Eurobond issue along with strong foreign buying leads to a rise of 841 points.
Investors remained in a jubilant mood as the stock market’s rally entered its third week with the benchmark KSE-100 index climbing 841 points (3%) to close at a record high of 29,249 during the week ended April 11.
The week saw the country’s Eurobond issue and continued foreign buying as catalysts for market growth. Strong remittance figures and the clearest hint of a discount rate cut by the State Bank also contributed to the market’s gains.
The biggest news of the week came in the form of the country’s successful return to the international debt market after issuing Eurobonds worth $2 billion to investors across the United States, United Kingdom and the Middle East.
The government’s original target was to raise $500 million from the bond issue. However, the target was revised after the issue was oversubscribed by more than 10 times. The government split the debt worth $2 billion into two parts — tenors of 5 and 10 years.
The successful bond issue along with the World Bank’s revision of the country’s GDP growth to 4% reinforced investor sentiment and provided a boost to the market.
Foreign buying continued at breakneck pace as net foreign buying stood at $34.8 million for the week, down slightly from the $35.8 million net buying in the previous week. The number reflected strong confidence of foreign investors and is likely to continue with the MSCI Frontier Markets portfolio reorganisation taking effect.
Macro figures were another source for celebrations as remittance figures for the nine months of FY14 stood at $11.6 billion, up 12% over the previous year. With inflation figures staying in single digits, the State Bank also chimed in as its acting governor announced that there will be good news for businesses in its monetary policy announcement next month.
In sector-specific news, the fertiliser sector was in the spotlight. Engro Fertilizer was the star performer after the Economic Coordination Committee’s decision to not divert gas from its plant ton Guddu Power. Engro Corporation’s share price rose 11% as a result.
The cement sector was under pressure throughout the week due to fears of a price war breaking out between manufacturers, while the oil and gas sector performed strongly on the back of foreign buying.
Average daily volumes remained high and stood at 311 million shares traded per day, up 7% over the previous week. Average daily values were up 17% and stood at Rs13 billion per day. The market capitalisation of the KSE stood at Rs7.03 trillion at the end of the week.
Profit-taking was witnessed at the bourse on Friday and it is likely that a mild correction will be witnessed in the coming week, following the 2,484 points rally in the last 3 weeks. However, the start of the earnings season could continue to provide further impetus to the market.
Winners of the week
Pakistan Services
Pakistan Services Limited is the holding company for Pearl Continental Hotels (Private) Limited, which constructs, operates and manages hotels. The group also owns a number of smaller companies that provide rent-a-car, travel arrangements and tour packages.
Jubilee General Insurance Company Limited
Jubilee General Insurance Company Limited is an insurance provider. The group supplies a number of lines of coverage, including health, fire, marine and miscellaneous.
Soneri Bank Limited
Soneri Bank Limited provides banking services.
Losers of the week
Shell Pakistan Limited
Shell Pakistan Limited markets petroleum and petrochemical products. The company also blends and markets different types of lubricating oils.
Grays of Cambridge
Grays of Cambridge (Pakistan) Limited is a holding company. The company, through its subsidiaries, manufactures and exports sporting goods, specialising in hockey sticks.
IGI Insurance
International Steels Limited manufactures steel. The company produces cold rolled, sheet, and hot dipped galvanised sheet steels. International Steels serves the construction, appliances,
automotive, agricultural implements, and packaging industries.
Published in The Express Tribune, April 13th, 2014.
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