The correction that many
quarters have been expecting has not come in as yet. Pakistan was hit
by the worst natural disaster in its 58-year history on 8th October
2005 and there were expectations that it would jolt the market. The
market did show a 0.25% decrease on Monday; however, it remained
strong during the rest of the week barring the minor correction on
Thursday. The surge was led by the cement sector on the back of
expectations of phenomenal construction activity that is expected
after the earthquake. PTCL showed some interest in light of rumors
that that a top-level delegation of Etisalat is in the country, which
is expected to resolve all outstanding issues. Overall, the market
showed a 3.76% increase (WoW).
OUTLOOK FOR THE FUTURE
The State Bank has raised the
limit of banks' exposure to the equity market up to 30 per cent and
asked them to invest 10 per cent in futures market. This is expected
to improv e market sentiment. Next week should see some stock specific
activity as the result season sets in again. We advise our investors
to go long in fundamentally strong scrips. Our top picks are Fauji Bin
Qasim, KAPCO, ICI Pakistan, Nishat Chunian, Packages, Pak Suzuki and
The major developments this
•Union Bank announced its
9M05 results posting after tax profits of PRs1,250mn (EPS: PRs5.09),
109% higher YoY.
posted earnings after tax of PRs117mn, which translates into EPS of
PRs0.78 compared to EPS of PRs0.21 during FY04 (Nov to June).
•Worldcall Telecom, the
recently listed WLL and LDI company posted an after tax loss of
PRs19mn. ???Worldcall Multimedia, the Lahore based equivalent of
Worldcall Broadband pos ted earnings of PRs68mn (EPS: PRs1.28)
compared to a loss of PRs4mn in FY04. The company has already
announced an interim 10% bonus issue.
posted after tax earnings of PRs439mn (EPS: PRs2.75); 80% up YoY. ???Kot
Addu Power Company (Kapco) announced 1QFY06 results posting profits
after tax of PRs2,067mn (EPS: PRs2.36), 3% higher YoY.
and Ministry of Water & Power Resources are seeking approval for
US$240mn Karachi Electric Supply Corp.'s extension plan of Korangi
Thermal Power Station in Karachi.
•Supreme Court of Pakistan
has asked for an explanation of government's decision of entrusting
price stetting authority to a private entity, Oil Companies Advisory
•As per newspaper reports,
an American equity fund, Amaranth Advisors LLC (a multi strategy
investment fund with assets under management of US$6.5bn) has
committed to investing US$25mn in Worldcall Group of companies.
•The SBP auctioned all
three maturities of Treasury Bills. Total bids of PRs16. 85 billion
were tendered, out of which the SBP picked up PRs4.4 billion.
•Dewan Farooque Motors
Limited announced its FY05 results posting earnings after tax of
PRs306mn (EPS: PRs3.97) as against PRs223mn (EPS: PRs2.90) in the
corresponding period last year
•Following a meeting of the
BOD of Karachi Stock Exchange (KSE) yesterday, it is reported that the
KSE intends to start futures trading from December this year.
•Islamabad Chamber of
Commerce and Industry (ICCI) has demanded that the government
immediately allow duty -free import of cement from neighboring
countries (Iran and India) through land route.
•Pakistan was hit by the
worst natural disaster in its 58-year history on Saturday, 8th October
THIS WEEK'S TOP STORIES
WORST EVER QUAKE TO HIT
Pakistan was hit by the worst
natural disaster in its 58-year history on Saturday. The earthquake,
measuring 7.6 on the Richter scale, is believed to have claimed
thousands of lives - official estimates at 20,000 casualties.
Muzaffarabad (Capital of Azad Kashmir) is said to be the most affected
area in this entire happening. According to the presidential
spokesman, almost 70% of the buildings in Muzaffarabad have been
destroyed or damaged, whilst, damages have also been witnessed in NWFP
and adjoining areas. The economy is unlikely to escape unscathed from
an event of such magnitude. We are revising our GDP forecast to 6.0%
(from 6.5%) for current fiscal year. We also believe that the
government would reallocate bulk of its Public Sector Development Fund
(PSDP) in infrastructural development as the entire communication
system (road network) has been destroyed. We also expect budget
deficit to widen further to 4.2% (from 4.0%) during the current fiscal
year, as government has already allocated PRs5.0bn for relief fund. We
believe, both industrial and agriculture activities will be least
impacted in this incident as bulk of the industrial estates and
agriculture land are concentrated in center of Punjab and Sind
province. However, we expect services sector activities to witness a
slow down owing to the infrastructural loss. In the long run, we
expect industrial sector to receive a real boost once the
reconstruction activities start. KASB Research Team (firstname.lastname@example.org)