. .



THE KASB REVIEW
STOCK MARKET AT A GLANCE

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

The KSE - Overview: All set to breach 1500?

Updated on Feb 12, 2001

Amidst a drawn out tussle between the bulls and the bears, the market resiliently maintained its upward drive to close at 1497, up 1.22% against last week's closing of 1479.

The price rally, triggered by a positive earnings surprise by Engro last week, extended well into this week, and was held up by investors anticipating a positive Hubco result and the possibility of a dividend announcement. Conflicting rumors of a payout aggravated activity in the stock, but punters were quick to book profits, which prevented the scrip from breaching the 20 level. The post-result disappointment, at not being rewarded with even a modest dividend, pulled the scrip down from a high of 19.85 to close just 1.03% up at 19.70 for the week.

A supporting factor cushioning the weekend run up was an announcement by the Privatisation Commission inviting EoIs for the sale of 26 per cent of PTCL shares. This development invited some foreign interest into the scrip. We believe that continued progress on the privatization front is likely to hold investors' attention on PTCL.

Another prominent gainer, PSO, was most buoyant towards the end amidst unconfirmed rumors of a bonus issue and after trading a hefty volume of 86mn, closed 5.41 points up on the last day at 157.85. Banking stocks performed well, led by Askari and Muslim Commercial Bank, while Nishat Mills dominated the textile arena, as price consolidated at 25.15 level in anticipation of an EPS of Rs6-7 in its forthcoming results.

The average gross badla rate was 16.5%, which means delivery pick-up was good, and which in turn implies that the market is all set to break the psychological barrier of 1500. The breach, if sustained in the early part of the week, could take the Index level up to 1525 levels. However, support level of 1490 should be monitored closely.

If this support is broken with strength, there is a risk of profit taking which could take away 15 - 20 points from the Index.

Sector outlook

Natural Gas: On Fire

Pakistan needs increasing supplies of energy in order to meet growing demand due to its population and economic growth. Fossil Fuels (oil, gas and coal), Electricity (thermal power, hydropower and nuclear power) and Renewable (biomass, solar energy, geothermal energy and wind energy) can be classified as the three classes of energy sources available to Pakistan with 98% of energy being supplied from the first two sources.

Pakistan is currently producing 56,141 barrels of oil per day (bbl/d), which is equivalent to 2,681,200 TOE. The net oil imports were approximately 14,217,933 TOE in 1999 with total oil consumption at 16,899,133 TOE. Being an oil deficit country, the imbalance in demand/supply of oil puts pressure on Pakistan's diminishing foreign exchange reserves. GoP has decided, in order to improve the balance of payments, to explore and develop other sources of energy.

Pakistan, with hydrocarbon rich basins and resource potential of 200 trillion cubic feet (tcf) of natural gas, has original recoverable gas reserves of 32.5 tcf and balance recoverable reserves of 20.61 tcf. Original recoverable gas reserves have gradually increased over the years as investment in the sector has risen and discovery rates moved up.

The annual production currently at 0.744 tcf, with no change in demand and assuming no new gas discoveries, translates into approximately 20 more years of productive capacity at current level of recoverable resources. Annual production and consumption have been rising even faster with production almost doubling from 1.2 mmcfd in FY 88 to 2.04 mmcfd by FY 99. As a result, despite higher original recoverable reserves, the balance recoverable reserves has actually shown slight decline from 20.9 tcf in FY 95 to 20.6 tcf in FY 99. This has prompted the government to provide greater incentives for new investment into gas exploration.

The higher production is directly correlated with rising gas consumption in the country. For example, the number of gas consumers has risen from 1,301,922 in FY 89 to 3,232,719 in FY 99. The number has almost doubled over the last 10-year period.

Provincial Overview:

Province wise gas sector analysis gives a deeper insight regarding target investment areas for exploration and distribution activities. Balochistan being the largest producer has the lowest consumption, due to sparse population, of natural gas in the year 1999 and has the potential of attracting higher investment flows in exploration activities. Punjab with only 5% share in total production consumes almost 42% of total production emphasizing the need for improved distribution and transmission services.

Sindh has witnessed rising production trend from 234,860 MCF in FY94 to 325,356 MCF in FY99. At the same time, consumption has stabilized at the level of 296,404 in FY99. NWFP with the lowest gas connections per capita, could see soaring growth in demand with investment increasing in the distribution infrastructure of the province.

According to industry sources, the demand growth rate of natural gas was estimated at 13% in 1996, which is expected to rise substantially to roughly 50% by the year 2006. These figures emphasize the need to expand the current reserves available by encouraging more investments into exploration activities in gas sector in Pakistan.

Prior to the discovery of natural gas in 1952, oil and coal were the major sources of energy. Natural gas now forms about 38% of country's energy supply with oil at 44%, hydropower at 13% and coal/others at 5%.

Power sector leads the group with the highest consumption of natural gas. The other two large consumers are fertilizers and other industrial.

The share of the transport sector is seen rising in the near future because over the last three years, Compressed Natural Gas (CNG) has emerged as an important substitute for petrol in Pakistan, although it has been used as such for much longer in other countries. This will result, to some extent, in lowering the cost of the oil import bill. CNG is a 100 per cent locally produced commodity, which is derived by compressing natural gas largely produced in Pakistan. Its quality of being a substitute for petrol at half the price has seen its demand soar in recent months. The estimated conversion of motor vehicles from petrol to CNG is approx. 5000-7000 per month and is expected to increase in the near future with the removal of the sales tax on CNG kits by the government.

MARKET ROUNDUP

..

LAST WEEK

THIS WEEK

% CHANGE

Mkt. Cap (US$ bn)

6.25

6.40

2.40

KSE 100 Index

1478.97

1496.95

1.22

Total Turnover (mn shares)

711.87

493.04

-30.74

Value Traded (US$ mn.)

513.35

405.83

-20.94

No. of Trading Sessions

5

4

 

Avg. Dly T/O (mn. shares)

142.37

123.26

-13.43

Avg. Dly T/O (US$ mn)

102.67

101.46

-1.18

MSCI Pakistan Index:

Pak Rs.

97.55

98.40

0.87

US $

42.44

42.82

0.89

.Source: KSE, MSCI, KASB



ASIA PACIFIC & AUSTRALIA
EXCHANGE INDEX LEVEL CHANGE EXCHANGE

Bombay

BSE

4381.19

+68.26

1.58%

Hong Kong

Hang Seng

15909.4

-140.07

-0.87%

Singapore

Straits Times

1982.34

+39.69

2.04%

Sydney

S&P ASX 200

3329.4

+17.30

0.52%

Tokyo

Nikkei

13138.23

-227.78

-1.70%

.



EUROPE & UNITED STATE OF AMERICA
EXCHANGE INDEX LEVEL CHANGE EXCHANGE

Frankfurt

DAX

6641.86

+62.90

0.96%

London

FTSE

6221.1

-4.50

-0.07%

Paris

CAC

5803.22

+51.08

0.89%

Dow Jones

Industrial

10781.45

-99.10

 

NASDAQ

Composite

2470.97

-91.09