THE KASB REVIEW

STOCK MARKET AT A GLANCE

 

 

By SHABBIR H. KAZMI
Updated May 08, 2004

 

Following the bearish spell in the last two weeks, the current week started on a strong footing with the index gaining 1.75 percent on Tuesday. Lower badla values helped in boosting investor confidence and pushing the index above the 5,500 mark once again. The remaining week, the market bounced to and move between small gains and losses, with profit-taking on Wednesday clipping some of the previous day's gains, while another strong session on Thursday more than made

 

 

 

 

up for the loss. Friday's session on the other hand witnessed intra-day volatility, however, the index closed at almost the same level as the Thursday's close. Overall, the index gained 1.82 percent WoW and closed at 5,529.19 compared to 5,430.43 last week.

OUTLOOK FOR THE FUTURE

A shortage of news flow from both the corporate and the political front is likely to keep the index range bound during the coming week. One wildcard that can have a strong impact on the market is the arrival of Shahbaz Sharif in the country. The plethora of rumors regarding the actions that will be taken by the government after his arrival have created confusion among investors. Thus, once this matter is sorted out, market participants will have an opportunity to take a solid stance on the issue, be it positive or negative.

FUNDAMENTAL CHANGES

The major developments this week were:

•Revenue collection for first ten months experienced a 12% YoY improvement.

•The central bank came up with a firm denial to the observations made by the Asian Development Bank on the country's banking sector.

•After the induction of two B777 into PIA, the Planning Commission (PC) came up with its formal approval for this purchase. Reportedly the PC's approval came after a long controversy where the PC raised objections to PIA's selection of these planes and the mode of financing the national carrier has opted for. The Commission has asked the management of PIA to renegotiate the loans with Citibank, which has largely financed this transaction against the gurantees of Exim Bank of US.

•Ufone started issuing new connections from May 5th.

•PSF manufacturers revised the prices of their product by PkR1.0/kg on account of rising raw material prices. The manufacturers had been unable to increase the prices in their last monthly meeting held towards the end of March-04.

•Pakistan and China signed an agreement to build the 300MW Chashma II nuclear power plant. The two governments had been working on this proposal since last year. While the latest press reports do not indicate any estimated cost of this project, the press reports last year indicated that this project would cost around US$300-400mn. The project is expected to be operational by FY2011 and is likely to be a key addition to the power sector in the country.

•A press report indicated that the government has evolved a mid-term tariff formula for KESC, aimed at providing at 12-15% return to the new investor. According to the Minister for Privatization, a pre-bid conference is likely to be held towards the end of May-04.

•Car premiums have gone up significantly over last two weeks. On average, the premiums are up about 50-100% on various models since last two weeks. The latest developments include an announcement from Indus Motors to stop bookings for their popular model Corolla and a 2% price increase for the new model of Honda Civic.

•Exports for the period Jul-April FY04 climbed to US$10,000.9mn, rising by 13% as compared to the same period last year. The total exports for the period have fallen short of the target by US$83mn. Imports, on the other hand, reached US$12,012.4mn during the said period, almost 19% higher as compared to last year. As a result, the trade deficit during the 10-month has shot up to US$2,011mn, worsening the ratio of trade deficit to exports to 20.11% as compared to 14.15% during the same period last year. Rising petroleum prices are one of the major contributors to the rising trade deficit.

•The Privatization Commission (PC) announced its intent to raise the total public offering size of Pakistan Petroleum Limited (PPL) to 20% as against the previous 10% of the total outstanding shares of the company. The increase in size has been made in view of the tremendous response received in the public offering of Sui Southern Gas Company Limited held a couple of months back. The PC has also decided to reduce the minimum application lot to 500 shares for PPL's public offering. The PC has also decided to move up PPL's divestment program ahead of the public offering of Pakistan International Airlines. According to the revised plan, the PC is aiming to hold public offering of PPL towards the end of May-04, which will be followed by public offerings of PIA and then Kot Addu Power Company.

 

 

•Warid Telecom has reportedly deposited 25% of the cellular license fee amounting to US$72.75mn to Pakistan Telecom Authority. With Space Telecom failing to submit 25% of the license fee by the stipulated time, Warid Telecom of UAE was asked to match the bid for the cellular license, which it did.

•Bank Alfalah is set to offer 40mn shares to the public at a price of PkR30 per share on the 17th and 18th of the current month. The company posted earnings of PkR10.62 per share for the year 2003 and its book value stood at PkR21.29 per share with revaluation of assets and at PkR16.27 without revaluation of assets during the said period.

•SECP's committee report on demutualization is expected to be released next week. According to a newspaper report, the SECP chief expects the implemention on this report to see completion before this year end.

•Reportedly the Oil & Gas Regulatory Authority is in the process of reviewing the current return formula of the GDCs.

MARKET ROUNDUP

..

LAST WEEK

THIS WEEK

% CHANGE

Mkt. Cap (US $ bn)

25.38

25.79

1.62%

Avg. Dly T/O (mn. shares)

509.86

473.87

-7.06%

Avg. Dly T/O (US$ mn.)

444.54

395.78

-10.97%

No. of Trading Sessions

5

4

 

KSE 100 Index

5430.40

5529.19

1.82%

KSE ALL Share Index

3529.35

3593.57

1.82%