Increased interest of Chinese companies was the only silver lining for investors. PHOTO: PPI
Bears made their presence felt as the Pakistan Stock Exchange’s benchmark KSE-100 index registered a decline of 1.44% or 581.73 points week-on-week to go below the 40,000-point mark. It closed at 39,781.95 points on Friday.
Rising political tension between Pakistan and India seemed to give investors the perfect excuse to re-align and strategise as the rollover week begins next. Geo-political tensions played the most decisive role, with foreign investors remaining net sellers over the week. On the other hand, banks and institutions helped absorb the selling pressure as they were net buyers of $1.1 million and $7.8 million, respectively.
Similar tensions over DAP subsidy cast a dark cloud over the fertiliser sector since the Federal Bureau of Revenue has so far failed to devise a mechanism to hand out the subsidy. Provinces’ reluctance to pitch in the subsidy amount did not make things better either.
Meanwhile, investors waited for the monetary policy announcement as any downward revision in the interest rate might have significantly affected the banking industry’s margins. However, in its monetary policy statement, the central bank chose to keep the rate unchanged.
A 53% year-on-year decline in foreign direct investment for the first two months of the fiscal year did not help dispel the dark clouds over the bourse - which was further exacerbated by August data that showed a decline in Pakistan’s key export - textile.
Interest of Chinese companies to invest in major scrips was perhaps the only significant silver lining for the week. Shanghai Electric, one of the largest mechanical and electrical equipment manufactory enterprises in China, was reported to be a key bidder for majority stake in K-Electric (KEL). Similarly, a Chinese investor expressed interest in due diligence of Dewan Cement Limited in order to acquire a stake in the company.
Analysts expect volatility to continue in the week to come, with the market continuing to remain under pressure.
On the macro front, a 1.10% decrease was observed in foreign exchange reserves held by State Bank of Pakistan week-on-week as of September 16.
Foreign institutional portfolio investment (FIPI) recorded an outflow of $16 million during the week as opposed to outflow of $5.27 million last week.
Winners of the week
Associated Services
Earlier called Latif Jute Mills Limited, the company is one of the industrial machinery and services firms in Karachi.
Honda Atlas Cars
Honda Atlas Cars Pakistan Limited manufactures, assembles and sells Honda vehicles through its many divisions within Pakistan.
Millat Tractors
Millat Tractors Limited assembles and manufactures tractors, implements and equipment.
Losers of the week
Hum Network
Hum Network Limited operates satellite television channels. The company operates a channel targeted primarily at women, one about food and one that covers lifestyle and entertainment.
TRG Pakistan
TRG Pakistan operates as an information technology company. The company provides business support and software services to other companies. TRG Pakistan manages call centres and offices located in Pakistan and elsewhere throughout the world.
Murree Brewery XD
Murree Brewery Company Limited specialises in the manufacture of beer and Pakistan-made foreign liquor. The group also has juice extraction and food manufacturing divisions, located at Rawalpindi and Hattar respectively. Their glass division manufactures all the group’s bottles and jars.
Published in The Express Tribune, September 25th, 2016.
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