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

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STOCK WATCH

By SHABBIR H. KAZMI
Updated July 06, 2002

The perplexing domestic and international scenario is not allowing the investors to take long positions. While Pakistan's equities market continue to outperform other markets, even the foreign portfolio managers are willing to increase their exposure in Pakistan. However, at times, they also indulge in profit taking. The single reason which has kept local market vibrant is strong performance of the economy despite many odds.

The post budget rallies also remained lackluster, not because of weakening of economic fundamentals, but because of the known secrets which were already incorporated. In the past, the news about release of funds from the IMF used to push the index. However, it has also become evident that now the Fund is willing to give any waiver and disbursement is guaranteed.

The two sectors which are expected to remain in limelight are commercial banks and fertilizer companies. Commercial banks mainly due to privatization of United Bank Limited and a number of foreign banks selling their Pakistan operations to the local banks. With the large number of foreign banking taking an exit, one gets the feeling that Pakistan is no longer an attractive market. However, sector experts say that after September 11 most of the foreign banks have decided to concentrate on their domestic markets.

A 5% increase in gas prices for fertilizer manufacturing companies was expected to come with the beginning of new financial year. The announcement has not come so far and sector analysts believe that the GoP has decided, with the consent of the IMF, not to increase the price. There is a feeling that the GoP's stance has been accepted by the IMF. However, industry sources say that if the GoP has reached such an understanding that there will be no price increase, it should be made public at the earliest. The industry desperately awaits this announcement because future expansions are dependent on it.

To a large extent the 'wizkids' are trying to introduce various measures which may create justification for prolonging of President's tenure. However, they tend to forget that similar attempts made in the past had disgusted the silent majority. Some people say, Had there been no political caucus before the referendum, the turn out at booths would have been much higher.

PAKISTAN STATE OIL COMPANY

The recent margin revision for oil marketing companies will have a positive impact on the earnings of the company. This include full year impact of both 3% increase in March and a further 0.5% increase from July 01, 2002. Margins on regulated POL products have increased to 3.5% from July 2002 onwards. The company's market share is expected to increase resulting in overall improvement in earnings. For the year 2002 the company's earnings per share is expected to be above Rs 25 with a dividend payout to range between Rs 13 to Rs 15. The company is expected to pay Rs 10 per share for the year 2002. At current prices the scrip looks attractive when compared in terms of earnings ratio as well as book value ratio.

PAKISTAN PTA

The debt at December 31, 2001 amounted to Rs 18.7 billion of which Rs 9.6 billion (US$ 160 million) is denominated in dollars. In respect of the local debt, in addition to loans provided by commercial banks, Rs 1.8 billion has been lent by ICI Pakistan. An improvement in business prospects recently has enabled the company to achieve an operating profit in recent months. However the high level of debt results in interest expense in excess the amount that the company can service resulting in further increases in the level of borrowings. Therefore, the company has decided to issue 200% right issue. Repayment of certain debts out of the funds raised through this issue will result in a savings in interest costs of Rs 615 million per annum.

PICIC COMMERCIAL BANK

After being able to overcome some of the problems inherited from previous management, the bank undertook a massive branch expansion programme. The management also decided to raise the paid up capital through 40% right issue or 20 million shares. The bank has already received Rs 173.932,800 from the shareholders, including the amount received from sponsors. With the growth in deposit base, advances, international trade handling, the bank is poised to emerge further strong.

PRIME COMMERCIAL BANK

The Board of Directors have recommended 15% interim bonus share for the current year. With this issue the paid up capital of the bank would be slightly more than one billion rupee. The bank has a reasonably wide branch work, deposit base and advances. The bank is investing in technology to improve its quality of services. This includes on-line banking, SWIFT transfers and complete computerization of its branch functions.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

Hub Power

24.05

23.60

24.05

211,444,000

P.T.C.L.A

17.65

17.30

17.55

93,545,500

P.S.O. XD

142.15

139.85

141.25

30,738,500

National Bank

21.75

21.05

21.65

26,012,500

Engro Chem.

62.50

60.70

62.50

10,850,800

Fauji Fert

48.55

45.75

48.55

10,593,700

FFC JORDAN

6.75

6.50

6.75

10,525,500

M.C.B. SPOT

29.90

28.85

29.00

1,314,500

Askari Bank

19.60

19.15

19.35

111,000

Shell Pak

218.95

216.00

216.00

22,100