. .



THE KASB REVIEW
STOCK MARKET AT A GLANCE

  1. FINEX WEEK
  2. STOCK WATCH
  3. STOCK MARKET AT A GLANCE

The trading week began at an index level of 1539.77, and closed with a 4.99 percent gain wow at 1616.74.

Updated on Jul 24, 2000

Low volumes and a flattening of price led to the immediate barrier at 1550 which was the ceiling of a converging triangle. In the process, the second wave has been confirmed. The price movement remains stable with the volumes increasing to an average of 200 million shares per day. Bouts of profitability on an intra-day basis and a minor correction on the last day of trading is a healthy sign in terms of future direction of the market.

The index remains poised for the test of 1700 levels provided that the psychological barrier of 1600 holds, which is expected to form an immediate support.

Pivotal blue chips led by Hubco showed an overall rebound. Along with Hubco, PSO, PTCL and ICI also remained much sought after throughout the week.

The scheme of arrangement announced by Dewan Salman fibres for the merger with Dhan Fibres at a ratio of 3 shares of Dhan for one share of Dewan did not seem to please the market. It was felt that this would lead to dilution of earnings and investors promptly pushed down the prices of both stocks. Dewan continues to look vulnerable at these levels.

Sector Analysis: WAPDA-NEPRA

Weathering the storm

The direction of events has become clearer during the past few months. The federal budget announced by the finance minister on 17 June 2000 was primarily a reflection of the government's desire to conform to the IMF conditions.

Although plans announced by the GoP for FY01 can be characterized as setting the road map for long-term economic stabilization, albeit with an over-optimistic bias, expectations seem to be running high regarding dramatic shifts in the budget's economic priorities.

The almost desperate attempts by the government to get some of the these decisions out of the way lend credence to our view that the outlines of the IMF set agenda are indeed not be taken for granted....yet again.

Power Rates: A taboo subject

This recent issue of increase in power tariffs also linked to this aspect of our macroeconomic strategy. Hesitation has been the key word for the government in its historical approach of dealing with the issue. A case in point is one such raise in power tariffs around April 1999, when, surprisingly the Prime Minister announced a 30% reduction in tariffs. However, with WAPDA requesting NEPRA to consider a petition calling for higher tariffs, the situation was defused. Much to the chagrin of the observers, this was followed by yet another petition for reducing tariffs that was subsequently approved. During this melee a third petition was filed for an increase in power tariffs! Although the government raised tariffs then, this whole process indicated the nonsensical approach and apparent hesitation by the government in addressing this issue.

Yet again, the GoP finds it self at the center of this issue. Although WAPDA has been calling upon the GoP to allow it to adjust its rates accordingly due to the increase in oil prices, the GoP has been playing a waiting game. According to the news reports this has cost WAPDA around PkR 10 bn. Although WAPDA has managed to absorb around PKR 4 bn through adjustment in the projected inflation, there is still a gap of PkR 6 bn to be accounted for.

WAPDA seeks auto adjustment of FO prices

Finally NEPRA has asked WAPDA to file a formal petition if it wants to have a formula for automatic adjustment of furnace oil prices. Although this will in the long run benefit WAPDA, effectively hedging it against international oil prices volatility, it is most likely to fall short of addressing the revenue gap for WAPDA in the near term.

NEPRA facing legal vacuum

We believe that this step by WAPDA is also linked to the crisis in NEPRA due to the absence of key members and a Chairman. Furthermore, the absence of a required number of members including its Chairman has also resulted in a legal constitutional vacuum as it is not able to maintain the quorum required to pass judgments and is incapable of effectively utilizing its inherent legal powers.

Economic sense must take precedence

We continue to reiterate our earlier stance that in order for WAPDA to be a profitable concern, there remains a need to let economic sense prevail over political considerations. Although current events hint at the possibility of a tariff revision in the medium term, such a step will undoubtedly prove very unpopular with the establishment, but could help in mitigating the losses being accrued by WAPDA through out this process. Thus causing severe repercussion for IPPs like Hubco.

 

MARKET ROUNDUP

.

LAST WEEK

THIS WEEK

% CHANGE

Mkt. Cap (US $ bn)

7.65

7.97

4.18

KSE 100 Index

1539.77

1616.74

5.00

Total Turnover (mn shares)

401.36

1002.00

149.65

Value Traded (US$ mn.)

326.60

792.02

142.50

No. of Trading Sessions

5

5

 

Avg. Dly T/O (mn. shares)

80.27

200.40

149.65

Avg. Dly T/O (US$ mn)

65.32

158.40

142.50

MSCI Pakistan Index:

     

Pak Rs.

107.84

113.85

5.57

US$

53.12

56.00

5.425

Source: KSE, MSCI, KASB


 

ASIA PACIFIC & AUSTRALIA
EXCHANGE INDEX lEVEL CHANGE EXCHANGE

Bombay

BSE

4463.66

-112.01

-2.45%

Hong Kong

Hang Seng

17920.86

+162.35

+0.91%

Singapore

Straits Times

2126.7

-6.55

-0.31 %

Sydney

S&P/ASX200

3332.3

+31.40

+0.95%

Tokyo

Nikkei 225

16811.49

-172.08

-1.01 %

 


 

EUROPE
EXCHANGE IINDEX LEVEL CHANGE EXCHANGE

Frankfurt

DAX

7373.26

-106.88

-1.43%

London

FTSE

6378.4

-90.60

-1.40%

Paris

CAC

6464.12

-99.65

-1.52%

Dow Jones

Industrial

10733.56

-110.31

 

NASDAQ

Composite

4094.45

-90. 11