Karachi Stock Exchange Weekly Analysis 31 May, 2014

The Karachi Stock Exchange (KSE) market movement was bullish because of strong foreign inflows in blue chips and expected relief from below than scheduled hike in capital gains tax. KSE - 100 index closed at 29,737 by gaining 981 points or 3.4 percent.

On WoW basis, KSE-100 index went up 3.4%. Volumes rose 57% WoW with ADTO clocking in at 235mn shares. FIPI surged by a whopping 348% WoW to US$29.6mn. Volumes shot up 57% as investor confidence revived on the back of foreign buying coupled with positive news about the upcoming budget and continuous improvement on the macroeconomic front.
Following news have played vital role in Karachi Stock Market index movement:

  • Index heavyweights MCB Bank Limited, Engro Corporation, United Bank Limited, Pakistan State Oil and Lucky Cement primarily buoyed the momentum, while mid-tiers also continued bullish momentum
  • The week saw foreign portfolio investment inflows with huge increase to $29.6 million as compared to $6.3 million last week
  • During the meeting with Tax Advisory Council (TAC) and the Minister of Finance, representatives of stock exchanges, have proposed the govt to raise capital gains tax (CGT) to 12.5% (from the current level of 10% and scheduled increase to 17.5%) on holdings less than 6‐mths
  • Federal Budget FY15 is scheduled to be announced on 3rd June, 2014
  • Announcement of strong PSDP figures along with mega infrastructure projects would continue to drive cement sector performance ahead
  • The upcoming week is likely to kickoff with an announcement of inflation numbers followed by yearly economic numbers and finally the most crucial announcement of budget FY15
  • Cement stocks did came back strongly after staying in a shell for quite some time
  • Possible bidding of LPCL on June 6, 2014 is likely to keep cement sector active
  • Despite pre‐budget turbulence in the market, rumor related to CGT, extension in tax amnesty and foreign inflow kept the market in green territory in the last few days
  • PM attractive tariff for coal‐fired power plants has drawn international investors' interest in power projects. Premier chaired a meeting held to review the pace of work on Gaddani Power Project here. He approved two additional coal‐fired power plants to be constructed in Gaddani. PM was given a detailed briefing on the status of power projects 
  • Import of motorcycles, new and used, registered a sharp increase while arrivals of second‐hand cars tumbled during the10MFY14
  • The SBP has issued instructions to all commercial banks that effective June 1, 2014, minimum rate of return, on average monthly balances, shall be applicable on all new and existing savings products (including any other profit‐bearing deposits with no fixed maturity), except term deposits 
  • OGRA opposes transport cost of PKR0.15/litre to Byco Refinery
  • FG that it has decided to take the case of KEL to the SC as the company is still getting 350MW from national grid in alleged violation of a decision of the CCI
  • The banking sector remained in the limelight as banks refused to participate heavily in the T-bill auction conducted during the week, preferring to keep investing in PIBs instead
  • In important announcements, ICI announced its intention to invest Rs960 million in Morinaga business, while Kapco gained two percent; following announcement to conduct feasibility study of 660MW coal-based power project

Top ten gainers of last week were: Mari Petroleum, Pak.Int.Con., Shell Pakistan, Abbott Lab, K‐Electric, Agritech, United Bank, Muree Brewery Co Ltd, Engro Corp and National Foods.

Top ten losers of last week were: Millat Tractors, Pakistan Cables, Shifa International Hospitals, EFU Life Assur Ltd., Sui South Gas, Soneri Bank, TPL Trakker Ltd, Cherat Cement, Hub Power and Askari Bank Ltd.

Top ten volume leaders were: KEL, LPCL, TRG, MLCF, BOP, FCCL, NBP, JSCL, ENGRO, DGKC and PSO.

Thank you very much for reading this article.

NOTE: The information posted in this blog (forum) is based on current affairs & investors point of view. There may be discrepancy in the ground realities.

Written by: Rana Khurram

Karachi Stock Exchange Weekly Analysis 24 May, 2014

The Karachi Stock Exchange (KSE) market remained extremely dull for the entire week. KSE - 100 index closed at  28,756 by losing 127 points or 0.4 percent.

The benchmark index lost 127 points during the week shedding 0.4% of its value as market heavy stocks of the likes of PAKT (-9.2%), OGDC (-0.7%) and NESTLE (-2.7%) weighed in on the index while mid-tiers KEL (+6.3%), MUREB (+15.1%) and PSEL (+10.2%) lent support to the  index. Trading activity continued to remain dull in lieu of uncertainty of the forthcoming budget. Average volumes clocked in at 96.5mn up 4% WoW. Foreigners remained net buyers during the week mopping up USD7.8mn worth of shares but shy of USD20.6mn in the previous week. With six sessions remaining prior to the budget we expect the market to remain range bound in lieu of ambiguity ahead of the federal budget.
Following news have played vital role in Karachi Stock Market index movement:

  • Government misses major budgetary targets
  • The news relatedto GDR of UBL, HBL, OGDC and PPL are likely to offer soon where we believe governmentmay easily fetch nearly USD1.6bn
  • Current account deficit rises to USD2.16bn
  • 3G/4G licenses fee over USD964mn received from telecom operators
  • Government not to pay PKR300bn circular debt
  • IPPs won’t be able to operate plants at full capacity due to non-payment of Rs300bn
  • PSO confirms it has defaulted on payments
  • NBP led consortium releases Rs27.5bn to PSO
  • LSM growth down 2.68% in March 2014
  • Textile exports grow by 6.5%YoY in 10MFY14
  • Rs250bn allocation proposed for 19 projects under Pak-China corridor  
  • Forex reserves at US$13.12bn vs US$12.88bn last week
  • Rs1.347trn (+36%YoY) projected as interest payments in budget FY15 budget
  • Fatima gets nod from shareholders for US Investment worth US$300mn
  • No increase in sales tax says an FBR member, rate to remain at 17% in the upcoming budget
  • Insurance companies allowed to launch takaful now  
  • IFC to invest in Bank AlFalah, SBP allows due diligence
  • Al Baraka plans Sukuk in Pakistan
  • CNG price raised by Rs10-15/kg              
  • FBR has proposed imposition of Special Excise Duty (SED) on import (of input and finished products) and locally produced goods where SED paid on inputs will be adjustable against final SED paid on locally produced goods from the same. SED is proposed at a rate of 1%‐2.5%
  • FBR has proposed increase in Federal Excise Duty (FED) on local production of cement from PRs400/ton to PRs500/ton, implying a PRs5/bag increase in cement prices 
  • Inclusion of KEL in MSCI index, possible launch of new model of Toyota Corolla and investment by THALL in Thar Coal Mining Company pushed the stocks in the top ten leading stocks of the week
  • Power tariff of 100MW solar power project inaugurated by PM earlier this month is set at unbelievably higher rate of PKR22.02/unit for the first 10 years, revealed an analysis by the SDPI
  • TCP imports 61,000 tonnes of urea under Saudi facility
  • PML‐N government is all set to introduce a number of revenue‐generation measures in the budget for FY15; including new taxes that are expected to yield an estimated PKR255bn
  • GoP tax target of PKR2,810bn to be envisioned in the next budget seems achievable against the revised estimates of PKR2,275bn for the outgoing financial year 
  • NEPRA reduced power tariff of Discos by PKR1.48/unit for April 2014 under the monthly fuel adjustment mechanism
  • An official said that for the first time about 30.65% rate of return has been offered in the upfront tariff for power projects based on Thar coal

Top ten gainers of last week were: Muree Brewery Co Ltd, Rafhan Maize Prod., Indus Motor, Pak Services, EFU Life Assur Ltd., Hum Network Ltd, Thal Limited, TRG Pakistan Ltd, Int. Ind.Ltd and K‐Electric.

Top ten losers of last week were: Pak Reinsurance, Pak Tobacco Co, Shezan International Ltd., Engro Foods Ltd, Nishat Chunian, Javedan Corporation, Nishat Mills Limited, Azgard Nine, Fatima Fert.Co. and Arif Habib Corp.

Top ten volume leaders were: KEL, LPCL, BOP, TRG, MLCF, FCCL, AKBL, JSCL, DGKC, BAFL and MARI.

Thank you very much for reading this article.

NOTE: The information posted in this blog (forum) is based on current affairs & investors point of view. There may be discrepancy in the ground realities.

Written by: Rana Khurram

Karachi Stock Exchange Weekly Analysis 18 May, 2014

The Karachi Stock Exchange (KSE) market Buoyed by Pak upgrade in MSCI review. KSE - 100 index closed at 28,883 by gaining 389 points or 1.4 percent.

The benchmark returned towards the glory adding nearly 389 points with nearly 132mn shares average daily volume. KSE-100 gained 1.4% WoW to close the week at 28,883 points. Volumes continued to remain sluggish, with ADTO clocking in at 133mn shares, down 5.5% WoW. Value traded also failed to impress with average of US$61mn traded per day, down 3.2% WoW.
Following news have played vital role in Karachi Stock Market index movement:

  • State Bank of Pakistan has announced Monetary policy maintaining status quo at 10%
  • News which greatly influenced the market was the enhanced weight of Pakistan in MSCI frontier market index. The recent changes in the MSCI index may have boosted the investor confidence
  • The stock included in the benchmark MSCI index was PSO, LUCK, PAKT and KEL whereas few other stocks were added in to the small cap index
  • KEL remained highly active during the week after inclusion in the MSCI FM index. Other stocks such as PSO, LUCK and PAKT were added, while Hubco was deleted from the MSCI FM index
  • Budget likely to be presented on June 3. Investors continue to believe on a possible boost in the market sentiment on the back of budget rally
  • Textile sector performing on Friday suggest some betterment is in the bag of the government or SBP which can possibly support them
  • Textile sector came in the limelight on the back of comprehensive proposals announced by the minister for the value‐added sector, which includes reducing borrowing costs, aiming to increase exports by US$3bn and offer 3%‐5% rebates
  • Government of Pakistan and IMF have successfully concluded negotiations for grant of USD550mn 4th tranche for EFF in Dubai and after the approval from IMF Board the country would get the amount by June 1, 2014 
  • PM performed the ground‐breaking of the country's first ever PKR15bn 100MW solar power park to provide cheap electricity and help the country meet its increasing energy needs. The Quaid‐e‐Azam Solar Park will be expanded to produce 300MW in the second phase by 2015
  • The overall fiscal surplus forwarded by the provinces to the tune of PKR216bn as well as surge in nontax revenue have helped the federal government to curtail its budget deficit at PKR811bn, or 3.1% of GDP, in 9MFY14
  • PM approved a PKR3.5bn interest‐free loan scheme, targeting 1mn people – 50% of them women. The disbursement of interest‐free loan would begin in June‐14
  • Nishat Chunian is in the phase to set up a 40MW coal based CPP to meet the internal electricity demands in a more efficient way that would help cutting the cost of energy significantly 
  • Remittances from overseas Pakistanis have shown a significant growth of 11.45% in 10MFY14
  • The government is reportedly planning a PRs31bn TFC to avoid PSO’s oil payment defaults
  • Thal Ltd has decided to invest PRs$3bn in Thar coal
  • PKGS, NATF, PAKT, BAHL and MCB were the primary index movers during the week gaining 23.8%, 14.4%, 12%, 5.1% and 1.0% WoW
  • Foreigners continued to remain net buyers during the week with an inflow of USD20.6mn as compared to USD5.0mn in the preceding week
  • Finance Minister Ishaq Dar expecting foreign exchange reserves to cross $15 billion by July this year
  • Government planning to introduce new textile policy and the Cabinet Committee on Privatisation (CCoP) giving a go ahead to the United bank Limited (UBL) privatisation deal
  • HASCOL shares commenced trading on the exchange this week with huge applause, as it was traded at a premium to the IPO price

Top ten gainers of last week were: Packages Limited, Hum Network Ltd, Muree Brewery Co Ltd, Pakistan Cables, National Foods, Siemens Pak Engg., Pak Tobacco Co, IGI Insurance, Abbott Lab and Thal Limited.

Top ten losers of last week were: NIB Bank, Jah.Sidd. Co., Javedan Corporation, TRG Pakistan Ltd, Netsol Technologies, Pace (Pak) Ltd., TPL Trakker Ltd, B.O.Punjab, International Steels Ltd and J.D.W.Sugar.

Top ten volume leaders were: LPCL, JSCL, BOP, KEL, FCCL, NML, NBP, NCL, FABL, PSO and MLCF.
Thank you very much for reading this article.

NOTE: The information posted in this blog (forum) is based on current affairs & investors point of view. There may be discrepancy in the ground realities.

Written by: Rana Khurram

Karachi Stock Exchange Weekly Analysis 11 May, 2014

The Karachi Stock Exchange (KSE) market witnessed pressure due to higher-than-expected CPI of 9.2 percent. KSE - 100 index closed at 28,494.5 by losing 426.5 points or 1.5 percent.

Trading activity took a plunge with average daily volume of 90mn shares, down 65% WoW. Average daily turnover declined by 30 percent on week-on-week basis to 141 million shares against 199 million shares. Foreigners remained net buyers during the week with an inflow of USD5.0mn as compared to USD15.4mn in the preceding week.
Following news have played vital role in Karachi Stock Market index movement:

  • Overall news flow during the week remained mixed, with last week’s inflation surprise also creating uncertainty regarding DR cut in the upcoming monetary policy
  • Anticipated status quo in upcoming Monetary Policy Statement (MPS) by State Bank of Pakistan (SBP) on May 16 along with uncertainty on political front would keep Karachi capital market volatile in next week trading
  • The political noise over the past few days has enhanced which also put investors at bay during the week
  • After a gap of one year, the country's total liquid foreign exchange reserves have crossed $12 billion mark, supported by growing foreign inflows
  • The monetary policy statement is also likely to be announced next week, which again would be a major sentiment driver for the market. The market sentiment will evolve around monetary policy
  • The outcome of the IMF meeting with the government, already underway, will influence the market sentiment in the coming week
  • Bearish sentiment prevailed at the local bourse throughout the week, as the release of above-expected CPI inflation figures (9.2 percent in April) last Friday still played on investors’ sentiment
  • Cement sector was in the limelight this week as All Pakistan Cement Manufacturers Association (APCMA) released the cement sales data for the month of April where domestic sales rose by 7.2 percent on year-on-year basis and 3.1 percent on month-on-month basis
  • Bestway Cement Limited also joined the race to acquire 76 percent stakes in Lafarge Pakistan Cement Ltd
  • Moody’s Investors Service said in a statement that upgrade in Pakistan credit rating could come from political stability and sustained build up in external liquidity
  • Karachi Stock Exchange (KSE) will likely to observe correction as investors might be opting profit taking due to early budget phenomenon, which has started to shadow the market sentiments
  • WB it had approved a USD1bn loan for Pakistan and "envisages" another USD11bn package spanning 5‐years. The loans are meant to support Pakistan's struggling energy sector and bolster its efforts to increase growth and investment and arrest poverty
  • Pakistan on Saturday received US$400mn from the ADB, as part of its five-year US$1.2bn programme for energy sector reforms
  • Cash-strapped oil marketing company Pakistan State Oil (PSO) has defaulted on international fuel supply payments, and suppliers have started imposing fines over the late payment of their dues, reportedly. Kuwait Petroleum Corporation (KPC) has imposed a fine of US$10,000 on the entity last week due to a technical default 
  • Prime Minister Mr Nawaz Sharif has directed the concerned officials to divert gas from fertilizer and CNG sector to power sector to immediately cut down power load shedding in the country by 692MWs 
  • Pakistan has approved transportation of Nato supplies to Afghanistan by air
  • The sales of urea fell by about 24% in Apr‐14 to 240,000 tonnes as compared to 314,000 tonnes in the same month last year. “This huge decline in sales may be attributed to the delay in cotton sowing season this Kharif,”

Top ten gainers of last week were: Hum Network Ltd, Muree Brewery Co Ltd, IGI Insurance, Packages Limited, Sui South Gas, Pakistan Cables, Javedan Corporation, PICIC Growth, Nishat Power Ltd and National Refinery.

Top ten losers of last week were: Atlas Honda Limited, Pak Services, Kohinoor Textile, Pak Tobacco Co.XD, National Foods, Agritech, EFU Life Assur Ltd., Netsol Technologie, Indus Motor and Abbott Lab.

Top ten volume leaders were: LPCL, JSCL, BOP, KEL, FABL, TRG, FCCL, MLCF, AICL, AKBL, and PTC.

Thank you very much for reading this article.

NOTE: The information posted in this blog (forum) is based on current affairs & investors point of view. There may be discrepancy in the ground realities.

Written by: Rana Khurram

Karachi Stock Exchange Weekly Analysis 3 May, 2014

The Karachi Stock Exchange (KSE) market was fairly volatile where a number of companies announced their financial results. KSE - 100 index closed at 28,921 by gaining 71 points or +0.2 percent.

Trading activity remained subdued during the week as well, with average daily volume of 144mn, flat WoW. Foreign flows continued to remain positive during the week with net foreign inflow of USD15.4mn down 17% WoW. With no immediate triggers on the horizon, we expect market to remain range bound with foreign flows likely to guide market direction. Going forward, after the conclusion of March quarter results, the monetary policy will be the most eyed event of the month, though date has yet to be announced.
Following news have played vital role in Karachi Stock Market index movement:
  • KSE-100 index remained flat during the week and gained a marginal 0.24% WoW, as earnings of major index movers (PSO and OGDC) failed to excite investors.
  • The euphoria witnessed in the recent laggard IPP HUBC was nullified by OGDC on concerns of strike price of privatization deal to be set at a discount to market price.
  • World Bank approves 3 loans for Pakistan worth USD1.125bn
  • ADB approved US$400mn loan for Pakistan to support power sector reforms
  • PSO seeks release of PKR150b to avert default
  • Sell-off of OGDCL, PPL & UBL: road shows being held in second week of May
  • Above expected CPI dampened the bullish market sentiment
  • Federal Board of Revenue (FBR) witnessed a shortfall of PRs29bn in April 2014 as an amount of PRs167bn (+8.69% YoY) was collected against a target of PRs196.4bn
  • Government plans to launch a sukuk of PRs42bn in the first week of May to facilitate liquidity-rich Islamic Banks, for the first time since March 2013. Finance Minister hinted at launching a dollar denominated sukuk in the international markets as well, after the recent success of Eurobond issue
  • Meezan Bank approved detailed guidelines on converting a conventional bank into an Islamic Bank, which pertains to the Bank’s intended acquisition of HSBC Bank’s Pakistan
  • Auto sector once again came into limelight as reportedly a plan to reduce import duties on vehicles is being finalized
  • Result season was full of twist and turns. Result of banking sector was fairly impressive and cement sector was upto the mark
  • Analyst anticipations were broadly beaten by the result of PSO, as the company announced earnings of PKR13.25/share taking 9MFY14 to a cumulative of PKR71.39
  • In addition NML also announced its quarterly result which was also far below analyst anticipation, primarily the exchange rate appreciation may have dented the operating margins
  • DGKC, Vision holding (owners of PIOC) and KOHC have shown interest in acquisition of Lafarge Cement Ltd. Incase DGKC acquires LPCL, they may forgo their plans of expanding in the south zone which may keep the cement industry price mechanism intact 
  • Government of Pakistan has imposed 5% custom duty on the import of cotton yarn following a massive increase in the import of cotton from India during FY14
  • Cement retailers have increased price of the commodity by PKR5/bag to PKR520 to PKR535/bag in Karachi
  • Government of Pakistan cuts diesel price by PKR4.51, petrol 34 paisas. According to a notification issued by OGRA the price of HSD reduced by PKR4.51/litre, Kerosene by PKR3.08/litre and LDO by PKR0.93/litre
  • Engro and SSGC have agreed to import and distribute LNG to the country
  • In a discount rate cut scenario, leverage players such as Efert, Engro Corporation, Fatima and small cement players are likely to gain attention, while double-digit yields of Kot Addu Power Company (Kapco), NCPL, NPL, National Bank of Pakistan (NBP) and FFC would become even more attractive
  • The week saw foreign portfolio investment inflows of $11.08 million as compared to $18.55 million last week
  • Government delaying Pakistan Internationl Airlines (PIA) and Oil and Gas Development Company Limited (OGDCL) privatisation and Zong opting to pay $516 million for 3G / 4G licence without delay
  • With the budget for the next fiscal year set to be announced in the coming month, speculation also crept into the market resulting in a cautious approach by investors and some negative sentiment towards particular sectors
  • Hub Power Company (the largest Independent Power Producer in the country) was the star performer as it rose 7.2% during the week as it announced earnings slightly above expectations

Top ten gainers of last week were: National Foods, Pak Tobacco Co., EFU Life Assur Ltd., Pace (Pak) Ltd., Hub Power, Jah.Sidd. Co., Kohinoor Textile, Pakgen Power Ltd., Askari Bank Ltd. and Hum Network Ltd.

Top ten losers of last week were: Pak Reinsurance, Ghani Glass, Netsol Technologies, Indus Motor, Pak Suzuki Motor, Jubilee Gen Ins, GlaxoSmithKline Pak., Soneri Bank, Century Paper and Pak Services.

Top ten volume leaders were: LPCL, MLCF, JSCL, BOP, KEL, FABL, AKBL, FCCL, HUBC, NIB and DGKC.

Thank you very much for reading this article.

NOTE: The information posted in this blog (forum) is based on current affairs & investors point of view. There may be discrepancy in the ground realities.

Written by: Rana Khurram