Initial losses were covered by gains later in the week.
The poor law and order situation across the country in the run-up to general elections was unable to prevent the stock market from reaching a new record high. Strong corporate earnings saw the benchmark KSE-100 index smash past the 19,000-point barrier to close at 19,226 points during the week ended May 3.
The index recorded only one session in the red, on the opening day of the week, and managed to climb in the remaining three, May 1 (Wednesday) being public holiday on account of labour day, to end the week with a net gain of 309 points (1.6%) and touched a level never witnessed before in its history.
The law and order situation in the country deteriorated during the week as attacks on political parties continued ahead of general elections on May 11. However, strong corporate earnings and surprisingly low inflation numbers helped to improve investor sentiment.
Lucky Cement, the largest cement manufacturer in the country, announced a 49% growth in year-on-year income for nine months of fiscal year 2013. The company reported earnings per share of Rs21.59, which were above market expectations.
MCB Bank, one of the largest banks in the country, announced EPS of Rs5.70 for the first quarter of 2013 and paid out a dividend of Rs3.50 per share for the period. This too was largely above expectations and provided a boost to the banking sector.
The recovery of the fertiliser sector came into the limelight with Fauji Fertilizer Bin Qasim reporting EPS of Rs0.53 for the first quarter of 2013, after posting a loss in the same period last year. According to the National Fertilizer Development Centre (NFDC), sales of DAP (the company’s main product) grew 83% in the first quarter of 2013.
The stock market was also aided by the Consumer Price Index (CPI) data released by the Pakistan Bureau of Statistics. CPI for April stood at 5.8%, allaying investor fears that the discount rate will be increased in the future due to rising inflation.
There was bad news for the telecom sector as the Competition Commission of Pakistan (CCP) gave a detailed ruling on the International Clearing House (ICH), in which it scrapped the controversial setup and imposed heavy penalties on the Long Distance International (LDI) operators in the country.
The CCP ruled that the LDI operators are liable to pay 7.5% of their annual turnover in penalties for setting up the ICH. Pakistan Telecommunication Company Limited, Worldcall Telecom and Telecard Limited will have to pay penalty of Rs8.3 billion, Rs534 million and Rs189 million as per the ruling. All telecom stocks took a severe beating during the week.
Average trading volumes dropped 15.9% to 159 million shares per day and average daily value also fell 15.5% to Rs4.90 billion. The market capitalisation of the KSE rose 2.2% to Rs4.75 trillion by the end of the week.
Winners of the week
Pakistan Tobacco Company
Pakistan Tobacco Company Limited manufactures and sells cigarettes
Pakistan International Container Terminal
Pakistan International Container Terminal operates a container shipping facility in Karachi
Rafhan Maize
Rafhan Maize Products Company produces corn oil, industrial starches, liquid glucose, dextrin, gluten meals, and other corn related products
Losers of the week
TRG Pakistan
TRG Pakistan operates as an information technology company. The company provides business support and software services to companies. It manages call centres and offices in Pakistan and elsewhere throughout the world
Jahangir Siddiqui and Company
Jahangir Siddiqui and Company is an investment company offering share brokerage, money market, advisory and consultancy, underwriting and portfolio management services
National Bank
National Bank of Pakistan is a government owned bank which provides a wide range of banking and financial services to corporate, institutional, commercial, agricultural, industrial, and individual customers throughout Pakistan
Published in The Express Tribune, May 5th, 2013.
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The CCP decision is creating more problems than solutions for almost all the Telecom sector in Pakistan. The sudden drop in the value of stocks is very temporary and will eventually pass by with time. However, it must be said that that these decisions should be taken in accordance with the market situation and dynamics. For sure, the Telecom sector will bounce back very quickly but the petition against the appointments of the CCP members could have change the scenario all together.
Well what they say is definitely true that perception is more important than reality, and it seems fits perfectly in the world of stocks. Well the KSE did not give two hoots about the pending petition against the CCP and its members appointments. In reality we would have to see what happens in this case for it to have a more considerable affect on the market.