Foreign funds back at Karachi bourse

[LahoreEstate]

Sunday, April 12, 2009
By Salman Siddiqui

KARACHI: Active trading in penny stocks pushed average week turnover to 18 months high to 400 million shares, while huge buying in cement, bank and telecom stocks helped Karachi bourse to stay in green territory this week.

News about fall in core inflation reinstated market in positive column on the weekend session. Otherwise, notable increase in cut-of-yield of central banks’ treasury bills and elimination of leveraging counter i.e. Continuous Funding System Mark-II (CFS MK-II) made investors extremely confused and convinced them to book profits at the available margins early this week.

The interesting part of this week’s trading was the return of foreign capital. Earlier, overseas investors remained net sellers for the last 15 consecutive weeks.

The KSE 100-share Index posted a net increase of 185.08 points or 2.49 per cent on week-on-week basis and closed at 7,617.96 points.

The parallel running junior 30-Index surged by 174.10 points or 2.15 per cent and concluded at 8,238.26 points.

The historically high turnover was the main feature of this week, as market saw 18 months high at 479 million shares turnover on Tuesday and 21 months high at 493 million shares on Wednesday.

Atif Zafar at JS Research says that interest shown by local high net worth individuals and offshore investors pushed average daily turnover to 18 month high at 400 million shares. Moreover, this was 35.8 per cent higher against 295 million average shares turnover of last week.

Accordingly, the overall market capitalisation surged by Rs55 billion to stand at Rs2,290 billion this week.

After a 15-week gap the offshore investors were net buyers in the outgoing week. They bought shares worth $15.1 million while shares amounting $12.1 million were offloaded, resulting in net buying of three million dollars, he added.

“Market, which was up 17 per cent in previous two weeks lost its momentum amid SECP decision to phase out CFS MKII without a replacement product.

As a matter of record, the CFS investment declined amid its phase out to Rs1.2 billion with an average annualised rate of 25.12 per cent,” Atif said.

A 92-104 bps hike in T-bill cut off yields in the latest auction on Wednesday and profit taking after a sustained rally put further pressure on the market.

However, market rallied on the last trading day on account of March’s CPI inflation falling (of 40bps) to 11 month low. A persistent fall in CPI is expected to pave the way for a possible decrease in discount rate by the central bank in the future, he further added.

Shagufta I. Khurram at KASB Securities said that 155bps increase in 12 month T-bill cut off yield to 13.49 per cent was a sentiment dampener for the investors, giving confused signal to the market regarding the upcoming monetary policy direction.

Ministry of Finance decision to increase cut off rates can be explained by pressure on liquidity side resulting from withdrawal of government deposits to retire its direct borrowing from the central bank and shift of bank deposits to national saving schemes, she explained and reiterated a 400bps cut in policy rate call by Dec-2009, while the timing of first cut could be delayed to July from April on liquidity pressure.

Experts level meeting of the representatives of 22 donor countries and agencies including WB, ABD, IDB participating in Friends of Pakistan conference, and first quarter of 2009 corporate results season, formally beginning from April 15, would be the two main market driver events in the weeks to come, she underlined.

Saudi Pak Commercial Bank, First Capital Securities, KESC, Pakistan Reinsurance, and Lakson Tobacco were major gainers while Hinopak Motors, Wazir Ali Industries, Altern Energy, Meezan Bank and Pakistan Oilfields were major losers at the KSE this week, according to KASB Securities.



Movement in Weekly Volume Leaders

Symbols Opening on Closure on Difference

Monday (Rs) Friday (Rs) (Rs)

Bank Al-Falah 15.10 14.73 -037

Bank of Punjab 12.51 15.75 3.24

DG Khan Cement 25.14 26.50 1.36

DS Industries 3.21 5.42 2.21

JS Company 35.57 38.30 2.73

KESC 2.78 3.73 0.95

Lucky Cement 57.16 57.64 0.48

NBP 94.32 101.30 6.98

NIB Bank 5.85 6.53 0.68

Pak.PTA 2.93 3.17 0.24

Pervez Ahmed 5.03 8.58 3.55

PTCL 19.18 18.83 -0.35

TRG Pakistan 1.56 2.09 0.53

http://www.thenews.com.pk/daily_detail.asp?id=171957