Weekly review: KSE continues to rise towards uncharted territory

Published: May 26, 2013
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Hopes of resolution of energy crisis and budget expectations aided the growth.

Hopes of resolution of energy crisis and budget expectations aided the growth.

KARACHI: The stock market’s relentless upward drive continued after its impressive performance in the previous week as the benchmark KSE-100 index eased past the 21,000-point barrier and closed with a gain of 767 points (3.6%) during the week ended May 24.

The index had recorded a gain of 621 points (3.1%) a week earlier after the emphatic win in general elections of Nawaz Sharif’s Pakistan Muslim League, whose policies are viewed as pro-business by the investor community.

Sharif’s party swept into power on the back of an election campaign that promised an end to the country’s crippling energy crisis and the resolution of issues facing the business community at large. Sharif’s close ties with Saudi Arabia have also instilled confidence into investors, who believe that he may indeed bring a quick workaround for the massive load-shedding being endured by people across the country.

Media reports surfaced that the Saudi government had agreed to offer $15 billion worth of oil to the country on deferred payment over a period of three years. The deal will be essential for averting a balance of payments crisis and to halt depreciation of the rupee, which currently sits at an all-time low against the US dollar.

The news immediately sparked interest in the energy and oil and gas sectors, which grew 4.8% and 8.2% respectively and outperformed the market. Pakistan State Oil was again in the limelight as its share price rose 13.2% during the week, following up on a 15.6% gain in the previous week.

The oil and gas sector was also aided by the release of funds, albeit a small amount, by the Ministry of Finance for easing the pain of circular debt. If the Saudi deal goes through, the sector can expect a massive reduction in circular debt, which will aid in the long-term resolution of the energy crisis.

The KSE index posted strong gains for the opening three sessions before easing off towards the end of the week with a mild correction. Investors also chose to be cautious after the caretaker government announced plans to bring a mini-budget through a presidential ordinance before the new government is sworn in.

The mini-budget envisages a broad-based increase in taxation for the auto, fertiliser, cement and textile sectors. The measures will help in meeting tax targets but will be very unpopular with the industries and the population and will likely be scrapped by the incoming government.

Average trading volumes shot up 29% to a solid 439 million shares per day, while average daily value improved further by 42.5% to stand at Rs14.02 billion. Market capitalisation increased 3.3% to Rs5.16 trillion by the end of the week.

Winners of the week

Mari Gas Company

Mari Gas Company specialises in the drilling, production and selling of natural gas.

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.

Pace Pakistan

Pace Pakistan develops real estate in both the residential and commercial sectors. The company develops and constructs shopping malls, supermarkets, and apartments.

Losers of the week

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 respectively.

Askari Bank

Askari Commercial Bank provides commercial banking services. The bank has branches in Pakistan, Azad Jammu, Kashmir and Bahrain.

Colgate Palmolive

Colgate-Palmolive Pakistan manufactures and sells detergents, personal hygiene, and a variety of other products.

Published in The Express Tribune, May 26th, 2013.

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