Market watch: Moody’s credit outlook sets bullish mood

Benchmark KSE-100 index climbs 187 points.

KARACHI: Positive developments over the weekend spurred a buying spree at the Karachi bourse as Moody’s positive comments on Pakistan’s credit outlook and China’s assurance of support during Prime minister’s visit maiden visit to China pushed the benchmark index into the black.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index gained 0.84% or 187.38 points to end at 22,365.72 points. Trade volumes fell slightly to 326 million shares compared with Friday’s tally of 356 million shares.

“Moody’s positive comments on Pakistan’s credit outlook, post-recent IMF loan, boosted confidence with investors brushing aside macroeconomic concerns as the rupee tests new lows against the dollar,” reported Harris Batla, analyst at Elixir Securities. Moreover, Prime Minister Nawaz Sharif’s visit to China and getting an overwhelming response with respect to investments in the energy sector provided further stimulus to dampened sentiments, Batla added.



According to a credit outlook report published by Moody’s Investors Service, the International Monetary Fund’s (IMF) staff- level agreement to provide $5.3 billion assistance to Pakistan (Caa1 negative) will be credit positive as the aid will help the nation refinance repayments due to the IMF this year, and avert a balance-of-payments crisis in Pakistan. Moody’s says it expects the extended fund facility (EFF) programme to boost Pakistan’s reserve buffer to $8.3 billion in fiscal 2014 from previously projected $6.5 billion.

Anticipation of rising inflation going forward and a hike in interest rates generated institutional interest in the banking sector, while China’s pledged support solidified government’s commitments to build dams to resolve energy crisis propelled the cement stocks.

Furthermore, Pakistan Telecommunication Company and Engro Corporation were star performers, hitting their respective upper circuits, over reported local and institutional buying. The value of shares traded during the day was Rs10.68 billion.



Lafarge Pakistan Cement was the volume leader with 31.96 million shares gaining Rs0.48 to finish at Rs9.79. It was followed by Karachi Electric Supply Company with 31.24 million shares gaining Rs0.08 to close at Rs7.98 and Bank of Punjab with 25.79 million shares losing Rs0.76 close at Rs13.45.

Foreign institutional investors were net buyers of Rs306 million, according to data maintained by the National Clearing Company of Pakistan.

Published in The Express Tribune, July 9^th, 2013.

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