THE KASB REVIEW

STOCK MARKET AT A GLANCE

 

 

By SHABBIR H. KAZMI
Updated Aug 24, 2002

 

MARKET REVIEW: DIVIDEND DRIVEN

As we have been saying in the past, the KSE-100 is currently being influenced more by fundamental factors than by mere speculation.

 

This week the major factors affecting stocks were 1) higher than expected dividend declarations by Lever Brothers, Shell Pakistan and PSO 2) the expectation of a 30-35% dividend declaration by Hubco continued to influence the market for a third week 3) the reaction of the brokers to the new directives by the SECP pertaining to the management of the stock exchanges 4) interim decision in the court case between Adamjee Insurance and MCB and 5) announcement of the parties eligible for elections and the constitutional amendments approved and finalized.

THIS WEEK'S PERFORMANCE

This week the market soared! The KSE- 100 index rose by 4.48% from 1,843.26 points at the beginning of the week to close the week at 1,925.75 points. Consequently, market capitalization increased by 4.03% to US$7.48bn. Although, analysts and traders continued to stress that the market was in an overbought situation and felt that a technical correction was due, positive expectations with regard to Hubco and some major pivotals along with constant positive corporate news during the week fueled the already upbeat trend in the index.

Along with the index, volumes soared. The average daily turnover was 163.82mn shares, higher than the entire week's trading during the some weeks in July and August. Hubco was the volume leader but PSO generated considerable interest during the week.

OUTLOOK FOR THE COMING WEEK

In our opinion, the stock market is considerably overbought and a technical correction can be expected during the next week. We expect the market to consolidate its position, especially with the only remaining excitement being in Hubco in the short term. During next week we expect the market to move in the 1,890 to 1,940 range.

THE DAILY DRAMA

Monday saw an increase of 12.58 points or 0.68% in the KSE-100 index, which closed the day at 1,855.84 points. The dividend of PkR58 per share declared by Lever Brothers Pakistan Ltd propelled the market in a positive direction. Good expectations from major stocks mitigated the negative effect of SECP's directives for the changes in the management of the stock exchanges. Volumes also increased with the turnover being 161.496mn shares. The principal gainers for the day were PSO and Hubco, largely due to positive results and dividend expectations from both these stocks.

On Tuesday, OMC's led the KSE-100 index to increase by another 11.45 points to close the day's trading at 1,867.29 points. PkR14 per share dividend declaration by Shell Pakistan continued the previous days dividend fueled growth in index. The higher than expected Shell results, generated fresh interest in PSO, which was one of the largest gainers as well as being the volume leader as investors made heavy purchases.

Trading on Wednesday started with an upward surge rising by 16 points, but profit selling in some key stocks later in the day shaved off some of the earlier increase with the KSE-100 index rising by a modest 5.71 points to 1,873.00 points. Volumes increased to 160.58mn, reflecting an increase of 37% over the previous day's trading. Dividend expectations continued to drive the market. However, on Wednesday Hubco's dividend related support surpassed PSO's with the power giant being the most active scrip with 43mn shares traded.

Both the trading volumes and the KSE-100 index surged on Thursday. Share turnover increased to 314mn, while the KSE-100 index soared by 2.76% to breach the psychological barrier of 1900 points, to close at 1,924.77 points. A PkR8 per share cash dividend along with a20% bonus share issue declared by PSO along with dividend related support for Hubco propelled the KSE-100 to these new heights. Hubco was the most active share with the largest single session volume of 132mn shares.

Volumes increased further on Friday with the total number of shares traded being 334.08mn. Excitement ceased in PSO and after almost a week it was not amongst the most active shares in the market, however, it was one of the largest gainers with the share price increasing by PkR9.95. KSE-100 increased marginally by 0.98 points to close the week at 1,925.75 points.

SECTOR REVIEW:

"EARNINGS SEASON-FULL OF ROSES" - WE TOLD YOU SO!

Market is up 8% since our last feature on this topic. The results from Levers, Shell and PSO were exceptional and these actually triggered a decent rally at the KSE. However, at 1925, we are sure that investors are feeling slightly nervous. Keeping in view the typical Pakistan related fears like bomb blasts, attacks in Kashmir and the ongoing tussle between the regulator and the members, the investors' extra cautiousness does have some validity. However, we believe that the market still has a substantial upside from current levels. Though initially it may spiral into a consolidation phase, our medium term call is still positive.

MARKET ROUNDUP

..

LAST WEEK

THIS WEEK

% CHANGE

Mkt. Cap (US $ bn)

7.19

7.48

4.03

Total Turnover (mn shares)

550.42

1089.00

97.85

Value Traded (US$ mn.)

418.20

819.12

95.17

No. of Trading Sessions

4

5

 

Avg. Dly T/O (mn. Shares)

137.61

217.80

58.28

Avg. Dly T/O (US$ mn)

104.55

163.82

56.68

KSE 100 Index

1843.26

1925.75

4.48

KSE All Shares Index

1161.65

1207.71

3.96

Source: KSE, MSCI, KASB