If the current level of satbility and good financial management continues we may witness armies of Western investment bankers (hence Capital providers) landing in Pakistan.

Pakistan is now firmly a leading Bull in the Emerging Markets herd. Lets hope this bull lasts a few more rounds .......................


On the same day, guess what the world press is saying about India? Well the Financial Times (page 15) explains how the Indian girls (in beauty pageants) are being brought up to be "Ice Vaginas" and the how the beauty contestants "drink their asses out" literally. I am not kidding.

It is sad to see that Indian girls have been brought up by their parents to swap Sutti for "drinking their asses out".

The FT goes on to comment that one of the girls in the Miss India contest started an impassioned speech about the virtues of single-parenthood, until the judges realized that the poor girl had absolutely no idea what the term means ...................... How can a nation that the Muslims tried to civilize for over 400 years revert so quickly to falling so low?

[nausherwan]

And read this from The Financial Times UK.


Market Focus: Karachi shines despite turmoil
By Farhan Bokhari
Published: July 25 2002 18:01 | Last Updated: July 25 2002 18:01


Pakistan's main stock market index, the Karachi Stock Exchange's KSE-100 closed marginally down on Thursday but analysts are expecting that the market will rise in coming days.

Karachi is one of the region's fastest rising markets - up 40 per cent on the the year in spite of some turmoil. Fears of a military clash with India in May sent the market down more than 7 per cent on its worst day. But analysts remain convinced, notwithstanding an unexpected crisis, that the market still has upside potential.

"There are many factors which are supporting the market's robust rise" said Yasin Lakhani, former Chairman of the Karachi Stock Exchange. Mr Lakhani said, many new domestic investors had stepped in to the market, who previously kept their savings in offshore accounts.

But events following last September's terrorist attacks, prompted many Pakistanis to repatriate their funds back home, driven by fears of being embroiled in US led worldwide investigations in to cases of money laundering. Pakistani businessmen say, they fear being especially targeted in global investigations in to money laundering and terrorist financing, in view of the country's reputation as one where islamic militant groups have been active for years. "Thanks to the FBI and other US agencies, Pakistanis who kept their money outside the country are now bringing it back. This is not a temporary shift, it seems to be a permanent trend" added Mr Lakhani.

Other analysts said, the move by Pakistan's central bank to reduce interest rates, has prompted many savers to withdraw their funds from fixed return long term deposits, for investing in assets such as equities. The central bank's move coincided with expectations of high returns as the market's surge continued.

"The indications of a fall in interest rates means that there's a lot of liquidity around, waiting to be invested," said Arshad Arif, chief analyst at Karachi's Khadim Ali Shah Bukhari brokerage house. "People know that there could be solid returns in the stock market and the returns from fixed deposits are certain to go down."

Other analysts said, the appreciation of the Pakistani Rupee which is up almost ten per cent since last September's terrorist attacks, has also helped to attract equity investors. In the past, large investors would expect a devaluation of between 8 to 10 per cent annually, as a normal feature of the Rupee, while an appreciation was unprecedented.

Pakistan's decision to support the US war on terror, was followed by economic gains such as an IMF loan programme and the rescheduling by the Paris club of lenders, of a part of Pakistan's foreign debt. Besides, Pakistan's liquid foreign exchange reserves of about U$7b which are unprecedented in the country's history, have risen in part with a fast rise in remittances from overseas Pakistan. For investors, the strengthening Rupee, for now takes away the fear of devaluation leading to a decline in the value of their investment.

[Lazarus]

For the first time (and quite possibly the last time) Pakistan has a real chance to become the Emerging Markets "hub" for overseas investment in Central Asia, espacially the land-locked central Asian economies.

[nasim]

It is true that pakistan has a unique opportunity to become an important piece of the central asian economic interest that everyone is interested in these days. As obvious, the only northern trade route goes through russia and for many reasons, several central asian states have it in their interest to diversify their options. Going south you deal with Pak-Afghan issues or iranian where any western investment involving america discards the latter. One of the conspiracy theories I have thought up involves this scenario. I have been surprised at the lack of open backing that the primary backers of the northern alliance have been or been able to provide. Since Russia would lose out to american foreign policy and western Business investment, it would probably not be in their interest to let afghanistan form any broad based nationally recognized government that was effective. They have their stooges in their right now and can use them to make sure any investment come for the benefit of russia and that the political power they have over former soviet states remains in tact.
The Iranians in my opinion want more of the resources flowing south, mostly through iran but I dont think they would hold up a Pak-Afghan route if it meant diverting resources south. Sure the iranians would have competition for their own resources but imagine everything this would solve for the iranians. A stable afghanistan with their guys in power and pakistan on its heels trying to mend fences and remaining on the defence in terms of policy in the region. The line through western afghanistan would undoubtedly provide a major source of economic sustenence for the people rather than the illegal sorts of exports like drugs or general goods smuggling. But the iranians are very irked at how fast America has been able to deploy and win over government after government for the war on terror. For the most part, the war has been going very well and it seems like a long term presence to irans rear is likely. This might lead the iranians to limit the support it gives to karzai in the event that the northern alliance goons back a coup of some sorts and take the pro-American Leader out. I would not even call karzai pro-west because european countries atleast recognize Iran. Karzai is seen as extremely compliant to the US and a stooge to american policy by the iranians.
The indians are the party that have absolutly nothing to lose with the northern alliance, karzai, the presence of western troops or resources flowing south. They want all of these things and are desperate to prop up the current afghan leadership. The other two backers are cautious with karzai but india wants to be seen as tacitly pro-american (even though they would never admit it and always maintain their "neutral" foriegn policy) so that the benefits of american friendship flow in terms capital and equipment to india. They want the resources from central asia, they want a counterbalance of modern fighters and well trained troops on china's western edge, they want pakistan surrounded by pro-indian or at the very least not pro-pakistan governments, etc. They have nothing to lose and everything to gain. They only thing stopping them is pakistan and our blockage of passage rights by land and air to central asia. Indian companies will have a hard time taking their goods over the himalayas through china(if they even allowed india to this in the first place) and it would be expensive to ship through iran and then all the way across afghanistan since most of the money will go to kabul anyway.

Pakistan can act like a cork to a bottle for central asia. Russia cannot afford to exploit the resources of central asia by itself and the west wants it flowing south. In the best of worlds, the US would like a route through turkey but will probably support something to get cash into afghan coffers and effectively providing aid and increasing global energy supply at the same time. A 2 for 1 situation basically. It is a rare opportunity to have when the whole world is plotting some sort of strategy in your own region. Pakistan needs to think a lot of strategy out and hopefully things come out good.

[Lazarus]

ISLAMABAD, Pakistan -- Against all odds, Pakistan has the world's best-performing stock market.


The Karachi Stock Exchange index is up 56% since the Sept. 11 terror attacks even as the Standard & Poor's 500 has fallen 19% and the Bloomberg European 500 declined about 27%.

Pakistani traders say one American hedge fund manager invested $30 million immediately after Sept. 11 and pocketed a 30% profit -- $9 million -- three weeks later.

Islamic militants still wreak terror in the back alleys of Karachi, where an estimated 10 million to 15 million Pakistanis live, work and pray alongside donkey-drawn carts and herds of goats and sheep. But investment bankers and brokers here are beginning to benefit from reforms in the country's capital markets.

And the U.S.-led war against terrorism in Afghanistan ( news - web sites), for which Pakistani President Pervez Musharraf pledged support, has brought renewed global attention to a country that investors previously shunned because of corrupt markets and unstable politics.

''What changed after 9/11 is Pakistan's overall risk profile,'' says Samir Ahmed, chief of the Lahore Stock Exchange, Pakistan's second largest. ''We went from being a pariah state to a more acceptable member of the world community, even though there are questions about democracy.''

''It was hopelessly undervalued. It was almost a no-brainer, honestly, to invest in it,'' says Khalid Mirza, 56, head of Pakistan's Securities and Exchange Commission ( news - web sites), who left a World Bank ( news - web sites) job in March 2000 to take over one of the world's most discredited and least regulated securities markets.

Pakistan investors were battered by the 1998 Asian crisis that spread to emerging markets worldwide. Also in May 1998, the government detonated a small nuclear explosion, escalating regional tensions with India. That sent even the heartiest investors packing. A year later, in October 1999, Musharraf seized power in a military coup that derailed the country's nascent democracy and presaged an interest-rate spiral that snuffed a small, domestic stock rally.

Musharraf's authoritarian regime imposed law and order. But he turned the job of managing Pakistan's economy over to free-market reformers such as Mirza. The results were startling.

Once installed in his panoramic tower office here, Mirza took a hard line against the country's wealthy investment bankers from Karachi and Lahore who had traditionally ruled Pakistan's stock markets according to their own whims and wallets.

Mirza pushed hard for the independent management now in place at Pakistan's three stock exchanges -- Islamabad, Lahore and Karachi -- and he imposed tough new auditing and management policies at the country's 725 listed companies. He also supports efforts by the exchanges, which list the same shares, to electronically link their trading floors. That should produce more uniform pricing.


http://story.news.yahoo.com/news?tmp...atoday/4450172

[Lazarus]

The Junk economy: the WHOLE world (including S&P and Fitch) is against the poor Indians ……………..


“CALCUTTA, India, Sept. 20 (UPI) -- Standard and Poor's rattled the economic community in India by downgrading the country's long-term sovereign rating for local currency (rupee) borrowing to junk status, stripping the country of its investment grade.

………….. Fitch, for instance, said Friday that it plans to review India's credit rating in November this year. The rating agency has already lowered the local currency rating to negative outlook ……………….”

http://www.washtimes.com/upi-breakin...1413-2192r.htm



“Mumbai, Sept. 20: Global rating agency Standard & Poor’s today lowered India’s local currency denominated debt rating to “junk”, citing the country’s swelling debt burden and its vulnerable public finances.

Continued large fiscal deficits, along with a languid pace of economic reforms, might lead to a further rating downgrade.”

http://autofeed.msn.co.in/pandoraV15...3BBBA79305.asp

"

Or maybe S&P has hired some Pakistani analysts who do not fall for Indian "smoke & mirrors" tricks.

[Gul Khan]

hehe I bet S&P has hired some ISI agents..

[H Khan]

RECORDER REPORT


KARACHI (October 19 2002) : The Karachi stocks closed at a near eight-year high on Friday as foreign buying surfaced in some of the fuel and energy shares after Pakistan decided to pull back forces from its border with nuclear rival India.

The KSE index, after a long and strong battle with bears, finally breached the 2100 barrier and was just to touch 2118, the level attained on December 7, 1994.

The main driving force behind this upsurge was Pakistan's response to Indian move on phased withdrawal of troops from the border. Pakistan immediately announced that it would also start withdrawing troops shortly and was ready to initiate dialogue. Moreover, market men strongly believe that Indian Prime Minister Atal Behari Vajpayee's visit to Islamabad for the South Asian Association for Regional Co-operation (Saarc) summit in January next year, will further help ease tension between the two countries.

The KSE-100 index showed a net gain of 18.94 points or 0.91 percent to 2111.73 points. The volume fell to 128.862 million shares as compared with 211.385 million shares of Thursday.

Zia Javed, research analyst at WE Securities said that the bullish fervour echoed across the board, with accentuation being placed on frontline scrips of Fertiliser and Energy sectors. The stability in both internal and external factors has provided a safe cushion for the market punters to actively participate in the trading.

The bullish thrust came in the form of rapturous buying in the largest OMC, after rumours were whispered of an off-the-market deal of a bulk lot transaction at higher rates. Although, the veracity of this particular piece of information remained invalid, the charm of it was luring enough to jump-start the bandwagon. Through a massive coalition of the blue chip counter, the index was able to resurrect and hold its integrity after successfully breaching the imposing psychological barrier of 2100, as well as setting a new record high for six years.

Raheel Moosani of Moosani Securities said that the PSO share price jumped by 4.20 percent and activity was largely led by the foreign investment in this counter. Active movement was seen across the board as the gainers beating out losers by 204 to 74.

Arrival of fresh funds in the market is encouraging helped the market to cross the 2100 coveted levels and expected to continue its upward drive despite political vagueness.

Zubair Ellahi from KAB Securities said that the market stabilised around current levels with an enhanced base. The privatisation related optimism is still on and this may keep the market active.

Hubco on a trading of 18.596 million shares gained 15 paisa to Rs 24.80, Engro moved up to Rs 67.60 from Rs 66.35 on a volume of 11.143 million shares, FFC Jordan rose 20 paisa to Rs 6.95 on a business of 10.934 million shares, PTCL increased by 15 paisa to Rs 20.10 on a turnover of 10.805 million shares and Sui Northern Gas closed at Rs 16.20, showing a rise of 25 paisa as around 10.058 million shares changed hands.

[Rafaqat]

http://akdtrade.com/


Pakistan's first online trading site. I think some members wanted to know how to buy shares from KSE. Now you can.

[Lazarus]

Hey Rafaqat:

>>>>Online trading
http://akdtrade.com/


Pakistan's first online trading site. I think some members wanted to know how to buy shares from KSE. Now you can.<<<<


Many thanks for the link.

I am little tied up at the mo. But soon I'll update you folks on my diversified portfolio and how it performs over the coming months.

[Sheikh]

Yaar I want to invest in Pakistan but don't have knowledge of Pakistani Stock Market! Would any of you care to give advice on stocks? I got a thousand Canadian dollars to burn. (Commion Bonus)

[Junaid]

RECORDER REPORT
KARACHI (November 18 2002) : The profits of commercial banks listed at the Karachi Stock Exchange (KSE) nearly doubled in the third quarter ended Sept 30, 2002, despite the fact that interest rates lowered by a substantial amount.

Iffat Zehra Mankani, head of research at IP Securities, said that banking system of the country has been propitious in the sense that the government had designed a prompt corrective action frame work with an objective of having strong banks with improved capital adequacy, asset quality, efficiency and profitability. This phase of restructuring is being carried on for the last five years with some of the impacts already realised while some are under way.

In line with the objective of SBP to have sturdy banks, a number of steps have been taken. These include the de-assistance from issuing more commercial banking licences realising that the country is 'over-banked' on the one hand to raising the capital requirements of the existing banks from January 1, 2002 to Rs 750 million and Rs 1 billion by December end.

Moreover, in response to the easing of the monetary policy that started in July 2001, the banks are being forced to cut their lending rates.

According to SBP's data, the weighted average lending rates of the overall banking sector has been lowered from 12.08 percent in July 2002 to 11.89 percent in September 2002. The probable reason of this decline is the load of surplus money available with banks, coupled with the sluggish credit demand.

The falling yield on government securities, along with the decline in lending rates, is shrinking the spreads of the commercial banks.

However, in the times of spreads' shrink, the profitability of commercial banks is showing improved growth, one of its reasons being the larger inflows of home remittances. These are assisted by the concentration of the nationalised banks on reducing their overhead expenses and continual lowering of tax rates on banks by the government. It is expected that tax rates on banks will be lowered to 35 percent by the FY07.

The third quarter of the current fiscal year has posted decent growth in profitability of the commercial banks listed at KSE.

Iffat said that analysis of the financial statement of 15 commercial banks shows a commendable growth of 98 percent in their after-tax profits for the period July-Sep, 2002 against the same period last year.

These 15 commercial banks posted profit after tax of around Rs 1.6 billion in 3Q FY02 as compared to around Rs 832 million same period last year while their pre-tax profits jumped to Rs 3.4 billion in 3Q-FY02 from Rs 2.1 billion in 3Q- FY01, showing a growth of 64 percent.

However, if MCB and NBP are kept aside, the growth in the net earnings of the privately listed banks is 21 percent, indicating the marvellous growth rate achieved by the two in the current year. Among the private sector banks Askari and Faysal were the major contributors to the growth of the sector.

The overall increase in profitability, in spite of reduced interest income, higher profits earned through non-mark-up interest income directs a positive outlook for the sector.

Though it is a fact that most of the banking stocks are low dividend yielding securities, MCB by announcing an interim dividend of Rs 2.5 during the third quarter in addition to the 10 percent bonus already announced by it during the year, has come up as a positive surprise for the investors. Furthermore, most of the sector stocks have performed fairly well depicting capital gains for their investors and adding value to their investments.

Copyright 2002 Business Recorder (http://www.brecorder.com)

http://www.brecorder.com/story.php?c...658434&m=0&s=0

[Lazarus]

Cross Post from U Azim's thread:

>>>>>>>>>>>
Moody's raises Pakistan's foreign debt rating to 'Positive'
RECORDER REPORT
ISLAMABAD (November 19 2002) : Moody's Investors Service, a credit rating agency, has raised outlook to 'Positive' from 'Stable' on Pakistan's B3 country ceiling for long-term foreign currency debt on stronger foreign currency reserves and ability to meet external liabilities.

The agency said in a statement that as a result of this action, the outlook on the B3 rating of the government's outstanding Eurobond has been moved to 'Positive' from 'Stable'.

In spite of the many uncertainties and economic fragilities that prevailed in the country, the rating agency said the country's strong recovery in external assets relative to short-term liabilities, and the greater likelihood that these assets can be retained, warranted an upward shift in the outlook to 'Positive'.

Moody's pointed out that an initial build-up in reserves had already been taken into account in its upgrading of Pakistan's foreign currency ratings to B3 from 'C-1' in January. Pakistan's foreign currency reserves increased to over $8.6 billion this month on increasing remittances and State Bank buying of dollars from the market.

Barring major shocks, the agency expects that Pakistan's economy would continue to grow at a pace similar to that of the last few years, although an improvement in global demand, coupled with greater political stability, could push growth even higher over the near term.

It said that for the longer term, faster growth and poverty alleviation will depend on the pace of structural reform, and on whether the political environment is stable enough to attract increased private investment.

The rating agency emphasised that regional and domestic political uncertainties continued to constrain the country's creditworthiness, especially the tensions with neighbour India.

It said that popular opposition to President Musharraf's co-operation with the US military action in Afghanistan was a divisive issue in the recent legislative elections and delayed the formation of new parliament.

On the economic front, Moody's said that reducing public debt from onerous current levels would be an arduous task unless growth is revived on an aggressive basis. Pakistan's balance of payments will also likely remain dependent upon financial assistance from its multilateral or bilateral creditors and donors for years to come, it said.

The statement said that the generation of substantial autonomous inflows from non-resident Pakistanis in response to the government's tightening of financial controls, plus the last few years' expansion of merchandise exports, boded well for increased self-sufficiency in the current account.

Copyright 2002 Business Recorder (http://www.brecorder.com)

-----------------------------------------------------------------

UA


__________________
O our Lord, pour patience down on us, and make our foothold firm, and help us against the disbelieving people. ( AL BAQARAH: 250)

<<<<<<<<<<

[Rostam]

What's impressive is that we're far above the 2300 level at the KSE.

Here's an article from the Financial Times which is maybe a week or two old:

Pakistan roars ahead
By Joe Leahy
Published: November 11 2002 13:34 | Last Updated: November 11 2002 13:34


The Pakistan stock market has continued to rally in the second half
of this year extending its lead as the region's best-performing
market.


Inflows of foreign capital into the tiny market, most of it money
remitted from abroad by Pakistani nationals, has created a liquidity-
driven rally, brokers say.

"It's purely domestically driven. The majority of the investment has
come from the local retail public," said Arshad Arif, chief analyst
at Khadim Ali Shah Bukhari brokerage in Karachi.

On Monday, the benchmark stock index closed down 15.74 points, or
0.71 per cent, at 2,211.60. Since the beginning of this year, the
Pakistani bourse, with a market capitalisation of only about US$8bn,
has gained 73.72 per cent. It has far outstripped most other markets
in the region, which are expected to finish lower in 2002.

The stock market's gains have been reinforced by a 9 per cent
appreciation of the rupee against the US dollar this year to about
Rs58.71/58.72 currently.

The gains follow US-led financial support for Pakistan in return for
its help in the war on terrorism. Foreign aid has begun to flow back
into the country, interest rates have fallen, corporate earnings have
picked up and foreign exchange reserves have more than doubled from
US$3bn previously to US$9bn.

Economic growth is seen at 4.6 per cent in the fiscal year ending
June 2003, a 1 per cent improvement on last year, Mr Arif said. A
rise in textile exports and an improvement in the agricultural sector
following high rainfall are driving the recovery.

The key factor behind the market's gains, however, is the rise in
domestic liquidity. Following the September 11 terrorist attacks on
the US, many Pakistanis began sending money home amid concern they
might be targetted by US-led probes into money laundering around the
world.

The volume of remittances has shown no sign of slowing, reaching
US$1bn in the three months ending September alone compared with an
average of US$1.2bn a year during the 1990s.

Investors are plowing this money into the stock market, where
dividend yields are a healthy 10 per cent, the highest in the region.

Despite the market's rapid gains, valuations remain cheap compared to
other parts of the region, brokers say.

Abid Naqvi, managing director at Taurus Securities in Karachi said
the market is trading at 6 to 7 times prices/earnings compared with 4
to 4.5 times prior to September 11.

"Historically speaking it was heavily under-valued because of
political risk," Mr Naqvi said.

The next catalyst for the market is expected to be the full
privatisation of Pakistan State Oil, the country's largest oil
marketing company, and Habib Bank Ltd, which are targetted for
completion in February.

The key uncertainty to the market's outlook remains political risk.
Parliamentary elections last month did not produce a clear winner,
with parties supporting General Pervez Musharraf, Pakistan's military
leader, fighting it out for control of the house with pro-democracy
and conservative Muslim lawmakers.

There is also the risk of a backlash among Islamic hardliners within
Pakistan if the US attacks Iraq.

However, Mr Naqvi said based on the relatively subdued atmosphere in
Pakistan during the 1990 Gulf War, he did not expect serious unrest
in the case of another conflict in Iraq. The consequences would be
more on the economic side.

"The war would affect oil prices and that would have an economic
impact on us, at least in the short term, because Pakistan is a net
importer of oil," he said

On Monday, Hub Power Co, the leading electricity company, ended down
0.6 per cent at Rs26.20 per share while Pakistan Telecommunications
Co was down 1.1 per cent at Rs 21.35.

(What's important to note is that the source is FT. These guys are usu. pretty sarcastic and pessimistic when dealing with Pakistan. When Musharraf launched his coup, FT's cover title read: "Oh, Pakistan." A far cry from "Pakistan roars ahead")

[Lazarus]

Rostam:

>>>>>What's important to note is that the source is FT. These guys are usu. pretty sarcastic and pessimistic when dealing with Pakistan.<<<<<

Totally Agree !!

[Junaid]

RECORDER REPORT
KARACHI (February 17 2003) : Majority of Karachi Stock Exchange members, including the management, wanted to annul the decision allowing opening of fourth stock exchange in the country and termed it as favouritism and contrary to the SECP plan of demutualisation of the exchanges.

Before resigning, Khalid Mirza, chairman of Securities and Exchange Commission of Pakistan (SECP) granted licence to PEX Ltd to run Pakistan's first electronic stock matching order network, or electronic trading, which would be an alternative to the existing three stock exchanges in the country.

The permission was given by the SECP's chairman Khalid Mirza at Islamabad where he told reporters on Friday that alternative trading systems, known as ECN, have become integral to modern securities markets...as well as competition to the established securities exchanges.

He said it would take a few months for PEX Ltd, the company given the regulatory authority to set up the electronic exchange, to start its operations.

The KSE is scheduled to hold a board meeting on Tuesday to debate the issue and several senior members were scheduled to meet with Shaukat Aziz, Advisor to the PM on Finance & Economic Affairs.

Firozuddin Cassim, chairman of KSE, said that the decision taken by the ongoing chairman was taken in a haste. Before taking any big decision the government and regulator usually hold debate among the participants.

"But suddenly we heard that the regulator has allowed the establishment of fourth stock exchange. We are not against the electronic communication network, but the setting up of the fourth stock exchange is contrary to the SECP's plan to modernise the working of capital market," he said.

Cassim said that the Asian Development Bank is also against the setting up of another stock exchange; rather it deferred the government's plan to set up exchanges in Quetta and Peshawar.

He added that SECP for the last couple of months has been brain-storming the participants to merge all the exchanges into one, calling it demutualization.

Moin Fudda, Managing Director of KSE, said he had sent IT official of the KSE in the presentation as he was busy in meeting with a foreign dignitary on February 10 and he could not attend it.

A leading member of the KSE said the presentation made at the SECP was for the Electronic Communication Network (ECN) but the decision was announced for the setting up of an Electronic Stock Exchange (ESE).

He said that the step taken by the SECP's former chairman was not a transparent one and they failed to follow a proper procedure to set up a parallel exchange.

He pointed out that the in the past the former chairman and other officials had made presentations, and in their speeches promoted for ECN, not ESE.

Moreover, for the exchange to have members listed it would certainly discourage the very spirit of the present bourses.

The proposal about ESE was not made public and lacked transparency. The government, especially the Prime Minister's advisor on economic affairs, Shaukat Aziz, should intervene in this matter and abolish the setting up of the exchange.

Brokers also said that ECNs were permissible, in their view, as long as they acted as electronic brokerages, rather than separate exchanges.

"We are not against ECNs, in principle, but granting the status of a stock exchange is not understandable," a prominent member said. "We are surprised and shocked."

Citing the example of AKD Trade, an online trading system provided by AKD Securities, brokers said they were not against ECNs as such. However, critics have said that since human intervention is involved in the execution of trade, AKD Trade is not a truly automated system of online trading.

Copyright 2003 Business Recorder (http://www.brecorder.com)

http://www.brecorder.com/story.php?c...734919&m=0&s=0

[Junaid]

RECORDER REPORT
KARACHI (February 17 2003) : The dividend yields are still attractive as compared with rates offered at the fixed income securities or money market, and the KSE-100 could range between 2100 and 3250 during the current year (2003), representing a 35 percent swing in index where the second half is likely to be stronger.

According to a report of BMA Capital Management, positive view on equities for 2003 is based on the following contentions:

Much of the story of increased capital inflows, reduced fixed income yields and positive political environment has been discounted by the sharp run up in equity values.

However, due to continuation of factors that helped the stock market outperform, we are likely to see a continuation of current equity values with short-term adjustments due to significant liquidity swings moving in and out of the stock market;

Even now, there are limited avenues of investment and low yields in fixed income markets. This will encourage long-term investors to enter the stock market and therefore in the event of a large correction the market will become extremely attractive for investment.

Interest rates are expected to continue downward movement, driven by increased capital inflows.

This again will keep the current levels of equity values sustainable in the absence of any major new equity issues in the market.

Foreign funds are unlikely to enter the market, despite a stable environment. Allocation of these funds generally takes place at the beginning of the year. Despite a good equity story for Pakistan, any foreign interest is only likely to materialise in the event of a major market correction.

Attractive valuations of the stocks with current PE multiples of 7.9x and forecasted PE of 6.8x 2003 earnings is likely to keep investor interest alive in equities.

The unfolding of the earning season and expectations of good corporate announcements, particularly by oil and gas and financial institutions, will keep investors locked into holdings in these sectors and keep the downside movement limited during Q1 2003.

Relatively stable political environment with the formation of a coalition government is likely to drive positive sentiment.

Any expectation of a major push by the Government on investment spending will spur new inflows into the stock market. An economic recovery, which suggests that industrial performance will benefit from low interest rate environment.

At the current KSE 100 levels of over 2500, there are some clear risk factors that may exert downward pressure and may lead to some correction in the index. These include: Any build-up of tensions between India and Pakistan over Kashmir issue is likely to exert a downward pressure on the index.

The expectation of a war in Iraq is likely to keep investor sentiment cautious on the buy side. Any military engagement is likely to trigger fears of a wider Middle East conflict.

Under such circumstances, the KSE 100 could see a 300-point correction in a short span of time.

The only sector, which could act as a hedge to an Iraq conflict is the oil and gas sector and this may outperform on the upside after the correction.

Medium term perspective: The low interest rate environment may divert funds to other avenues of investment especially real estate and consumer durables. This may divert investment holdings for retail investors in particular and reduce exposure in stocks.

The escalation of oil prices in recent months along with any further increases is likely to add to inflationary trends and cost of production for the industry.

Based on technical analysis, we forecast the KSE 100 index to range between 3250 and 2100.

The KSE-100 Index closed at 2546 on Jan 31, 2003, after touching a high of 2955.52 on Jan 16, 2003. From a technical perspective, 2546 is an important support level for the market to continue its bullish trend.

If the Index drifts further lower, this will end the bullish trend of the market, which commenced in August 2002. Given such a move, the Index can then move south to test 2100.

The 2100 level would be the support of the KSE 100 long-term trend line. From a technical perspective, we recommend to sell if the Index closes below 2546.

Copyright 2003 Business Recorder (http://www.brecorder.com)

http://www.brecorder.com/story.php?c...734915&m=0&s=0

[Aziz]

And World's Top Market Is...Pakistan
With government economic reforms kicking in, the nation's tiny bourse is outperforming all others -- at least for now
Around the world, equity markets are grappling with tough times. Except in Pakistan. Despite jitters over the conflicts in Afghanistan and Iraq to the west and continuing tensions with neighboring India to the east, Pakistan's tiny stock market is scoring record gains. Indeed, Bloomberg ranks the KSE-100, the benchmark Pakistani index, as the world's top-performing stock market. Despite a correction early this year, the index is up 51.4% for the 12-month period that ended on Mar. 31. Barring some sort of political or war-related catastrophe, the market seems poised to continue its steady upswing.


Why the buoyancy, especially as U.S. and Pakistani soldiers conduct raids on suspected terrorist enclaves? Thanks to a series of government reforms, Pakistan's economy is doing amazingly well. Gross domestic product is projected to grow at a solid 4.5% this year. The previously corrupt, inefficient tax-collecting authority, Central Board of Revenue, is being restructured, and for the first time in years, tax-collection revenues match up with target numbers.

Privatization has also begun in earnest and United Bank, the country's third-largest bank, was sold in October for $200 million. In addition, a resumption of post-September 11 aid inflows from the U.S. has strengthened Pakistan's balance of payments and helped boost foreign-exchange reserves to a record $10.3 billion.

STRICTER MEASURES. Another big plus for the Karachi market is record low interest rates. As the State Bank of Pakistan, the central bank, has driven interest rates down over the last two years, the yield on six-month government treasury bills has declined from 12.5% in July, 2001, to 2% today. By contrast, companies in the KSE pay an average dividend yield of 10%.

As investors seek higher returns, major new liquidity has found its way into the equity market. "Whether its wealthy individuals or big institutions, money is coming in, and there are no other avenues for it to go," says Moin M. Fudda, Managing Director, Karachi Stock Exchange. "That new liquidity is clearly the fundamental reason for the [stock market] rally."

The global crackdown on the hawala system of informal money transfers has also bolstered stocks. Remittances sent by expatriate Pakistanis through banks are expected to hit $4 billion in the fiscal year that ends on June 30, 2003, up from $2.4 billion in the previous fiscal year. And a significant chunk of that is making its way into equity investments.

DON'T "OVERSTRETCH." Improvements in corporate governance have helped, too. In the last two years, a host of measures enforced by the Securities & Exchange Commission of Pakistan, including requiring listed companies to circulate quarterly reports and penalizing them if shareholder meetings aren't held on time, have enticed more individuals to get involved in the share market.

The KSE also has beefed up its regulatory oversight of brokers. "Ensuring that brokers don't overstretch themselves has given investors comfort and given the market stability," says the KSE's Fudda. Brokers' capital adequacy, which until recently was monitored only on a weekly basis, is now tracked daily, and exposure to trading risks is now calculated hourly rather than daily.

For all the good news, many foreign fund managers are far from impressed. Indeed, they've been markedly absent during the market's historic rally. From July, 2002, to February, 2003, the net inflow of foreign portfolio investment amounted to just $9.4 million. Still, that's quite an improvement from the net outflow of $7.7 million from July, 2001 to February, 2002.

GOING PRIVATE. The KSE estimates that for all of 2003, net foreign investment could approach $50 million -- the bulk of the money from expatriate Pakistanis. The U.S. and European fund managers who could give the market added credibility outside Pakistan aren't expected to join in, however.

Skeptics fear the market is still open to manipulation by a handful of big speculators. Although the Karachi Stock Exchange has 717 listed companies, only about 30 are easily traded, and the 10 most heavily traded stocks account for 80% of the market's total trading volume. Plus, poor investor awareness and a lack of marketing on the part of brokers means the country has only a tiny base of individual investors. Indeed, Mohammed Sohail, head of research at Invest Capital & Securities, a Karachi-based brokerage firm, estimates the number at no more than 100,000.

The government is working to improve liquidity. Under a new privatization strategy, it's selling off its shares of state-controlled companies while listing them on the bourse as well. In last four months, about $70 million worth of stock in three state-owned companies has been sold, and Abdul Hafeez Shaikh, Federal Privatization & Investment Minister, says more will follow. For instance, two state-owned energy companies, Pakistan Petroleum Limited, and Pakistan Oil & Gas Development Corp. are expected to be listed this year.

BIGGER CAP. For the foreseeable future, the KSE will continue to be overshadowed by neighboring India's $100 billion stock market, a natural choice for investors poking around in South Asia. Pakistan's market capitalization has more than doubled over the past year but is still just $10 billion. Muddassar Malik, director at Karachi-based brokerage firm BMA Capital Management, says to really get noticed the KSE's market cap must expand to the point where it accounts for at least 50% of GDP, up from 11.7% now.

Over the longer term, that certainly seems possible -- if all goes well. But even raging bulls on Pakistan's prospects know that any number of problems could intervene and suddenly slow or halt the market's progress.

Aziz

[Aziz]

Karachi Stock Exchange index creates yet another record
RECORDER REVIEW
KARACHI (April 21 2003) : The Karachi Stock Exchange Index created yet another record last week ending on April 19, 2003, as it stayed above 2900 points (on closing basis) for consecutive five sessions and where buying activity glued to first- and second-tier stocks following active support from financial institutions and leading players of the market.

The KSE-100 index rose by 2.25 percent to close the week at 2,935 points, against 2,870 points of previous week.

The index remained turbulent this week, rising sharply then recording a correction and then rising sharply again. The stock of interest this week, however, was PSO, whose privatisation delay hit the market.

However, it seemed that as the investors were largely expecting this delay, and no major impact came on the stock, with the price declining only marginally by 55 paisa.

At higher index values, investors had become a little cautious and average daily volumes declined 2.87 percent from 210 million shares as compared to 216 million shares of preceding week.

Analysts expected the market to consolidate its position at current levels on the whole. However, stock prices might see some swings, as profit taking is likely to occur.

Although, at these levels, a major correction can take place, but traders believe that anticipation of quarterly results and dividend expectations will support the market.

Bidding for 51 percent government stake in PSO was postponed from the scheduled date of April 26. The Privatisation Commission said that the new date would be announced after consultations with the bidders.

The PC also announced resolution of the outstanding receivables issue from KESC by transferring the case to National Refinery.

Analysts believe that this is the last of the major issues hampering the privatisation. Although, this delay has weakened the share price, it is believed that the privatisation is likely to be completed by June 2003.

The Treasury Bills auction saw the cut off yield on the 3-month government paper drop by 36 basis points to 1.65 percent a year, while on the 12-month paper decline was very marginal by 6 basis points to 2.69 percent a year.

Market punters expected that the rates would see an upward revision. However, the marginal decline in the 12-month paper indicated that the interest rates in the economy are bottoming out.

The State Bank of Pakistan picked up Rs 24.308 billion during the auction as compared to a target of Rs 24 billion.

Major portion of the amount was raised through 12-month T-bills, while only Rs 498 million was raised on 3-month T-bills. Bids of Rs 63 billion even at these low interest rates signified considerable liquidity in the market.

The marginal decline had no significant impact on the market. However, punters believe that the dividend yielding stocks are likely to get even more attractive.

Earlier in January 2003 when the Index crossed 2900 level for the first time it stayed above that level for 4 sessions only.

After that in the next few weeks amid manipulations and badla related problems, the Index crashed by 16 percent in just two weeks.

But interestingly this time with index settling at over 2900 level, badla market has still not shown any uncertainty.

In January when Index was over 2900 level, badla financing at KSE alone was Rs 12-13 billion whereas it is currently around Rs 8-9 billion.

At the end of last weekend, badla rate at KSE was 8.4 percent up marginally from 8.2 percent of the previous weekend.

At this time around an analyst said that the investors are not aggressively leveraging their long positions and this is also a main factor for lower badla investment and rate.

Badla rates, which jumped to over 30 percent mark in January, when Index crossed 2900 point are currently in single digit.

These investors after burning their fingers in the January correction may have changed their strategy or have found other share financing options like Futures, Margin Financing and unofficial badla.

Copyright 2003 Business Recorder (http://www.brecorder.com)

Aziz

[Behjat]

Foreign exchange reserves sufficient for 11-month imports: Musharraf
MUHAMMAD RIAZ
LAHORE (April 22 2003) : President General Pervez Musharraf has said that Pakistan's foreign exchange reserves have reached to the level that we could meet the country's imports for more than 11 months, while Pakistan's exports to Afghanistan have increased from US $ 5-10 million to US $250 million.

While talking to newsmen at National College of Arts (NCA) here on Monday, Musharraf said: 'we would discuss with the Afghanistan's President Hamid Karzai about future action plan for giving a boost to the indigenous exports to Afghanistan during his visit to Pakistan'.

Presently, Cherat Cement has achieved 100 percent capacity production while Fauji Cement's production has increased from 60 percent to 75 percent and the cement would be exported to Afghanistan, he added.

Responding to a question, he said Pakistan is ready to play its due role in rebuilding process of Iraq. We are awaiting UNO's decision in this regard. We also want to send medical teams to Iraq, he maintained.

When asked about any possibility of targeting Pakistan by USA, the president said some irresponsible people are talking this and they should feel 'shame'.

Pakistan has significant importance in view of geo-political and geo-strategic situation, therefore, Pakistan's turn would never come, he clarified.

When the president was asked about his address to the parliament, he said it is not so necessary, adding that he does not want to give a 'perception' to the world that Pakistan's nation is uncivilised.

About the Legal Framework Order, Musharraf said it would remain intact as part of the constitution.

If LFO is abrogated, the entire election process would automatically be abandoned.

However, he maintained that the assemblies would complete their five-year term. The opposition parties sooner or later would have to reconcile with the LFO, he added.

To another question about Indian offer for initiating the process of talks on Kashmir issue, he said the Prime Minister Mir Zafarullah Jamali has already welcomed this offer and hopefully peace talk would help resolve the long-standing Kashmir issue.

Earlier addressing the 9th Convocation of the NCA, the president said Pakistan remittances have increased by 100 percent to US $4 billion.

Currently, Pakistan's foreign exchange reserves are more than that of India according to the economy size, he added.

Talking about education, he said the government is committed to impart quality education to achieve progress. We have constituted Higher Education Commission headed by Professor Dr Ataur Rehman, which would ensure balance development of education between science and technology and arts subjects.

"I do not have responsibility of country's chief executive as the same are being run by a civil government, therefore I would concentrate on promotion of quality education. I intend to pay frequent visits to the educational institutions for this purpose'', the president said.

Pakistan had two kind of problems; social and economic. My government had preferred to strengthen the national economy so that fund could be generated for the uplift of social sector. Now we have overcome resource constraints, he added.

Musharraf also announced a grant of Rs 10 million for the NCA's Endowment Fund.

He commended the NCA's decision to set up its campus in Multan and hoped that quality education would be imparted there.

We are also encouraging the provincial government, which in collaboration with the district administration are setting up tourist spots in the walled city of Lahore. UNESCO has already extended its co-operation in this regard, he informed.

Musharraf said that Lok Virsa is being converted into museum on permanent basis at Shakarparian in Islamabad, which would be completed in next two years. Besides, Art Galleries are being set up in Lahore and Islamabad like Karachi. He congratulated the graduate students and urged upon them to play their role in the country's development.

Earlier, Federal Minister for Education Zubeda Jalal presented the welcome address while college's principal Sajida Vandal presented the college report.

Meanwhile, the president gave away medals and certificates to the students. He also inaugurated an exhibition on the occasion.

Copyright 2003 Business Recorder (http://www.brecorder.com)

[Aziz]

Karachi Stock Exchange index touches record high
RECORDER REPORT
KARACHI (April 22 2003) : The Karachi Stock Exchange (KSE) on Monday closed at a record high mark, breaching the previous best level of January after support from financial institutions emerged in PTCL, PIAC, Sui Northern Gas and National Bank of Pakistan.

The KSE-100 index ended at 2967.49, crossing the previous high level of 2955 on January 15, 2003.

It scored a gain of 32.10 points, or 1.09 percent, up from 2935.39 points of Friday.

The volume amounted to 203.476 million shares, against 168.863 million shares.

The market capitalisation of KSE for the first time crossed the Rs 650 billion level and was at Rs 651.101 billion, up from Rs 640.55 billion of Friday.

According to an analyst, the market showed appreciation after the Indian Prime Minister offered talks with Pakistan, for resolving all disputes, including Kashmir. He said that Pakistan would respond positively.

However, another analyst said that it is a jugglery of words because when the Indian Prime Minister delivered his speech in BJP dominated state his stance was different and said that 'Pakistan a fit case for pre-emptive action'.

In another state (occupied Jammu & Kashmir) where the voters have a more sympathetic view of Pakistan, the policy statement underwent a 180-degree shift and the Indian government offered talks and peace.

Decline in interest rates and low badla rates also encouraged buyers to put their money in local stocks.

The return on some of the equities are still in double digits as compared to other avenues, an analyst said.

Hasnain Asghar of Aziz Fidahusein said that the healthy statements by the neighbour gave the bulls yet another reason to cherish, and the index finally succeeded in registering ever-highest closing.

The second-tier driven rally was successful, as the institutions started accumulating growth stocks.

Although the leading stocks failed to participate, the ongoing consolidation indicated sharp rise.

Technically, the market faces resistance around 2970. Opening above that level will allow the index to touch the highest level of 2993, with major resistance staying around 3005.

The interest shown by Arab countries in investing in Pakistan will allow the leading stocks to outperform.

Upcoming third quarter results will keep the bulls in, as the earnings are expected to be in line with expectations.

A leading dealer said that most of the activities glued to those companies, which are going to announce their quarterly results in the next ten days.

Moreso, in the companies, which are in the privatisation block, like National Bank, PTCL, Sui Northern Gas, Pakistan International Airlines and PSO.

Leading brokerage houses were also active in blue chips and choice scrips.

PTCL on trading of 48.643 million shares gained 45 paisa to Rs 25.80; Sui Northern Gas rose 30 paisa to Rs 26.95 on turnover of 47.655 million shares; Hubco shed five paisa to Rs 35.40 on business of 17.180 million shares; Dewan Motors denoted an increment of 65 paisa to Rs 15.35 on business of 8.622 million shares; and D G Khan Cement moved down to Rs 14.75 from Rs 15.30 on total deals of 8.221 million shares.

Copyright 2003 Business Recorder (http://www.brecorder.com)

Aziz

[Aziz]

Foreigners eye Pakistan shares on easing regional tensions

KARACHI: Foreign investors may finally be ready to take a look at Pakistani stocks now that tensions in the region have eased.

Although its stock market was the world’s best performer in percentage terms last year, foreigners largely stayed away, scared off first by a US-led attack on Afghanistan in late 2001 and then by a confrontation between Pakistan and India.

But that may be about change, according to some analysts.

Asif Qureshi, head of research at Karachi-based Elixir Securities, said he sees renewed foreign interest in Pakistan. Mr Qureshi recently returned from the UK, where he and his colleagues met with 12 fund managers to promote investment in equities in Pakistan.

“There were concerns about the political situation here, but the impression I got was nobody wants to miss a second rally here,” Mr Qureshi said.

Last year, the Karachi Stock Exchange’s benchmark KSE-100 share index soared 112 percent. The gains were powered by local financial institutions and retail investors, who bought into a market characterized by falling interest rates and a surplus of liquidity as foreign-exchange remittances from overseas Pakistanis flooded the banking sector.

And the market has continued to move ahead in 2003, inspired by an end to the war in Iraq and prospects of peace talks between India and Pakistan. The index has risen 10 percent so far this year, closing at 2972.42 Friday, and is headed toward the psychologically important record of 3,000.

“The valuations are still strong. The market still has a 10 percent dividend yield and a 10 percent earnings growth in 2003 so there’s still scope to gain 20 percent this year,” Mr Qureshi said.

He said foreign investors are likely to look for growth stocks, particularly in the banking and energy sectors.

But foreigners may not jump into the market right away, said Mohammad Sohail, research head at Investcap Securities. He said the index already is at an “inflated level” and that foreign funds are likely to wait for a correction.

“When foreigners came into our market in the 1990s they were looking for 15 percent-20 percent dividend yield. Now our market is offering 10 percent-12 percent which isn’t that attractive,” Mr Sohail said.

Foreigners seen targeting biggest companies: However, he said foreigners may target the shares of Pakistan’s biggest companies like Pakistan Telecommunications Co, Hub Power Co and Pakistan State Oil.

The shares of these three doubled in value in 2002, although they have given up some of these gains since the beginning of the year. Mr Sohail said he sees Hubco’s shares advancing to Rs 39 a share in 2003, up from a closing price Friday of Rs 35.15.

Pakistan State Oil, which closed at Rs 209.70 on Friday, could hit Rs 250 within the next seven months, he said, if a planned privatisation of the company remains on track. Foreign interest in Pakistan’s stock market also could get a boost if flights are allowed to resume between Pakistan and India. Flights were banned in January last year at the height of tensions between the two countries.

“Foreign fund managers who used to visit India were prevented from visiting Pakistan because of the ban on flights and travel advisories,” Mr Qureshi said.

But the ban is expected to be lifted as the two neighbours move to normalize relations. “Most fund managers who are expected to come to India in July and August might take a peak at Pakistan,” said Mr Qureshi.

Pakistan’s stock market capitalization has risen to $11.5 billion from just $6.5 billion at the beginning of 2002, but it is still one of Asia’s smallest markets.

So while liquidity alone may not be enough to lure foreign investors, said Aqib Elahi Mehboob, research head at AKD Securities, there are other attractions. He pointed to the commitment shown by policy makers to bolster economic growth and speed up the privatization and listing of state-run companies.

Pakistan has said it plans to move ahead with the sale of a 51 percent government stake in Pakistan State Oil, the country’s largest oil-marketing company.

The government also has plans to sell up to another 5 percent of companies in which it holds stakes and launch initial public offerings of non-listed, wholly owned state companies.

Meanwhile, the government said it expects the economy to have grown 4.5 percent in the current fiscal year ending June 30, up from 3.6 percent the year before. The current account surplus hit a record $4.4 billion in the nine months ended March 31, and interest rates are at record lows.

“We believe the stellar market performance is set to continue over the medium term with an immediate index target of 3362 points over the next six months,” Mr Elahi said. —Dow Jones Newswires

Aziz

[Aziz]

Islamabad Stock Exchange to start internet trading facility by year-end
ISLAMABAD (May 13 2003) : The Islamabad Stock Exchange (ISE) will be providing internet trading facility to enhance trading activities by the end of the year.

ISE Chairman Chaudhry Mohammad Sharif stated this while talking to APP here on Monday.

He said ISE will be expanding its network to facilitate buyers and encourage them to enhance their activities, adding it has already initiated "Ultra Trading System" (UTS) to facilitate the clients and expand trading activities in the month of March.

Chaudhry Mohammad Sharif said the Islamabad Stock Exchange has set up an information centre for the first time in the country for guidance of its clients, providing them necessary information for carrying out trading business.

He said, "We are trying to establish a liaison between the investors and the businessmen

Chaudhry Sharif said ISE has necessary infrastructure and facilities for its clients, and its service are at par with the Karachi and Lahore bourses.

The trading activities at the Islamabad Stock Exchange are gaining momentum with the passage of every day, and the number of brokers has risen to 105 of which 41 are fully active, he added.

He also said, "We are moving towards integration and establishing one National Stock Exchange to integrate all the trading activities in the country."

Replying to a question, he said that volumes at ISE are increasing gradually with the improvement in economic conditions owing to commendable policies of the present government, adding all the economic indicators are showing upward trend exhibiting stability in the national economy.

The ISE chief said Pakistan is as an attractive market for local and foreign investors as a result of the atmosphere emerged through the economic reforms during the past three years, and other key factors such as continuity of policies, over all better law and order situation, completion of political transition, reconstruction in Afghanistan, stability in the local currency and declining interest rates.

He said there was no restriction in any sector for investment in Pakistan, and the investors were free to transfer anywhere as much profit they want.

The investors were allowed to have 100 percent equity, which qualifies that the present government was exercising open and investor-friendly policy, he added.

The ISE chief appreciated the government's policy on the privatisation of state-owned concerns by floating the shares through the stock market.-APP

Copyright 2003 APP (Published under arrangements with Associated Press of Pakistan)


Aziz

[Aziz]

Market capitalization hits new record at Rs657bn


By Our Staff Reporter

KARACHI, May 14: Stocks on Wednesday staged a broad recovery followed by active short-covering in most of the blue chip shares at the lower levels lifting the market capitalization to a new record figure of Rs657 billion amid light trading.

The surpassing of the previous all-time peak level of Rs654 billion established early this year at Rs657 billion signals a major change in the investor perceptions of the future market outlook. It could well prove a prelude to the entry of leading foreign equity traders into the local market and the credit for this will largely go to the heavily capitalized shares, analysts predict.

Most of the leading foreign funds start operations in the bourses having a market capitalization at least of $20 billion and the current move appears to be achieving this end, they added.

The shifting of the PSO sell-off bidding date to the first quarter of the next financial year seems to have encouraged institutional traders to mop up its floating stock at the prevailing lower levels, analysts said, adding and that "in turn evoked sympathetic buying in other energy shares and blue chips on the other counters."

"No one could precisely fathom their (market players) operational strategy as they are at liberty to make positive news as negative and negative as positive as they did in the case of PSO," they said.

Leading among them are expected to play with the PSO-episode for the next couple of weeks and for good reasons too, and indications are that they will keep the market in a good shape also, they added.

The KSE 100-share index recouped most of the previous losses and rose to finish higher by 22.53 points at 2,987.67, reflecting the relative strength of the leading base shares.

"It is a very unusual performance viewed in the backdrop of Thursday's closure," one broker commenting on the market's terribly sluggish trading said. "Return of the leading financial institutions though on selected counters changed the market psychology."

But some others attributed the return of the bull market to clearance of an air uncertainty over the issue of sell-off of the PSO's controlling shares to one of the short-listed bidders.

According to official sources, the bidding date had been extended to the first quarter of the next financial year, which in turn allowed investors to take new positions after refixing their investment priorities.

Political background news were divided, which could have their toll if investors did not fathom promptly their likely impact on the future stock trading.

"Despite some reservations on the Indian peace moves, their impact on the market is positive," brokers said, adding "but what worried them some of the LFO related irritants and their fall-out on the market."

Leading gainers included IGI Insurance and Wyeth Pakistan, which rose by Rs8.25 to Rs34, followed by Javed Omer, IGI Insurance, Burewala Textiles, Dawood Cotton, Gul Ahmed Textiles, Shell Gas, Shell Pakistan, Atlas Battery, Millat Tractors, Pakistan Cables, and Packages, up Rs3 to Rs7.

Most of the MNCs also posted good gains ranging from Rs3 to Rs6 for Abbott Lab, Clariant Pakistan, Colgate Pakistan, Glaxo-SKF and Reckitt and Benckiser on active support.

Siemens Pakistan and Unilever Pakistan fell by Rs9.05 and Rs10. The selling in Unilever Pakistan was attributed to reports that Tata group of companies will operate on the local market in tea business through the Lakson group. Jahangir Siddiqui & Co, Noon Pakistan and Ghani Glass also suffered fall ranging from Rs2 to Rs2.45.

Traded volume fell to 122m shares owing to closure ahead as compared to previous 178m shares, but advancing shares held a strong lead over the losing ones at 227 to 133, with 59 shares holding on to the last levels.

Sui Northern Gas topped the list of actives, up 45 paisa at Rs31.10 on 20m shares followed by PTCL, higher 25 paisa at Rs25.50 on 19m shares, Hub-Power, easy five paisa at Rs34.65 on 10m shares, PSO, higher by Rs1.65 at Rs206.75 on 9m shares, D.G. Khan Cement, firm by 15 paisa at Rs16.85 on 7m shares and Bosicor Pakistan, higher 80 paisa at Rs15.75 on 7m shares.

Other actives were led by Kohinoor Textiles, higher by Rs1.20 on 5m shares, Dewan Salman, firm 35 paisa on 4m shares, WorldCall, up 20 paisa on 3m shares and Lucky Cement, unchanged also on 3m shares.

FORWARD COUNTER: PSO also came in for active support on the forward counter and recovered Rs1.90 at Rs207.40 on 6m shares followed by Hub-Power, firm by 10 paisa at Rs34.80 on 6.503m shares.

Sui Northern Gas maintained its upward drive on reports of higher earnings and recouped overnight loss at Rs31.10, up 75 paisa on 5m shares, PTCL, higher 15 paisa at Rs25.40 on 4m shares and Pak PTA, steady by 25 paisa at Rs8.95 on 0.579m shares.

DEFAULTER COMPANIES: Over two dozen shares of various companies came in for active trading and generally tended higher under the lead of S.S. Oils, up 45 paisa at Rs5.50 on 68,000 shares, followed by Medi Glass, up 10 paisa at Rs2.10 on 47,000 shares. Sahrish Textiles was traded unchanged at Rs2 on 40,000 shares and so did some other amid active two-way trading.

BOARD MEETINGS: Alhamd Textiles, Premium Textiles on May 16; Gadoon Textiles, Shahtaj Sugar Mills, Shahtaj Textiles, Ishaq Textiles on May 19; Ibrahim Fibre on May 21; and Ahmed Spinning on May 26.

Aziz

[Aziz]

Institutional backing helps Karachi Stock Exchange index attain record high level
RECORDER REPORT
KARACHI (May 15 2003) : Support from financial institutions in the key scrips helped the stock market on Wednesday to finish on a record high level, breaching the previous best attained on May 5.

The KSE-100 index recovered Tuesday's losses and posted an increase of 22.53 points and closed at 2978.67 up from the previous high of 2975.72.

The volume fell to 121.446 million shares from 177.837 million shares.

The volume was on the lower side as several punters sold their portfolios ahead of 12 Rabi-ul-Awal holiday.

However, support from financial institutions and some leading brokerage houses boosted the sentiment.

Slowly and surely, the market is heading towards 3000, but it is difficult to ascertain when that session will materialise because on every occasion the market receives selling pressure, trimming the share values.

Ovais Imam of DJM Securities said that the market was off its lows made earlier in the day and kept the upward bias throughout the trading session.

Active short-covering was witnessed in big counters.

The index further consolidated the minor support area of 2940 and it has made a bullish engulfing pattern on intraday charts which is typically bullish.

It is imperative for the market to break above the resistance area of 2995 with good volumes to maintain its positive stance.

Zubair Ellahi of KAB Securities said that the index has exhibited strong closing but the sustainability appears difficult.

The repeated reversals during the last couple of weeks have dampened the speculative tempo to establish new records.

It appears appropriate to take advantage of current levels.

Aadil Ehtesham of FDM Capital Securities said that the market recovered lately as buying in blue chips restored positive sentiment.

PSO, ICI, Sui Northern Gas closed the day on plus note while cement sector also drew investors' interest.

PSO privatisation, likely to be held after 11 weeks, depressed the sentiment.

The trend appeared to mixed to depress and the index is likely to swing above 2900 level which might help the market to consolidate.

Sui Northern Gas posted an increase of 45 paisa to Rs 31.10 on turnover of 19.863 million shares; PTCL gained 25 paisa to Rs 25.50 on trading of 18.814 million shares; Hubco shed five paisa to Rs 34.65 on business of 9.281 million shares; PSO closed at Rs 206.75, ie higher by Rs 1.65 on total deals of 8.822 million shares; and D.G. Khan Cement moved up to Rs 16.85 from Rs 16.70 as around 7.247 million shares changed hands.

Copyright 2003 Business Recorder (http://www.brecorder.com)


Aziz