Volumes at best since CGT imposition

KARACHI: In another dull day of trading, the KSE-100 lost 33.56 points to end at 9,604.41. Volumes had improved somewhat.

Relatively speaking, there was some improvement in volumes on yet another dull day as local institutional activity picked up slightly. Turnover was 23.24 million shares, up from 14.71 million shares traded on Monday, which was the lowest since December 2008.

“Foreign interest due to the KSE dips along with expected positive news flow regarding modalities of capital gains tax lifted the volumes to 30 million, the highest since the imposition of capital gains tax. Investor confidence was boosted by expected positive news flow about leverage product,” said Topline Securities’ equity dealer, Samar Iqbal.

The low volumes are because of the people adjusting to the new tax, said dealers. They expected trade to pick up once the leverage products were reintroduced. Analysts believe that the investors are hoping for the re-introduction of margin buying in the market, which will improve liquidity and result in better volumes.

“Talk of some foreign buying in select names with a few cross trades on the system failed to create any excitement with broader market volumes depicting a dismal picture. Retail investors remain sidelined resulting in very thin volumes across the board as market anxiously awaits some concrete development on leverage product,” said Elixir Securities analyst, Faisal Bilwani.

The government imposed a capital gains tax of 10 per cent on stocks held for six months or less, and 7.5 percent on stocks held between 6 months and a year. 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.

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.

AMTEX gained on continued local interest as company announces intention to sign a memorandum of understanding with an overseas partner eyeing greater demand of its products.

Out of 360 active stocks, 160 closed in the green, 171 closed below their last closing levels and 29 remained unchanged. Value of the shares traded was a meagre Rs0.838 billion.

JS Growth Fund was the volume leader with 5.71 million shares traded. Its share price went down by Rs0.02 to end at Rs3.48.

Amtex was the second volume leader with 4.32 million shares traded. Its share price went up by Rs0.46 to end at Rs14.40.

Lotte Pakistan PTA was the third volume leader with 1.42 million shares traded. Its share price went down by Rs0.09 to end at Rs7.83.

Published in The Express Tribune, July 7^th, 2010.