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THE KASB REVIEW
STOCK MARKET AT A GLANCE

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

The KSE Overview: Market Swings to the Hubco Tune

Updated on Oct 16, 2000

Market weakness persisted throughout the week and the Index levels continued to decay. The KSE 100 Index, after opening at 1581.42 levels, closed for the week at 1545.43 levels, down 2.28% wow.

Although trading for the week commenced on a positive note, strength to levels of 1597.57 was short lived. Failure to break through the barrier of 1600 levels proved to be a turning point and a negative wave of a trading band of 1550-1600 commenced henceforth. Negative momentum stalled intra day gains and the Index continued to ease on a daily basis to test the floor of the band at 1550 levels. Volumes also demonstrated a similar pattern of decline on the last day. Critical level of 1550 was tested and breached and the Index closed around the lowest levels of the week.

Blue chips had stagnated in the initial days of the week, and in the absence of any positive news on Hubco, faltered at their support, thus weighing heavily on the Index. PTCL eased through support of 25.40 and PSO through 170 levels.

Only MCB and Ibrahim Fibres retained a positive trend and demonstrated strength on a wow basis, the first driven by privatization prospects, while the second was responding to strong sector fundamentals.

Jobbers remained the main participants of the market who on strength were on the sales side and later continued with the same strategy. Institutions, on the other hand, maintained a low profile.

Sentiment remained subdued. Technical weakness had clearly emerged. If the dispute of Hubco lingers, additional weakness to 1500 levels cannot be ruled out.

Sector Snapshot: Oil Price Carnage Continues

Investment Highlights:

Although we draw comfort from the results shown by the army since taking over WAPDA, which are in the form of a 17.5% increase in revenue collection, a massive 68% drop in pending applications for new connections and a 4.68% increase in units generated during FY 99, we believe the next big hurdle for the government continues to be tariff rationalization.

The recent 13 paisa per unit increase in power tariff, may provide a little breathing space to WAPDA, but in the long run (given the 10 year high oil prices US$ 35) the GoP will need to tilt the tariffs in favor of bulk users and cease to provide subsidized electricity to domestic consumers, who account for nearly 82% of the total consumer base of 11.3 mn. A task easier said than done, given the political repercussions of such an action.

One indirect impact of rising oil prices on listed IPPs is the additional strain on WAPDA's cash flows and the trickle down effect on its ability to service its obligations. Coupled with a government-induced cap on electricity tariffs, any increase in oil prices is unlikely to be transferred fully to the consumers at the same time however. This trend will provide greater impetus to the government drive of converting oil-fired power plants into gas, saving much needed foreign exchange in the process.

Two accords on sale and purchase of gas have already been signed that involve a total investment of $428 mn besides a Memorandum of Interest linked to the supply of gas to the 1655 MW Guddu Thermal power station.

Current positive overtures by the IMF indicate a strong possibility of a stand by arrangement and ultimately a resumption of a longer term funding program. In this scenario, with the resumption in activities of multilateral agencies, we believe that efforts of converting to gas will perhaps be the first beneficiaries of any funding source.

The tariff dispute with Hubco continues unabated. With payables to Hubco crossing the 13 bn mark, we believe that the whole issue continues to revolve around WAPDA's ability to pay IPPs in general and Hubco in particular. Allegations and counter allegations have turned Hubco into a very volatile entity, thus we continue to advise a Trading Sell on the Stock.

MARKET ROUNDUP

..

LAST WEEK

THIS WEEK

% CHANGE

Mkt. Cap (US $ bn)

6.88

6.93

0.73

KSE 100 Index

1581.42

1545.43

-2.28

Total Turnover (mn shares)

951.36

546.32

-42.57

Value Traded (US$ mn.)

448.51

396.98

-11.49

No. of Trading Sessions

5

5

 

Avg. Dly T/O (mn. shares)

190.27

109.26

-42.57

Avg. Dly T/O (US$ mn)

89.70

79.40

-11.49

MSCI Pakistan Index:

     

Pak Rs.

109.65

108.10

-1.41

US $

48.25

47.59

-1.37

.Source: KSE, MSCI, KASB


 
ASIA PACIFIC & AUSTRALIA
EXCHANGE INDEX LEVEL CHANGE EXCHANGE

Bombay

BSE

3738.93

-108.65

-2.82%

Hong Kong

Hang Seng

14680.5

-394.30

-2.62%

Singapore

Straits Times

1860.4

-5.45

-0.29%

Sydney

S&P ASX 200

3201.9

-24.60

-0.76%

Tokyo

Nikkei

15330.31

-220.33

-1.42%

.


 
EUROPE & UNITED STATE OF AMERICA
EXCHANGE INDEX LEVEL CHANGE EXCHANGE

Frankfurt

DAX

6661.3

+196.04

3.03%

London

FTSE

6209.6

+77.70

1.27%

Paris

CAC

6064.21

+73.51

1.23%

Dow Jones

Industrial

10192.18

157.60

 

NASDAQ

Composite

3316.77

242.09