Karachi Stock Exchange Weekly Analysis 29 June, 2014

The Karachi Stock Exchange (KSE) market rises on lowering of political noise.The KSE-100 index closed at 29,344, up 2.3% WoW or 652 points, as political tensions eased. Volumes rose 4.9% WoW with ADTO clocking in at 160mn shares. Average daily value traded was up 11% WoW to US$83mn. FIPI remained strong, rising over 3x WoW to US$15.44mn.

With Ramadan starting from next week, activity in the market may decline, as it has done historically. On average, volumes have fallen by 30% in the Ramadan months over the last three years. Inflation for June will be keenly watched; we are expecting it to clock in at 8.6%. The market is likely to take direction from the upcoming results season with excitement anticipated in the banking and cement sectors.
Following news have played vital role in Karachi Stock Market index movement:

  • Other major highlights of the week included National Assembly’s approval of Rs4.3 trillion federal budget, foreign exchange reserves crossing $14 billion mark, government fetching Rs39 billion at the T-bills auction and urea off-take clocking in at 408,000 tons in May, down by 16 percent on year-on-year basis but up by 58 percent on month-on-month basis
  • Oil, cement and banking stocks remained in the green ahead of better earnings expectations for June-quarter
  • OGDC was the primary benefactor contributing 172 points to the index along with MCB (+60 points) and PPL (56 points).
  • On corporate front, a significant event during the week was the book building of PPL at a floor price of PRs205, which has received overwhelming response, being oversubscribed by more than 2x
  • Forex reserves cross US$ 14 billion
  • PTC, however, bore the brunt of institutional selling as sentiment had turned sour on the reversal of ICH
  • PSO’s receivables surged above PRs180bn, with the company on the verge of default of PRs53bn to international suppliers, if the govt does not disburse cash. PSO has clearly GoP to clear dues worth PKR100bn if it wants to continue the supply of fuel to thermal power houses and thus ensure its promise of uninterrupted electricity during Ramazan
  • Mari Petroleum Company Limited (MPCL) has agreed to deposit PRs9.9 billion worth of reserves with the government by converting them into preference shares if the company is given an increase in gas price under the new proposed pricing formula 
  • Textile garment exports grew almost 31% in the first two months after the trade preference scheme came into force, according to official statistics released recently. Exports from Pakistan to the EU in the first two months of implementation of GSP+ have recorded a substantial increase over the comparative period of previous year,” said the Ministry of Commerce 
  • The cement space was greeted with increasing interest in LPCL as its takeover process nears a close and a reduced levy of GIDC approved in the finance bill FY15
  • SHFA (+20% W/W) made sharp advances amid realization of hidden value in the stock and re‐rating of its attractive multiples
  • Automobile assemblers primarily INDU will stay in the limelight due to expectations of a handsome payout at the year end, followed by PSMC which will keep the market upbeat on account of the earnings accretive Punjab Taxi scheme 
  • SITC will establish a new 35MW coal‐based power plant at Faisalabad. The PKR2bn Syndicated Islamic Finance Facility (Diminishing Musharaka) was jointly mandated to MCB, UBL, MEBL as a financial advisor and loan arranger 
  • GoP has raised PKR49.537bn through an auction of three‐year Ijara Sukuky SBP
  • PTA chairman called for investment in advanced 3G and 4G mobile broadband technologies in Pakistan to provide high quality mobile broadband services on a par with leading services around the world 
  • PM performed the ground‐breaking ceremony of the 4320MW Dasu Hydropower Project
  • OGDCL sacked all Nashpa oil field team members on alleged bn rupees worth crude oil theft and formed a six‐member high profile investigating committee to probe the matter. MD OGDCL taking strict action against the menace of oil theft removed 33‐ member field team including officials 
  • Sugar price climbed by PKR230/100 kilogrammes bag during the last one month in the wake of an alleged manipulation of the stocks by the sugar dealers. The price of 100kg of sugar bag reached around PKR5,350 to PKR5,370 in Akbari Mandi wholesale market – the largest wholesale grain market of Pakistan 
  • Leather sector exports are on the declining trend and, if the situation persisted, the Indian competitors will snatch further market share of Pakistan’s leather and leather goods, Pakistan Tanners Association Standing Committee on Gas and Infrastructure Chairman 
  • Foreigners’ interest remained robust during the week as foreign investors bought shared worth ~USD15.4mn against a mere USD3.6mn in the previous week

Top ten gainers of last week were: Shifa International Hospitals, Pakistan Cables, Lafarge Pakistan, ICI Pakistan, Rafhan Maize Prod., J.D.W.Sugar, Askari Bank Ltd., Sui South Gas, Pak.Int.Con and Muree Brewery Co Ltd.

Top ten losers of last week were: Colgate Palmolive, TRG Pakistan Ltd, PICIC Growth, Lotte Chemical Pakistan Ltd, Hum Network Ltd, Abbott Lab, Lucky Cement, NIB Bank, Ghani Glass and Agritech.

Top ten volume leaders were: LPCL, FCCL, KEL, BOP, NBP, PTC, SSGC, TRG, LOTCHEM, MLCF, and  UBL.

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 21 June, 2014

The Karachi Stock Exchange (KSE) market witnessed a significant correction this week, closing at 28,692, compared to 29,731 last week. The Karachi Stock Exchange KSE-100 index lost 1,039 points, or 3.5 percent, in the week on solid correction, Volume activity in terms of value traded witnessed attrition of 26.6% WoW to US$75.1mn. Weekly flow of net foreign investment was only US$3.6mn, a significant slowdown from recent weeks. KSE-100 index lost 1,039 points (- 3.6% WoW) during the week, primarily on the back of political noise.

Next week would most likely be event driven with political noise in limelight with the return of religio-political leader and possible protests in the province of Punjab, further clarity on the Lahore incident and commencement of the government’s appeal against the removal of Pervez Musharraf’s name from the exit control list (ECL) in the Supreme Court. Investor interest also weakened during the week as average volumes clocked in at 101.9mn, down 34% WoW. Foreigners’ interest diminished during the week as foreign investors bought shared worth a mere ~USD3.6mn against USD12.6mn in the previous week.
Following news have played vital role in Karachi Stock Market index movement:

  • KSE100 index closed the week little changed in volatile trading as late selling in PM session wiped morning gains
  • Institutional buying interest at lows provided the much needed support, however investors continued to remain cautious and confused as politics continues to play a key role
  • Pakistan Telecom PTC PA - 4.9% hit intraday lower circuit but managed to close above; stock has fallen by over ~15% in past three trading sessions after ICH was disbanded earlier this week
  • United Bank UBL PA -0.83xx% exchanged over 5mn shares on second consecutive day as reported FII institutional activity played on both sides
  • Cements and select oil names continue to play in a narrow range as leading players remain sidelined
  • A truly happening week on the political front as Pakistan Army launched a full scale operation against militant hideouts in the North Waziristan which Government also endorsed by taking all parties on board
  • Investors welcomed the military operation but the bull run soon ended following violence in the city of Lahore that remains a highly polarising political issue
  • Stocks depicted weakness across the board with index heavy weights namely MCB, OGDC, PSO, PPL and PTC dragged the index by 85, 84, 81, 67 and 51 points respectively
  • Zarb-e-Azb: Full scale assault begins in North Waziristan
  • Budget deficit likely to surge by 0.9%
  • Gradual increase in GIDC under consideration
  • Unsatisfactory progress: IMF puts off fourth review of Pakistan’s economy
  • Reserves increase to USD13.571bn
  • PSMC: A major catalyst on the horizon: The Punjab Government in its provincial budget FY15 has re-launched the Yellow Cab Scheme with an allocation of PKR25bn. PSMC remains the prime contender for the scheme as it enjoys hegemony in the <1300cc category
  • MCB: Estimates revised up; reiterate Sell: We reiterate our sell call despite upward revision in estimates as it currently trades at an expensive multiples (CY14E PBV of 2.8x and PER of 14.5x)
  • Autos: Volumetric triggers priced in: Auto sector is expected to remain in limelight where we expect volumetric growth on account of much awaited Corolla 2014 model and from Punjab Taxi scheme. Major impact of these developments would accrue to INDU, PSMC and THALL.
  • IPPs: Cash flow concerns unlikely to hurt payout capacity: As per news flows, fifteen IPPs have served notices to PEPCO for the payment of PKR66bn. However, government guarantees have not been invoked yet.
  • Investors would likely be watchful of political situation next week while PPL’s privatization would also remain in limelight  
  • Indus Motor Company Ltd (INDU) is expected to unveil the new model of Corolla in Jul/Aug’14 which should provide a fresh trigger to earnings, unlocking substantial room for price appreciation in the stock 
  • Market participants seem to wait for the arrival of PAT leader on Monday, which would set the next direction of the local index
  • A major Chinese group has purchased about 1/4 of land in an industrial zone, run by the FIEDMC, and is expected to make an investment of USD2bn to set up a big cotton spinning facility 
  • PM inaugurated the Mehar Gas Processing Plant which will produce 30mmcfd and 3,300bpd. MoD, MoP Board Member of OMV; Erwin Kroell, SVP Middle East and Caspian Region; and Axel Welch, Austrian Ambassador were also present during the inauguration ceremony 
  • NHA that work on Karachi‐Lahore motorway project is in full swing, dispelling the impression that the project has been put on the back burner. With reference to a news item appeared in Daily Times on June 11, a of the authority maintained that the contents of the story are baseless 
  • BoD HUBC has approved equity investment in SECMC of up to USD20mn and development of projects to establish coal‐based power plants up to 660MW
  • US OPIC has approved a financing of up to USD100mn to develop and operate a 50MW wind power project being set up in the Jhimpir wind pocket, some 100km northeast of Karachi
  • The GoP is scheduled to conduct an Ijara Sukuk auction with a size of PKR49.5bn, the funds raised from this auction are believed to be used for the financing of the M3 motorway project
  • Investors will be keenly watching the outcome of PPL’s domestic secondary market offering and its pricing, whose domestic road-show is ongoing
  • Foreigners’ interest diminished during the week, as foreign investors bought shares worth $3.6 million against $12.6 million in the previous week
  • PTCL witnessed selling pressure after the government dissolved International Clearing House, while PSO also declined on uncertainty over the mounting circular debt
  • Pakistan State Oil was worst hit as news emerged that the circular debt level had hit Rs350 billion. The company’s share price plummeted 8.2% during the week
  • Institutional activity also declined ahead of June quarter-end
  • Cement and banking stocks remained in the green ahead of better earnings expectations for June-quarter

Top ten gainers of last week were: Pak Suzuki Motor, Shezan International Ltd., Javedan Corporation, Indus Motor, Shifa International Hospitals, Colgate Palmolive, Grays Of Combridge, Abbott Lab, Kohat Cement and Fauji Fert BinXD.

Top ten losers of last week were: Atlas Honda Limited, Muree Brewery Co Ltd, P.T.C.L.A, Shell Pakistan, B.O.Punjab, Attock Refinery Ltd., J.D.W.Sugar, Netsol Technologies, Azgard Nine and GlaxoSmithKline Pak.

Top ten volume leaders were: FCCL, PTC, LPCL, BOP, TRG, KEL, NBP, MLCF, UBL, DGKC, and SSGC.

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 15 June, 2014

The Karachi Stock Exchange (KSE) market was range bound during the week. The market witnessed upward trend in two of the five sessions, as it remained down due to the law and order concerns on militant attack at the Karachi airport. The KSE-100 index gained 222 points, or 0.8 percent, on week-on-week basis to 29,731 points against 29,509 points last week. Market liquidity; however, was lower as average volumes dropped by 17.5 percent on week-on-week basis to 215.6 million shares against 261 million shares.

KSE-100 index gained 222 points in the week but remained range-bound due to the lack of major triggers, while investors’ sentiment will evolve around foreign buying next week, as no major move is expected. On a WoW basis, the KSE-100 index rose 0.8%. Volumes fell 17.5% WoW with ADTO clocking in at 215.6 mn shares. FIPI has drastically declined from US$31.2mn last week, to US$12.6mn this week. We continue to believe the upcoming result season along with clarity over political front may energize the market. Nevertheless news flow seems quite weak and market is looking towards new triggers.
Following news have played vital role in Karachi Stock Market index movement:

  • Pakistan equities closed higher on buying from foreigners and excitement over privatisation of govt holdings in United Bank UBL PA +2.26%. UBL offered sale of 242 million shares with a floor price of Rs 155 per share
  • In 2007, the government sold its UBL shares at Rs206 per share and now it has sold the shares at Rs158, which was a manipulation, it should not have sold below the earlier sum
  • According to analysts, market response will remain negative next week, as investors were cautious over the government’s manipulation in the United Bank offer, which remained around 25 percent lower than the market rates. The same manipulation is likely in PPL, OGDCL and then HBL shares
  • The banks, in particular, remained in the limelight as a result of the successful book building of UBL’s privatisation
  • The week saw decline in the foreign portfolio investment inflows to $12.6 million as compared to $31 million last week
  • Mari Petroleum announced higher-than-expected production estimates from Ghauri field, which brought renewed interest in Mari and PPL
  • Textile sector also remained in the limelight in anticipation of favourable textile policy
  • News about government transferring lands to PTCL management also helped the stock post gains during the week
  • The World Bank approving the Dasu Dam project (positive for cement) and agreeing to give a loan of $700 million
  • On the macro front, Pakistan’s trade deficit shrank by 5.66 percent on year-on-year basis in 11 months of FY14 and foreign exchange reserves rose by $17.5 million to $13.457 billion
  • Any concessions on the government’s proposal to increase Gas Infrastructure Development Cess (GIDC) from the budgeted Rs300 per mmbtu can be a trigger for the fertiliser and textile sectors
  • Oil and Gas Development Company (OGDC) closed in red as the company will issue $850 million worth of Global Depositary Receipts (GDRs) in September 2014
  • PSO is facing imminent default on payments to international oil suppliers and is seeking a bailout in the face of long delay on the part of power producers to pay for fuel supply. PSO had defaulted on international payments last month and international banks have refused to open LCs for oil import. PSO has to make a total payment of PRs93.34bn to Kuwait Petroleum Corporation and other fuel suppliers  
  • The statement from Mr. Dar about possible completion of transfer of properties and payment by Etisalat of USD798mn kicked started PTCL upsurge
  • The political warfare has once again heated‐up along with General Musharraf’s name being removed from ECL. Probably with a passage of time the Ex‐president is likely to leave the country
  • Hascol oil storage installations launched: Hascol becomes 2nd largest oil importer in Pakistan
  • Power shortfall has jumped to 3600MW with increase in demand, both domestic and commercial. NTDC, power generation during last 24 hours stood at 13,700MW against a demand of 17,300MW, leaving the system with a total shortfall of 3,600MW 
  • The divestment of GoP 5% holding In PPL will be held by the end of June 2014 in the domestic market, Privatization Commission Chairman

Top ten gainers of last week were: Grays Of Combridge, Hum Network Ltd, Sui South Gas, Mari Petroleum, Pak Tobacco Co.XD, Colgate Palmolive, Lotte Chemical Pakistan, Atlas Honda Limited, Cherat Cement and Engro Foods Ltd.

Top ten losers of last week were: Shell Pakistan, Shifa International Hospitals, Pakistan Cables, Nishat Chunian Power, Rafhan Maize Prod., Pak.Int.Con.XDXB, Feroz 1888 Mills Ltd, National Foods, Agritech and Bata (Pak) Ltd.

Top ten volume leaders were: TRG, KEL, FCCL, LOTCHEM, BOP, NBP, PTC, MLCF, PTC, LPCL, MLCF, SSGC, and SNGP.

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 8 June, 2014

The Karachi Stock Exchange (KSE) market was range bound during the week. Positive sentiment that could have emanated from the Budget announcement was dampened by deteriorating law & order situation in the city on news of arrest of MQM leader in UK KSE - 100 index closed at 29,509, by losing -228 points or -0.8 percent. The KSE All Share Index increased by 0.51 percent or 110.64 points to 21,825.14 points, the KSE 30-Index swelled by 0.31 percent or 62.23 points to 20,219.78 points, whereas the KMI 30- Index dipped by 0.02 percent or 7.55 points to 47,211.9 points.

On WoW basis, KSE-100 index went down 0.8%. Volumes rose 11% WoW with ADTO clocking in at 261mn shares. FIPI remained robust, rising 4% WoW to US$31mn. The volatility at the bourse attracted a lot of activity as average daily volumes increased 11% to 261 million shares traded per day. Similarly, average daily value also increased 18.7% to Rs13.24 billion traded per day. The market capitalisation of the Karachi Stock Exchange stood at Rs6.99 trillion at the end of the week.
Following news have played vital role in Karachi Stock Market index movement:

  • Political turmoil eclipsed budget FY15. Political turmoil eclipsed the significance of budget FY15 and resulted in KSE-100 index shedding 796pts on Tuesday. However the market managed to rebound and recovered by 501.4pts the same day 
  • The benchmark index remained volatile throughout the week losing 228.58 points (↓ 0.8% WoW) as a result of heightened uncertainty during the week
  • Index heavy weights primarily buoyed the index namely MCB, LUCK, FCCL and OGDC pushing the index by 37.8, 36.4, 31.1 and 26.6 pts respectively
  • Trading activity picked up slightly while average volumes clocked in at 181mn, up 10% WoW
  • Foreigners remained net buyers during the week mopping up USD9.02mn worth of shares against USD29.56mn in the previous week
  • Economic Survey 2013-14: targets missed
  • Prime Minister inaugurates first phase of PKR57.38bn Nandipur power project
  • Dar has presented PKR3.8tr budget
  • Japan inks accord to extend PKR5bn loan for energy sector
  • Govt all set to divest UBL shares
  • Pakistan-China corridor: Two strategically vital projects approved
  • Public debt reaches PKR15.534tr
  • Domestic sales of cement increased while exports decreased in May 2014 compared to the corresponding month last year Data released by APCMA, despatches to domestic markets increased by 9.86% to 2.309mn tonnes compared to 2.102m tonnes in May 2013 while exports decreased by 3.4% to 759,000 tonnes from 785,000 tonnes 
  • GoP has imposed CGT on debt instruments like PIB, Treasury Bills, Foreign Currency Bonds and Sukuk in the proposed FBFY15
  • A major oil reserve has been discovered near Jhelum in Punjab by MARI, opening up a new area for exploitation of hydrocarbon potential
  • Urea and DAP sales up 58% MoM and 188% MoM in May-14
  • Foreign participation remained strong as foreigners were net buyers of $31 million worth of equity
  • The capital market is concern the capital gain tax was increased from 10 percent to 12.5 percent for a period of less than one year while for the first time the government introduced a tax of 10 percent over one year period to two years
  • Finance minister announced the export refinance rate cut by 1.9 percent to 7.5 percent which was likely to benefit the textile companies
  • Weekend blues forced local investors to book profits at higher levels where United Bank Limited continued to remain under pressure ahead of government offering as concerns loomed over floor price
  • Renewed interest helped Engro Corporation to close 2 percent up after falling in last few trading sessions
  • Fauji Cement led the volume with 25 million shares gaining 5 percent in value
  • Fauji Cement, Pak Int Bulk(R) and Lafarge Pakistan were the top traded companies with turnovers of 25.067 million shares, 16.641 million shares and 15.584 million shares, respectively
  • Wyeth Pakistan Limited was the top price gainer with increment of 200.99 rupees (2.01 U.S. dollars) to 4,225.99 rupees (42.26 U.S. dollars) whereas Bata Pakistan was the major price shedder with decrement of 77.27 rupees (77.27 U.S. cents) to 3,457.19 rupees ( 34.57 U.S. dollars)

Top ten gainers of last week were: Shell Pakistan, Fauji Cement Company, Grays Of Combridge, Millat Tractors, P.T.C.L.A, Pakistan Cables, Pak Services, Nishat Chunian, Nishat Mills Limited and Lucky Cement.

Top ten losers of last week were: Engro Corp, Hum Network Ltd, Thal Limited, Century Paper, IGI Insurance, Faysal Bank, Bata (Pak) Ltd., Dawood Hercules Chem, Int. Ind.Ltd and United Bank.

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

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