KSE records lowest volumes in 19 months

Stock volumes were the lowest recorded in 19 months at 14.71 million shares, and the index decreased by 59.68 points to end at 9,637.97. Volumes had decreased from 22.47 million shares traded on Friday. The last time volumes were this low was in December 2008.

Turnover was only 14.71 million shares, down from 22.47 million shares traded on Friday, and the lowest since December 2008.

Local investors were unwilling to trade unless volumes grow and currently very few bids and offers were being made. “They were probably waiting for foreign funds to start coming in or state funds to start buying,” said Elixir Securities’ analyst, Nazim Abdul Muttalib. He added that there was very little foreign institutional investment, so locals have also decided to wait and see.

Regional markets are suffering from lack of flows and international markets financial situation is uneasy. And Investors, who are already worried about the new capital gains tax, awaited the re-introduction of margin buying. They are still not sure what would be the impact of the new tax. Plus, in the absence of any leverage products, there is not enough liquidity available, according to dealers.

“There is absolutely no interest in the market for now, and such a situation is not good,” said Sajid Bhanji, director at Arif Habib Ltd.

Dealers said investors were also hoping for the re-introduction of margin buying in the market, which will improve liquidity and result in better volumes.

KSE authorities and the Securities and Exchange Commission of Pakistan (SECP) met last month to discuss margin buying and other leveraged products, and decided to form a committee required to submit its recommendations within 15 working days.

A meeting of the stakeholders to discuss the issue is scheduled for Wednesday, dealers said.

With late last week terrorist strikes in Lahore, investors have decided to stay away with security situation as an easy excuse and local politics and court cases have started to dominate the newspaper headlines, and there is nothing positive in these news that can drive equities, according to dealers.

With a market lacking any serious triggers and very little FII flows, one can expect volumes to decrease further in the coming days, according to analysts.

Out of 359 active stocks, 144 closed in the green, 196 closed below their last closing levels and 18 remained unchanged. Value of the shares traded was a meagre Rs0.326 billion.

MCB was one of the volumes leaders in the market and its stock prices decreased due to rumors of foreign funds selling the stock.

Amtex Ltd, a Pakistani textile maker - plans to integrate with an overseas company, according to media reports and its stock price advanced by 3 per cent to close at Rs13.94 as a result. It was the volume leader today with 2.7 million shares.

JS and Co was the second volume leader with 0.9 million shares and the Bank of Punjab was third with 0.8 million shares.

Published in The Express Tribune, July 6^th, 2010.