. .



By SHABBIR H. KAZMI
Updated July 07, 2001

The KSE-100 index lost over 60 points during the week. It was only because of the recent investigation by NAB regarding two brokerage houses. This kept the market under pressure. However, it seems that the days of wheeling and dealing are over. This may kept the daily trading volume low over the short-term. However, the need for such a shakeout was felt long ago when certain elements made a fortune in HUBCO by spreading rumours. The NAB must also look in all such transactions taking place in the past.

The market also remained devoid of news regarding payment of dividend by HUBCO. Activity in fertilizer sector lost steam due to further delay in announcing Fertilizer Policy. According to sector analysts, the resistance from Ministry of Petroleum regarding feedstock price is beyound comprehension. The delay in adding new urea production capacity can only lead to substantial forex expenditure on import of the commodity.

The decision to allow the Oil Companies Advisory Committee removes apprehensions regarding present government's intention to gradually deregulate oil and gas sector. Creation of an autonomous Oil and Gas Regulatory Authority is expected to expedite process of privatization in oil and gas sector.

The Karachi Stock Exchange has allowed trading in futures contract in six companies. These are Dewan Salman Fibres, Ibrahim Fibres, HUBCO, PSO, MCB and SNGPL. The first two companies are also under T+3 settlement system. It appears that some quarters of the market are urging the general investors to jump into forward trading system. However, IP Securities have a different point of view. According to a report by the brokerage house, "One of the main criteria for futures market anywhere in the world is the trading liquidity, i.e. active trading is needed so that sizable orders can be executed rapidly and inexpensively. High turnover at the exchange is a prerequisite and not a product of forward trading during the gestation period of the system." Therefore, it would be a fallacy to assume that forward trading would boost the daily trading volume from the day one.

PAKISTAN TELECOMMUNICATION COMPANY

During the week the scrip touched a very low price. As the bulk selling pressure is lowering the scrip is expected to witness a renewed buying interest. With new development on the privatization front, the probability of price improvement increases further. According to a report from IP Securities the name Orascom Telecom of Egypt has shown interest in privatization of PTCL. Orascom is one of the largest conglomerates having diversified interest. An offspring of Orascom Group is the largest telecom player in the Middle East and Africa. Orascom also holds major interest in Mobilink, which directly compete with the fully owned cellular company of PTCL. Orascom emerges to be the leading contender, also having experience of operating in Pakistan.

PAKISTAN STATE OIL COMPANY

The recent price hike in prices of POL products provided some inventory gains. However, the policy followed by oil marketing companies in general, to maintain relatively lower inventory levels, does not allow any significant increase. Saying this much, neither the lower inventory gains nor possible reduction in quantities sold are the real threat for PSO. The real threat is the shift in GoP policy regarding switchover of cement and power plants from furnace oil to coal. The complete switchover of cement plants to coal will substantially reduce the sale of furnace oil the main product handled by the Company.

HUB POWER COMPANY

It seems all set that the lenders will approve dividend payout. Added to this is the expectation of yet another dividend payout by the Company. However, declining repayment ability of WAPDA is a serious threat for the cashflow of HUBCO. According to a report by KASB there is a renewed interest for companies belonging to power sector. As the forex reserves of the country have improved considerably and further increase, in forex reserves, is possible due to release of next tranche by the IMF, other companies are also expected to make dividend announcements.

FAUJI FERTILIZER

The scrip remains among the volume leaders despite rumours that ground is being prepared for the merger of FFC-Jordan into the biggest urea manufacturing company. As the DAP prices, in the international market, are improving the threat of low cost imports are reducing. As such the recent rains have improved fertilizer offtake having a positive impact on cash flow of the Company.

WORLDCALL

The Company has been among the volume leaders for some time. Initially due to speculative activity and subsequently due to selling pressure. The scrip is expected to witness further decline despite enjoying strong fundamentals. This offers an opportunity for accumulation.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE MN)

Hubco

19.10

17.75

17.75

89,146,000

PTCL

17.85

16.90

16.95

69,929,500

PSO

132.35

126.75

128.35

45,261,900

Engro

57.00

52.50

52.50

11,821,600

World Call

15.70

12.70

13.90

11,66,000

Adamjee

55.25

49.25

50.45

9,912,500

MCB

24.40

22.70

23.00

8,402,000

Fauji Fertilizer

35.60

34.45

34.70

5,887,600

Shell Pakistan

245.50

237.40

237.55

237,500