Announcements of army chief and investment schemes were the highlights of the week.
The stock market’s impressive performance continued without any interruption as the benchmark KSE-100 index racked up another 454 points (1.9%) in the run-up to an all-time high close of 24,302 points during the week ended November 29.
The index’s strong performance came on the back of major national developments which saw the prime minister announce heads of two major institutions, the army and the judiciary, and also a major investment scheme which will provide significant incentives to investors.
Investors rejoiced at the smooth transition of power in the army as Lieutenant General Raheel Sharif was appointed the new Chief of Army Staff by Prime Minister Nawaz Sharif. The bulls took control of the market following the announcement as the KSE-100 index shot up 412 points (1.7%) on Thursday.
The prime minister also approved Justice Tasadduq Hussain Jillani as the Chief Justice of Pakistan, taking over from the retiring Justice Iftikhar Muhammad Chaudhry. The departure of Justice Chaudhry is expected to bring to an end the high judicial activism witnessed in his tenure, which is likely to result in reduced tension between the executive and the judiciary.
The postings were expected to be one of the toughest tests for the Pakistan Muslim League-Nawaz led government and investors showed confidence in the decision of the government, despite ignoring seniority in the appointment of the army chief.
The prime minister also announced a new investment scheme for green field industrial projects in certain sectors of the economy. The scheme will provide various incentives for projects worth more than Rs25 million. Besides receiving tax incentives, investors would not be required to declare their source of income.
To meet the country’s growing energy needs, the government also inaugurated a nuclear power project on the coast of Karachi, which is expected to generate 2,200 megawatts of electricity within six years. The project will be the first amongst a series of power projects which include a 2,500MW wind power project and extension of the Tarbela hydropower plant.
Despite the positives, there were some alarming figures for investors in the form of declining foreign currency reserves at the State Bank of Pakistan. The central bank’s reserves fell to $3.4 billion after the payment of $396 million to the International Monetary Fund in the previous week. Total reserves stood at $8.7 billion as per latest data from the State Bank.
Investors were also concerned about the inflation figures for the month of November, which are expected to return to double digits according to analysts at JS Global Capital. If the figures do cross into double figures, expectations of a further discount rate hike are likely to dampen market sentiments.
Average trading volumes declined 25% and stood at 133.4 million shares per day. Average daily value also fell 16.7% and stood at Rs7.08 billion. The market capitalisation stood at Rs5.87 trillion at the end of the week.
Published in The Express Tribune, December 1st, 2013.
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