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By SHABBIR H. KAZMI
Updated Oct 13, 2001

Globally the equities markets are witnessing a directionless movement and profit taking is evident. The massive downturn in prices of stocks of airlines, insurance companies and banks seems to be related to inevitable huge losses at the year end in December. However, Pakistan does not face a similar situation. The index often plunges due to rumours hiking uncertainty level. While the institutional investors have exhausted, more or less, their funds, retail investors prefer to stay at sidelines.

The behaviour of market during the week indicated two factors: 1) some interest of retail investors and 2) inflow of investment from foreign fund managers. While the first factor clearly depicted profit taking phenomena the second was attributed to a little change in sentiments towards Pakistan, mainly due to attractive dividend yield. However, analysts do not believe that the upturn in the market is not sustainable because of lingering uncertainty in Afghanistan and the internal situation.

Analysts who have applauded the GoP's decision to join the war against terrorism, are now forced to take into account the increasing disruption in economic activities in Pakistan. As the news indicate probability of prolonged war and intensive air attacks alongwith deployment of ground troops, the possibility of higher civilian casualties goes up. In such a scenario it would be difficult for the GoP to cap demonstrations and to stop the agitators from getting violent. This may lead to further worsening of the law and order situation and further disruption in economic activities.

Strikes called by various groups have a direct impact on working of manufacturing units in Karachi which has two seaports. The disruption at ports also delay handling of cargo. The last quarter of year is crucial for exporters of textiles and clothing because large shipments are usually made during this period.

NISHAT MILLS

While the outlook for many textile mills seems a little gloomy, Nishat Mills is expected to emerge stronger in the prevailing crisis. The strategy of focusing on greater value addition and pursuing aggressive marketing efforts to explore new markets will enable the Company to face competition, in a better manner, after textile quota is completely phased out.

PAKISTAN TELECOMMUNICATION COMPANY

In the absence of any positive news improving economic fundamentals for the company, market manipulators spread the rumour about possible declaration of dividend by the Company. Some analysts term this as an attempt to initiate buying spell. Whereas, others link it to the interest of foreign fund managers. As regards nothing possible announcement about payout, the analysts believe that management will maintain the past practice or declaring above 20 per cent dividend. Therefore, the dividend yield looks very attractive.

ADAMJEE INSURANCE COMPANY

Before the Company could recover from the hit of huge losses originating from the UAE, there are rumours about another blow of a major claim estimated around Rs 400 million from the fire at PACE Mall in Lahore. There is a forecast that the Company may not be in a position to declare even a modest dividend. Therefore, the recent activity in the scrip was suspected to be aimed at profit taking. Saying this much, there is also a potential for increase in underwriting business. There are reports that large corporations have started reverting their insurance business to local companies. This shift has the potential for enhancing the premium base and cushioning the claim ratio.

TELECARD

The Company has shown healthy growth in sales. While there was exceptionally high growth in sales during the previous year, the management may not be able to replicate this for the year 2001. The economy has shown signs of a economic slowdown and the sales growth for the year 2001 is expected to be low due to a much larger base than for the year 2000. PTCL had awarded O&M licenses to three local payphone companies, including Telecard, to set up wireless local loops. The Board of Directors have approved issue of 100 per cent right shares to finance this project. There are reports that relevant equipment has reached Pakistan and being installed. With the commissioning of this project earning potential of the Company is expected to improve.

SHELL PAKISTAN

Continued investment in refurbishment of outlets, superior marketing and a strong brand name are likely to ensure leadership of the Company in the trade. However, earnings momentum is expected to taper because of sluggish POL demand coupled with successful marketing strategy of Pakistan State Oil to contain loss in its market share. The scrip is expected to remain pick of the investors due to management strength, strong cashflow and virtually debt free balance sheet. The Company also seems to be better poised to benefit from imminent deregulation of the sector.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE MN)

PTCL

15.70

13.10

15.10

262,125,000

Hubco

15.35

12.65

14.95

168,475,500

PSO

114.00

93.50

104,90

35,506,800

FFC

38.15

33.25

37.95

22,447,500

Engro

51.15

43.05

47.00

16,544,300

Adamjee Ins.

29.20

19.95

29.10

8,686,500

MCB

22.10

18.75

21.90

5,004,000

Dewan Sal man

13.35

11.20

12.80

4.799.500

Nishat Mills

12.80

10.20

12.65

4,204,000

Ibrahim Fibre

12.45

10.35

11.65

3,397,500