Weekly Review: KSE-100 closes flat as monetary policy announcement draws closer
Bourse remained mostly in red the entire week, clawing back up on Friday over positive sector-specific news.
KARACHI:
The stock market closed flat for a second week running as investors took a more cautious approach in the build-up to the monetary policy announcement on October 5. The benchmark KSE-100 index closed lower by 8 points (0.1%) during the week ended September 27.
There were a couple of news flows, creating sector-specific activity in a relatively uneventful week and the bourse remained in the red for a majority of the week, before clawing its way back up on Friday, to close at similar levels as that of last week.
With the announcement right around the corner, investors are widely expecting a cut in interest rates, following three consecutive months of single-digit inflation. A survey conducted by KASB Securities revealed that approximately 80% of market participants were expecting a cut of 50-100 basis points.
That anticipation was affirmed by inflation numbers for August, which stood at 9.5%. However, it should be noted that fuel prices surged again and their lagging effect on inflation will only manifest in the coming months. The interest rate currently stands at 10.5%.
Investor participation dropped significantly during the week as well as volumes plummeted into double figures and stood at 95 million shares traded on average each day, down 27% over the previous week.
This, however, did not hamper foreign investment as foreigners were net buyers of equity worth $4.8 million during the week, following up on the $3.9 million net buying in the previous week. On the other hand, the rupee depreciated 0.4% vis-à-vis the US dollar as repayments of International Monetary Fund debts draw nearer.
In sector-specific news, there were good news for the fertiliser sector, as the government announced to use the gas infrastructure development cess (GIDC), earned on gas sales to fertiliser plants, to subsidise the cost of setting up transmission lines from various gas fields to the beleaguered fertiliser plants on the Sui Northern Gas Pipelines network.
The GIDC was implemented with the intention of setting up alternative sources for the fertiliser plants, and the government’s decision to actually use the proceeds for that purpose was viewed as a positive step.
Oil marketing companies (OMCs) also had something to look forward to, after the news that the government was planning to increase marketing margins for petrol and diesel by Rs1 and Rs1.5 in the light of the depreciating rupee. Significant activity was witnessed in all three major OMCs (Pakistan State Oil, Shell and Attock Petroleum) as a result.
The decline in average volumes was complemented by the decline in average daily values as it fell 38% to Rs2.77 billion traded per day. The market capitalisation of the KSE declined 0.3% to Rs3.89 trillion by the end of the week.
Winners
Abbot Laboratories
Abbott Laboratories (Pakistan) Limited engages in the manufacture, import, and marketing of pharmaceutical, nutritional, diagnostic, diabetes care, molecular, hospital, and consumer products.
Media Times Limited
Media Times Limited is engaged in printing and publishing daily English and Urdu newspapers namely, and also the production, promotion, advertisement, distribution and broadcasting of television programmes through satellite channels.
Indus Dyeing
Indus Dyeing and Manufacturing Company engages in the manufacture and sale of yarn in Pakistan. It offers cotton, melange, man-made fibre and core spun lycra, among other products, and exports primarily to the US, Japan, Hong Kong, Indonesia, Malaysia, and India.
Losers
Siemens Engineering
The company’s principal activity is manufacturing, installing and selling of electronic and electrical capital goods. It also executes projects under contracts. It operates in three segments; Energy, Industry and Healthcare.
Ibrahim Fibres
The principal business of Ibrahim Fibres Limited is the manufacture and sale of polyester staple fibre (PSF) and yarn. The polyester fibre division of the company produces a range of lustres and varieties. Its manufacturing units are located in Faisalabad. PTA Limited exports PTA to customers in both Asia and Europe.
Mari Gas
Mari Gas Company Limited principally engages in the drilling, exploration, production, and sale of hydrocarbons in Pakistan. It explores for natural gas, crude oil, condensate, and LPG.
Published in The Express Tribune, September 30th, 2012.
The stock market closed flat for a second week running as investors took a more cautious approach in the build-up to the monetary policy announcement on October 5. The benchmark KSE-100 index closed lower by 8 points (0.1%) during the week ended September 27.
There were a couple of news flows, creating sector-specific activity in a relatively uneventful week and the bourse remained in the red for a majority of the week, before clawing its way back up on Friday, to close at similar levels as that of last week.
With the announcement right around the corner, investors are widely expecting a cut in interest rates, following three consecutive months of single-digit inflation. A survey conducted by KASB Securities revealed that approximately 80% of market participants were expecting a cut of 50-100 basis points.
That anticipation was affirmed by inflation numbers for August, which stood at 9.5%. However, it should be noted that fuel prices surged again and their lagging effect on inflation will only manifest in the coming months. The interest rate currently stands at 10.5%.
Investor participation dropped significantly during the week as well as volumes plummeted into double figures and stood at 95 million shares traded on average each day, down 27% over the previous week.
This, however, did not hamper foreign investment as foreigners were net buyers of equity worth $4.8 million during the week, following up on the $3.9 million net buying in the previous week. On the other hand, the rupee depreciated 0.4% vis-à-vis the US dollar as repayments of International Monetary Fund debts draw nearer.
In sector-specific news, there were good news for the fertiliser sector, as the government announced to use the gas infrastructure development cess (GIDC), earned on gas sales to fertiliser plants, to subsidise the cost of setting up transmission lines from various gas fields to the beleaguered fertiliser plants on the Sui Northern Gas Pipelines network.
The GIDC was implemented with the intention of setting up alternative sources for the fertiliser plants, and the government’s decision to actually use the proceeds for that purpose was viewed as a positive step.
Oil marketing companies (OMCs) also had something to look forward to, after the news that the government was planning to increase marketing margins for petrol and diesel by Rs1 and Rs1.5 in the light of the depreciating rupee. Significant activity was witnessed in all three major OMCs (Pakistan State Oil, Shell and Attock Petroleum) as a result.
The decline in average volumes was complemented by the decline in average daily values as it fell 38% to Rs2.77 billion traded per day. The market capitalisation of the KSE declined 0.3% to Rs3.89 trillion by the end of the week.
Winners
Abbot Laboratories
Abbott Laboratories (Pakistan) Limited engages in the manufacture, import, and marketing of pharmaceutical, nutritional, diagnostic, diabetes care, molecular, hospital, and consumer products.
Media Times Limited
Media Times Limited is engaged in printing and publishing daily English and Urdu newspapers namely, and also the production, promotion, advertisement, distribution and broadcasting of television programmes through satellite channels.
Indus Dyeing
Indus Dyeing and Manufacturing Company engages in the manufacture and sale of yarn in Pakistan. It offers cotton, melange, man-made fibre and core spun lycra, among other products, and exports primarily to the US, Japan, Hong Kong, Indonesia, Malaysia, and India.
Losers
Siemens Engineering
The company’s principal activity is manufacturing, installing and selling of electronic and electrical capital goods. It also executes projects under contracts. It operates in three segments; Energy, Industry and Healthcare.
Ibrahim Fibres
The principal business of Ibrahim Fibres Limited is the manufacture and sale of polyester staple fibre (PSF) and yarn. The polyester fibre division of the company produces a range of lustres and varieties. Its manufacturing units are located in Faisalabad. PTA Limited exports PTA to customers in both Asia and Europe.
Mari Gas
Mari Gas Company Limited principally engages in the drilling, exploration, production, and sale of hydrocarbons in Pakistan. It explores for natural gas, crude oil, condensate, and LPG.
Published in The Express Tribune, September 30th, 2012.