Weekly Review: KSE-100 gains 1.7% as earnings season kicks off

Strong PTCL earnings acted as a catalyst for the market.

KARACHI: The stock market continued its upward march to touch new highs as the benchmark KSE 100-share index posted a gain of 391 points (1.7%), following start of corporate earnings season, during the week ended July 19.

Investors anticipate a fruitful round of corporate earnings announcements, as companies are going to announce their financial results for the first half of 2013 or full fiscal year 2012-13 in upcoming weeks.

The all-important energy sector will be watched closely as a majority of investors believe that abnormally high payouts will be announced following the new government’s decision to eliminate circular debt from the sector. The sector has been leading market growth in recent weeks after the government acted upon its decision and eliminated a large part of the circular debt by issuing treasury bills and bonds.

The earnings season opened on a positive note as Pakistan Telecommunications Company Limited (PTCL) announced impressive results for the first half of 2013. The company posted earnings per share of Rs1.54 for the period, up 15% year-on-year.

More importantly, the company announced a payout of Rs1 per share, which was well received by investors.

The first half of the week was largely uneventful as the index traded within a range to sustain itself barely above the 23,000-point barrier. The market recorded a 165-point correction on Wednesday and dropped below the barrier, but made a strong comeback in the final two days, gaining 434 points (1.9%) and closing at a new record of 23,429.



There was some cause for concern for investors as the 10-year Pakistan Investment Bond (PIB) saw a 25 basis points’ increase in its yield standing at 11.8%, 280 basis points above the discount rate.

According to a report prepared by KASB Securities, this phenomenon is indicative of bond market expectations about increase in interest rates later in the year, meaning a hike in the discount rate by the State Bank.

On the currency market, the Pakistani rupee continued to lose value against the US dollar and slid 0.5% during the week. The depreciation will have a positive impact on the energy sector and earnings of exporting companies, but does not bode well for the economy.

However, there was positive news as well as it became clear that the government has requested the International Monetary Fund (IMF) to provide $7.3 billion instead of the $5.3 billion previously agreed. The IMF is likely to approve this request in September and the increased amount will provide further cushion to the country’s dwindling foreign exchange reserves.

Trading volumes took a hit due to the limited activity in Ramazan and dropped 17.7% to 216 million shares traded per day on average. Average daily value recorded a similar decline of 18% to Rs9.86 billion. Market capitalisation rose 1.9% to Rs5.70 trillion by the end of the week.

Winners

Faysal Bank



Faysal Bank Limited provides commercial, consumer and investment banking services.

Habib Bank  



Habib Bank operates commercial bank in Pakistan. The bank offers commercial, corporate, Investment, retail
and international group banking.

National Bank of Pakistan



National Bank of Pakistan is a government owned bank which provides a wide range of banking and financial services to corporate, institutional, commercial, agricultural, industrial, and individual customers throughout Pakistan.

Losers

Karachi Electric Supply Company



The Karachi Electric Supply Company is a privately-controlled power producer, which transmits and distributes electricity.

Pace Pakistan



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

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.

Published in The Express Tribune, June 21^st, 2013.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.