Weekly review: Karachi Stock Exchange dips below 18,000 points amidst fog
The law and order situation and weak macroeconomic indicators contribute to the decline.
The law and order situation and weak macroeconomic indicators contribute to the decline.
KARACHI:
The stock market failed to maintain its position above the 18,000-point barrier as the worsening law and order situation in Karachi and weak macroeconomic data took its toll on the benchmark KSE-100 index, which closed down 221 points or 1.2% during the week ended March 8.
A variety of positive sector-specific news could not save the index from losses as investors also shifted their focus towards the political scenario where the current government is due to complete its tenure in the coming week and pave the way for a caretaker setup until general elections, due to be held in May.
The week started off on a negative note following a massive bomb blast in Abbas Town, Karachi on Sunday evening which left 50 people dead and 140 wounded. The already tense situation was intensified when the Muttahida Qaumi Movement announced that it will go on an indefinite strike unless the perpetrators were captured. However, the party cancelled those plans on the insistence of trade unions.
On the macro front, the foreign exchange reserves of the country dipped below the $13 billion mark declining $380 million during the week to close at $12.81 billion. The forex reserves have been on a constant decline after hitting a record high above $18 billion in July last year.
Auction of treasury bills was also held during the week where cut-off yields rose 2-9 basis points. The increase in yields meant that further monetary easing was unlikely and with inflation slowly creeping up, a round of discount rate hikes might be on the horizon, which will have a negative impact on the market.
There was bad news for the telecom sector, as the contentious International Clearing House (ICH) issue was raised in the United States, where the Federal Communications Commission (FCC) prohibited US telecom providers from paying anything above the pre-ICH rate of 2 cents per minute for termination of calls to long distance and international operators in Pakistan.
Under the ICH regime, this rate has been hiked up to 8.8 cents per minute and resulted in windfall profits for telecom operators in Pakistan, as the arrangement did not require any additional expenditure. Pakistan Telecommunications Company (PTCL), the operator of the ICH, took a beating and shed 11% of its value during the week.
However, it was not all bad news as there were positives for the fertiliser, refinery and chemical sectors all emanating from pending decisions of the Economic Coordination Committee. Engro was the main beneficiary on the fertiliser end as the ECC is likely to approve gas supply of 79 million cubic feet per day (mmcfd) to its Enven plant. The stock climbed 4.4% during the week.
The refinery sector also received positive news as the ECC was expected to increase deemed duty – customs and surcharge duty on imported oil – from 7.5% to 9% on refinery products.
Similarly, the ECC is also likely to approve an increase in import duty on purified terephthalic acid (PTA) from 3% to 4%, resulting in a boost to local manufacturers of PTA.
Average daily volumes plummeted 27% to 236 million shares. Similarly, average daily values declined 21% to Rs7.07 billion. The market capitalisation of the KSE declined 1% to Rs4.46 trillion by the end of the week.
Winners
Dawood Hercules
Dawood Hercules Corporation produces urea fertilisers. The company also produces anhydrous ammonia for manufacturers of soda ash, fructose, and other chemicals.
Attock Refinery
Attock Refinery, a subsidiary of the Attock Oil Company, specialises in the refining of crude oil
Nishat Chunian Power
Nishat Chunian Power owns, operates and maintains a fuel-fired power station for the generation, supply and transmission of electric power in Kasur, Punjab. The company is a subsidiary of Nishat (Chunian) Limited.
Losers
Jahangir Siddiqui and Company
Jahangir Siddiqui and Company is an investment company offering share brokerage, money market, advisory and consultancy, underwriting and portfolio management services.
JS Bank
JS Bank is a full service commercial bank. The bank provides a wide range of banking products and services including retail and consumer, treasury, corporate and commercial, and investment banking.
Azgard Nine
Azgard Nine manufactures and exports textile products such as denim fabrics, and apparel. The company also manufactures and sells urea and phosphatic fertilisers from its fertiliser plants.
Published in The Express Tribune, March 10th, 2013.
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The stock market failed to maintain its position above the 18,000-point barrier as the worsening law and order situation in Karachi and weak macroeconomic data took its toll on the benchmark KSE-100 index, which closed down 221 points or 1.2% during the week ended March 8.
A variety of positive sector-specific news could not save the index from losses as investors also shifted their focus towards the political scenario where the current government is due to complete its tenure in the coming week and pave the way for a caretaker setup until general elections, due to be held in May.
The week started off on a negative note following a massive bomb blast in Abbas Town, Karachi on Sunday evening which left 50 people dead and 140 wounded. The already tense situation was intensified when the Muttahida Qaumi Movement announced that it will go on an indefinite strike unless the perpetrators were captured. However, the party cancelled those plans on the insistence of trade unions.
On the macro front, the foreign exchange reserves of the country dipped below the $13 billion mark declining $380 million during the week to close at $12.81 billion. The forex reserves have been on a constant decline after hitting a record high above $18 billion in July last year.
Auction of treasury bills was also held during the week where cut-off yields rose 2-9 basis points. The increase in yields meant that further monetary easing was unlikely and with inflation slowly creeping up, a round of discount rate hikes might be on the horizon, which will have a negative impact on the market.
There was bad news for the telecom sector, as the contentious International Clearing House (ICH) issue was raised in the United States, where the Federal Communications Commission (FCC) prohibited US telecom providers from paying anything above the pre-ICH rate of 2 cents per minute for termination of calls to long distance and international operators in Pakistan.
Under the ICH regime, this rate has been hiked up to 8.8 cents per minute and resulted in windfall profits for telecom operators in Pakistan, as the arrangement did not require any additional expenditure. Pakistan Telecommunications Company (PTCL), the operator of the ICH, took a beating and shed 11% of its value during the week.
However, it was not all bad news as there were positives for the fertiliser, refinery and chemical sectors all emanating from pending decisions of the Economic Coordination Committee. Engro was the main beneficiary on the fertiliser end as the ECC is likely to approve gas supply of 79 million cubic feet per day (mmcfd) to its Enven plant. The stock climbed 4.4% during the week.
The refinery sector also received positive news as the ECC was expected to increase deemed duty – customs and surcharge duty on imported oil – from 7.5% to 9% on refinery products.
Similarly, the ECC is also likely to approve an increase in import duty on purified terephthalic acid (PTA) from 3% to 4%, resulting in a boost to local manufacturers of PTA.
Average daily volumes plummeted 27% to 236 million shares. Similarly, average daily values declined 21% to Rs7.07 billion. The market capitalisation of the KSE declined 1% to Rs4.46 trillion by the end of the week.
Winners
Dawood Hercules
Dawood Hercules Corporation produces urea fertilisers. The company also produces anhydrous ammonia for manufacturers of soda ash, fructose, and other chemicals.
Attock Refinery
Attock Refinery, a subsidiary of the Attock Oil Company, specialises in the refining of crude oil
Nishat Chunian Power
Nishat Chunian Power owns, operates and maintains a fuel-fired power station for the generation, supply and transmission of electric power in Kasur, Punjab. The company is a subsidiary of Nishat (Chunian) Limited.
Losers
Jahangir Siddiqui and Company
Jahangir Siddiqui and Company is an investment company offering share brokerage, money market, advisory and consultancy, underwriting and portfolio management services.
JS Bank
JS Bank is a full service commercial bank. The bank provides a wide range of banking products and services including retail and consumer, treasury, corporate and commercial, and investment banking.
Azgard Nine
Azgard Nine manufactures and exports textile products such as denim fabrics, and apparel. The company also manufactures and sells urea and phosphatic fertilisers from its fertiliser plants.
Published in The Express Tribune, March 10th, 2013.
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