By SHABBIR H. KAZMI
Updated July 14, 2001

Analysts are unable to find a plausible reason for the bearish sentiments prevailing in equities market. Pakistan's economic reforms are going quite well, bringing macro economic stability and setting the pace for fundamental reform to achieve higher growth. International financial institutions have also acknowledged the reasonably satisfactory level of achievements of various targets. However, fresh investments, both domestic and foreign, are unlikely to originate in the immediate term.

Almost a billion dollars appear to have been sanctioned in principal by the Asian Development Bank and further assistance for capital market reforms, small and medium trade finance, export finance facility along with technological marketing and management capability, development of SMEs and other areas are being considered for Pakistan. The prospects for rescheduling of Pakistan's external debts have also improved. All these factors are expected to reduce country risk and restore confidence of investors. The recently announced Trade Policy also pronounce the direction of GoP policy.

The efforts on the privatization front have been intensified. Though, expectation for immediate success may be low, the process is expected to yield results. Overseas investors seem to have expressed keen interest in energy sector. Now it is the turn of policy planners to express their firm commitment to whatever they have been saying.

PAKISTAN TELECOMMUNICATION COMPANY

There seems to be no reason to doubt the sincerity of Privatization Commission regarding sale of shares with transfer of management control of the Company. However, keeping in view the given constraints of administrative structure in Pakistan probability of delay cannot be completely ruled out. Though, the scrip is trading at a very handsome discount at present, the keen interest of two international giants may reflect in upward movement of price. Some analysts, believe that the erosion in value was the outcome of massive selling by the two brokerage houses which came under scrutiny lately.

ENGRO CHEMICAL PAKISTAN

The most significant risk factor facing Engro is the uncertainty surrounding the proposed fertilizer policy. There is an apprehension about a drop in earnings mainly due to lower volume and weakened pricing power as a result of water shortage and declining farmer income. Fertilizer offtake is driven by various factors like availability of water, support price for various crops and credit extension for the agriculture sector. Uncertain regulatory prospects for the fertilizer industry, whereby there are indications that subsidy on gas (feedstock) may be removed. This would effectively depress sector EPS growth and ROE over the next couple of years. While fertilizer manufacturers have been able to pass on increase in cost, they may not be able to do so in the near future.

SUI SOUTHERN GAS COMPANY

The Company has announced an ambitious three-year expansion programme that is expected to improve its profit after tax. The recently announced Gas Infrastructure Rehabilitation and Expansion Project is estimated to cost US$ 32 million in foreign currency and another Rs 2.25 billion (Total Rs 4.3 billion). This is expected to increase system capacity by nearly 43 per cent by end June 2003. This expansion in capacity was necessary for handling approximately 300 to 400 MMCFD of gas being made available from the newly discovered gas fields. The Company has already raised one billion rupee by floating TFCs. While the demand for gas is expected to increase, the formula (ROE or ROOA) for determining profit for the Company will also play an important role. The successful privatization of Company's LPG business and establishment of Oil and Gas Regulatory Authority paves the way for privatization of the Sui Twins.

NISHAT MILLS

The decline in earnings for the first half of the year 2001 also indicates the negative change in Pakistan's textile sector fundamentals. The previous year was marked by low cost of cotton and robust increase in exports. All these trends have reversed in the current year causing a sharp contraction in profit margin. While the Company was better off than competitors due to early buying of cotton, it will not be able to contain hike in administrative and selling expenses. Financial charges are also expected to be higher due to higher working capital requirements. While some textile exporters are expected to witness decline in volume due to global recession, Nishat Mills is immune to this phenomena to a large extent. The recent investment in spinning and processing facilities also enables the Company to compete on better footings. Profit margin of the Company is expected to improve due to its branding ability and thus improving pricing power.

MOVEMENT AT A GLANCE
SCRIP	HIGH (Rs.)	LOW (Rs.)	CLOSING  PRICE	TURNOVER  (SHARE MN)
Hubco	18.25	17.45	17.75	85,494,000
PSO	130.25	120.25	130.00	78,972,600
PTCL	17.15	16.60	16.80	66,183,500
Engro	54.30	51.40	53.60	11,625,000
ICI	9.05	8.55	8.85	8,028,000
Adamjee	51.00	45.40	48.60	7,907,000
SNGPL	9.80	9.40	9.45	5,350,000
SSGC	10.50	9.75	10.25	714,000