Strong corporate earnings and possibility of a new IMF deal propelled market to record high.
Despite the deteriorating law and order situation in the country in the run-up to general elections in May, the stock market posted a gain of 287 points (1.5%) and showed no signs of slowing down as corporates churned out impressive results.
The index recorded only one session in the red, at the start of the week on Monday, which was followed by four consecutive sessions in the black. Average volumes jumped up by 15.5% to 189 million shares traded per day.
Strong corporate earnings from the fertiliser, cement and banking sectors were the catalysts for the market growth during the week. The fertiliser sector impressed with Engro Fertilizers and Fatima Fertilizer posting earnings per share of Rs0.8 and Rs0.6 respectively for the first quarter of 2013, triggering buying in both stocks.
Engro Corporation, the parent company of Engro Fertilizers, also announced during the week that it would conduct initial public offering of Engro Fertilizers’ stocks this year, after restructuring of its debt and finalisation of gas supply agreements with the government. The news attracted further investor interest in the company’s stock.
The cement sector also stimulated buying interest as Maple Leaf Cement and Cherat Cement, both mid-sized players in the sector, reported strong earnings of Rs4.16 and Rs9.65 per share respectively, for nine months of fiscal year 2012-13.
The banking sector also had some positives as Allied Bank and United Bank announced EPS of Rs2.72 and Rs3.23 for the first quarter of 2013. Furthermore, it also came to light that banking spreads grew by six basis points in March, thus halting the eight-month decline in spreads.
Investor sentiments were also buoyed by the caretaker prime minister’s announcement that after holding successful talks with the International Monetary Fund, the new government would have the option of acquiring $5 billion from the IMF under the Extended Fund Facility (EFF), to shore up the country’s dwindling foreign exchange reserves.
Foreign buying was again strong as foreigners picked up a net $5.9 million worth of equity, following $6.7 million worth of buying in the previous week. Foreigners have been active in Pakistan’s bourses for the past couple of months and have purchased a net $92 million worth of equity in 2013, according to a research conducted by KASB Securities.
While trading volumes picked up 15.5%, average daily value at the Karachi Stock Exchange dropped 6.7% to Rs5.79 billion.
Winners
TRG Pakistan
TRG Pakistan operates as an information technology company. The company provides business support and software services to companies. It manages call centres and offices in Pakistan and elsewhere throughout the world
Pakistan Tobacco Company
Pakistan Tobacco Company Limited manufactures and sells cigarettes
Murree Brewery
Murree Brewery Company 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
Losers
Javedan Corp
Javedan Corporation manufactures Portland cement, blast furnace slag cement and sulphate resistant cement
Ghani Glass
Ghani Glass manufactures and sells glass containers. The company manufactures glass containers for pharmaceuticals, food and beverages and commercial, domestic and industrial use
Pak Services
Pakistan Services is the holding company for Pearl Continental Hotels (Private) Limited, which constructs, operates and manages hotels. The group also owns a number of smaller companies that provide rent-a-car, travel arrangements and tour packages
Published in The Express Tribune, April 28th, 2013.
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