Analysts’ tips on absorbing shocks in bourses ahead of elections

Recommend portfolios comprising fertiliser, cement, and oil and gas sectors.

KARACHI: As Pakistan is preparing for general elections, small investors in country’s stock exchanges are looking at safer investments over the next three months until the formation of a new government. However, what are safe sectors and where to invest for better returns is anybody’s guess.

Analysts say that investors, big or small, are all closely looking at the political developments and all wish to see a strong government at the centre to tackle economic issues head on.

Most of the analysts who talked to The Express Tribune said that they recommend fertiliser, cement, and oil and gas sector for small or medium size investors over the next three months.

Chief executive of Topline Securities, Muhammad Sohail, says that the democratic transition from the interim setup to the next government was very important and small and medium size investors were cognisant of this fact.

“If political transition goes smoothly and the country gets a strong government at the centre, the stock exchange in the country will definitely go up,” said Sohail.



Replying to a question, he said, the preferable sectors for investment were fertiliser, cement and independent power producers (IPPs). The number of small investors at the Karachi Stock Exchange (KSE) had definitely gone down compared to 2008, but it was very difficult to determine the correct percentage of this decline, he added.

However, he added, that the number of small investors had grown considerably in last six months at KSE.

Nominee Director, Ali Hussain Rajabali Limited, Faisal Rajabali commented that the impact of small or retail investors on the Karachi index had gone down considerably in the last five years.

Rajabali also picked fertiliser, oil and gas and cement sectors. He recommended breaking the portfolio by investing 40% in fertiliser, 40% in oil and gas (both marketing and exploration) and 20% in cement.



Most analysts at the KSE say that the number of small investors at KSE declined by 70%-90% since 2008 – the last time Pakistan was close to general elections. They also say that this means KSE is much more stable today when compared to 2008.

Chief Operating Officer of Zafar Moti Capital Securities, Javed Ibrahim, said that since most of the small investors had left KSE in recent years, the remaining investors were mostly institutions.

However, I think small investors should look at cement, oil and gas and fertiliser sectors if they want to keep investing over three months at KSE, he suggested.

“I think cement, fertiliser and oil and gas will all grow in the next few months,” said Moti.

Investors, whether small or big, all expect economic reforms from the next government, he added.

Published in The Express Tribune, March 28^th, 2013.

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