THE KASB REVIEW

STOCK MARKET AT A GLANCE

 

 

By SHABBIR H. KAZMI
Updated Apr 10, 2004

 

MARKET THIS WEEK

The market closed the week at yet another new all time high of 5,371.52. In addition, the week also witnessed the third highest single-day turnover in history, with 907.47mn shares trading hands on Wednesday. While the index experienced intraday corrections throughout the week, with the strongest one of around 70 points on Friday in response to the  

 

 

 

 

SECP's cancellation of recent rules introduced by the KSE, it closed in the positive region on every day of the week. The banking and cement sectors turned out to be two of the biggest beneficiaries of the rally. On the whole, the index closed at 5,371.52 on Friday against 5,161.50 last week, translating into a WoW gain of 4.07 percent.

OUTLOOK FOR THE FUTURE

The index has been moving from strength to strength ever since it crossed the 5000 mark and it appears that there is still further upside potential. However, technical indicators suggest that the upward momentum may slow down in the near future. A fundamental analysis of the market supports this view as well: while heavyweights such as PTCL and OGDC still offer good value to investors, some stocks have reached, or are approaching, their fair values. Having said that, the availability of liquidity has been a key driver of the ongoing rally and as long as there is ample liquidity in the market, it could continue to forge ahead as it has during the past few weeks.

FUNDAMENTAL CHANGES

The major developments this week were:

•The government dispatched 3,500 fresh troops to Wana to reinforce the 13,000 troops already there. This was in line with the government's ultimatum to the local tribes to hand over suspected Al Qaeda sympathizers by April 10. However, after a grand tribal jirga, where all the tribes of the northwestern area bordering Afghanistan were represented, a 300-man lashkar was formed with the authority to demolish the houses and impose a fine of PkR1 mn on all Al-Qaeda sympathizers that were identified by their tribes. As a result, the government extended its deadline by a month.

• As per a source, the government is considering reducing the GST rate from the existing 15% to 12% on luxury items and 5% on necessary items. Also, the source disclosed that the government is considering reducing corporate tax rates from 35% for listed companies and 39% for unlisted companies to 25% across the board in the budget for FY05.

• Reportedly, ginners are sitting on 1.5mn bales of unsold cotton. Given the fact that the ginners paid a high price for phutti, they face considerable losses if they sell cotton at the prevailing lower prices.

• Figures released by the Pakistan Cotton Ginner's Association indicate that total cotton production reached 9.75mn bales by April 1, 2004.

• Mobilink plans to invest $250mn for expansion with an aim to double its consumer base and surpass PTCL's number of customers by the end of this year.

•Cement sales recorded an increase from 8.674mn tonnes to 9.79mn tonnes during the first nine months of the current fiscal year, translating into a 14 percent rise YoY. Exports similarly jumped by 203 percent from 257.41k tons to 779.99k tons during the said period.

• As per sources in the Sindh government, the province has asked the National Finance Commission to give revenue generation a weight of 15% for distribution purposes. Sindh has also suggested a weight of 70% for population with the remaining 15% to be used for backwardness and poverty. The province however has stated that it is still open for negotiations. The source also claimed that Balochistan has supported the request made by Sindh, whilst the NWFP has not indicated its opinion on the matter.

• The Commerce Minister, Humayun Akhtar, informed exporters that the European Commission has made an offer to review the anti-dumping duty imposed on bed linen exports from Pakistan.

• The National Assembly approved the National Security Council Bill.

• The Supreme Court gave Shahbaz Sharif permission to return to the country.

• Faysal Bank Limited received a number of Expressions of Interest for the divestment of 51% stake in Saadi Cement. Faysal Bank is the financial advisor handling the transaction on behalf of various financial institutions. According to the bank, three parties have shown an interest in acquiring the stake which include AKD Securities, Arif Habib Co. and Siddiq Sons. Saadi Cement has an installed capacity of 1.5mn tons of cement annually. The major sponsor of the company is Pakland Cement Ltd., which holds a 43% stake in the company.

• In order to make its plans for textile cities a reality before the end of the current fiscal year, the government has formed a company called the Pakistan Textile City Limited in Karachi, the first of three such companies the government plans to establish. The next two will be set up in Lahore and Faisalabad.

• Reportedly, the ministerial committee on autos will be making a decision with regards to the import of reconditioned cars soon. In this regard, the committee has summoned the various stakeholders to present their points of view on the subject next Monday. However, as per the Finance Minister, the government will be forced into a decision if car premiums do not come down soon. The Minister also hinted at an adjustment in auto tariffs in the next Budget.

• According to Urdu daily Jang, the top management of PTCL has formed a committee to prepare an attractive voluntary separation scheme for all categories of staff. The other task of this committee is to suggest measures to improve the performance of the company.

• The SECP cancelled the March 29th circular from the KSE regarding changes in carry over transactions. Reportedly, the said decision was taken by the regulator owing to the fact that it did not want the KSE to come up with new initiatives since it was in the process of phasing out COT. Press reports are also indicating that the SECP's decision will lower system risk within the market, which increased after the KSE circular.

• As per official sources, the government and the IMF have made their initial forecast for tax collections for FY2004-05 as part of the 8th review of the IMF's PRGF. The new target of PkR56.570bn has been set based on a 10% growth rate and an additional PkR5bn. Until March 2004, the CBR had collected PkR351.7bn, which is 13% YoY higher than the amount collected during the same period last year and represents 69% of the current year's target.

• Pakistan Oilfields Ltd will be participating in the bidding for a cellular license expected this month as a member of a consortium.

 

 

MARKET ROUNDUP

..

LAST WEEK

THIS WEEK

% CHANGE

Mkt. Cap (US $ bn)

24.08

25.02

3.90%

Avg. Dly T/O (mn shares)

542.77

726.75

33.90%

Avg. Dly T/O (US$ mn)

444.35

650.03

46.29%

No. of Trading Sessions

5

5

 

KSE 100 Index

5161.50

5371.51

4.07%

KSE ALL Share Index

3363.87

3497.63

3.98%