Updated Dec 18, 2004


Despite expectations of a potential correction on the back of high COT, the KSE-100 index kept leaping upwards and closed 141 points up compared to last week. The positive triggers include possible expansion of HUBCO, news that Privatization Commission has called EoIs for PTCL sell off and increase in domestic POL prices. The least expected but fundamentally positive event occurred when OCAC announced 7.5% increase in POL prices. This is likely to provide the much-needed trigger for oil marketing companies stocks.




















According to a report by AKD Securities, "It seems that an invisible hand is ensuring that the market does not lose its momentum. However, all good things come to en end. Investors, in their best interest, are advised to be choosy with their portfolios and follow prudent approach".

The Net Asset Value of NIT units achieved an all-time high record value on 15th December. Since July this year the NAV has gone up by nearly 19%, from 30.53 rupees to 36.28 rupees per units. This landmark has been achieved despite highest ever dividend payout of 2.55 rupees for the year ended June 30, 2004. The Net Assets of the Fund have also increased to the record high level of 56.9 billion rupees. This may not have any direct impact on the stock market but certainly improves the value of portfolio maintained by other corporates. The improvement in NAV also bodes well for the privatization of NIT, on the active list of Privatization Commission.

Al Meezan Investment Management Limited (fund managers of Al Meezan Mutual Fund and Meezan Islamic Fund) held a presentation at the Karachi Stock Exchange to highlight and introduce their latest offering, the first Shariah compliant closed-end balanced fund of Pakistan by the name of Meezan Balanced Fund. As per the investment policy, the fund shall invest 40-60% of its net assets in Shariah compliant equity market investments while the remaining 60-40% of the net assets would be invested in Shariah compliant fixed income avenues such as Modaraba, Musharika and ready-future hedges. Total fund size is PKR 1,200mn, of which PKR 300mn is being offered for public subscription at a price of PKR 10 per share from the 20th to 23rd of December 2004. PKR 900 million have already been placed during pre-IPO. The Fund is currently trading at the provisional counter and closed at par yesterday.




According to AKD Research the domestic cement industry is highly fragmented with low concentration of power. The recent improvement in the fortunes has originated from a collective will to ensure a sufficient return on capital invested. Till the time, new capacities come online, most of the players are happy with the current returns. However, an onslaught of new capacities are in the pipeline, where the first one to expand will ask for more quota in order to ensure a competitive rate of return. Lucky has asked for higher quotas based on its recent BMR. However, given the relatively small BMR, the company has just tested the waters as it will be the first one to bring a big capacity of 3,800 tons/day online in June next year.


A record 29 parties have submitted EOIs for National Refinery Limited (NRL), where the final bidding is expected to be during April or May 2005. According to the privatization minister, Statement of Qualification (SoQ), which is the next step, would be submitted by January 17th, after which the due diligence process would commence. Admore Gas, Crescent Standard Business Management, Shell Pakistan, Al-Tawairqi Trading & Construction, Engro Chemical Pakistan, Orient Petroleum, Al-Ghurair Investment, Fauji Foundation, Pak HY-Oils, ALP Group, Gharibwal Cement, Pak Kuwait Investment Co, AMZ Securities, Ghulam Mohammad and Consortium, Pak Oman Investment Co, Asia Petroleum, Gul Ahmed Textile Mills, Pakistan Refinery, Attock Oil Co, KPC Holdings (Aruba), Pakistan State Oil Co, Bosicor Refinery, Lukoil International Trading & Supply Co, Reliance Industries, Caltex Oil (Pakistan), National Refinery Employees Union, Sapphire Agencies, Crescent Leasing Corporation and Nishat (Chunian).


Advancements in the privatization of National Refinery (NRL) is expected to keep PICIC Growth Fund (PGF) in the limelight as it holds 5.38 million frozen shares of NRL that would be sold at the privatization price. The incremental impact of NRL's privatization on PGF is enormous. The potential impact has started appearing in its price but still not fully incorporated. Assuming the strong fundamentals enjoyed by NRL and keen interest of strategic investors, one thing is sure that NRL sale would be at a very attractive price. Therefore, the fund has potential to make huge one-time gain. However, inflow of such a large cash flow would be a little difficult to deploy keeping in the high stock prices prevailing at this juncture.