Weekly Review: Dismal earnings announcement, tumbling regional markets deal critical blow to KSE
KSE 100-share index sheds 4% to stands at 22,714.68 points at the end of week.
KSE 100-share index sheds 4% to stands at 22,714.68 points at the end of week.
KARACHI:
The country’s largest stock market – the Karachi Stock Exchange – witnessed a dismal week, shedding 4% as earnings of the big names listed on the index missed street estimates coupled with a critical blow from the regional markets which were tumbling.
The benchmark KSE-100 index took a breather with foreign inflows clocking in at just $3 million as pressure from regional sell-off become evident amid falling volumes which declined 11.1% during the week and trading value of shares in dollars fell 6.4% compared to the previous week.
Moreover, analyst at JS Global Capital Furqan Ayub believes that investors concerns on a possible interest rate hike in the monetary policy announcement of the State Bank of Pakistan, which was due this week but has been now postponed to August 27, and widespread floods in the country also stifled the performance of the market. Resultantly, the KSE-100 Index shed 959 points, correcting by 4% to close at 22,715-point level.
Despite positivity at the macroeconomic front where Pakistan current account registered a surplus for the month July and negotiations with the Washington-based International Monetary Fund on the extended loan facility somewhat successful, the bourse had plenty reasons to extend the bull run.
But the sell-off in regional markets with all of them closing in the red and earnings announcements by some of the big names listed including Pakistan Petroleum, Hub Power Company, National Bank of Pakistan, United Bank and Engro Corporation which lagged market estimates sparked off the bearish trend.
Pakistan’s current account recorded a surplus of $46 million in July, against a deficit of $427 million in July 2012, owing to lower trade deficit and sharp growth in remittances to $1.4 billion.
The cement sector, which has been supporting the bullish trend, lost its charm as ravaging floods in the country resulted in negative expectations on future demand of cement, which may hurt the sector’s profitability.
Going forward
All eyes remain on the approval of the IMF loan in early September, whereas according to the finance minister, the government had submitted the letter of intent to the lending agency this week for an expected $6.36 billion extended fund facility after fulfilling all prior conditions laid down by the IMF.
Furthermore, market sentiments will take a cue from the upcoming monetary policy announcement where investors in the equity and the bond market expect a hike of 50-100 basis points in the interest rate and earnings announcement of Pakistan State Oil and Kot Addu Power Company.
PSO is expected to announce a dividend payout given the large cash payments it received at the end of June to reduce the circular debt levels.
However given the lack of triggers, analysts advise cherry-picking approach towards portfolio construction.
Winners
NetSol Technologies
NetSol Technologies Ltd provides information technology solutions and services. The company’s services include custom software development, technology outsourcing, systems integration, application development, and business intelligence consulting.
IGI Insurance
International General Insurance Company of Pakistan Limited provides property and casualty insurance products and services. The company’s products include fire, marine, and motor insurance.
JDW Sugar Mills
JDW Sugar Mills produces and sells crystalline sugar. The company is located in Rahimyar Khan, and was formerly named United Sugar Mills Limited.
Losers
Security Papers
Security Papers Limited manufactures paper for banknotes, financial instruments, watermarked university degree certificates, and other types of security papers. The company supplies its products in Pakistan and throughout the world.
Cherat Cement
Cherat Cement Company Limited manufactures and sells cement and clinker.
Clariant Pakistan
Clariant Pakistan Limited manufactures textile and leather chemicals, dyes, pigment preparations, and master batches. The company also acts as indenting agents for the parent, Clariant AG and affiliates, in the chemical, dyes, paper, emulsions, life sciences, and other sectors.
Published in The Express Tribune, August 25th 2013.
The country’s largest stock market – the Karachi Stock Exchange – witnessed a dismal week, shedding 4% as earnings of the big names listed on the index missed street estimates coupled with a critical blow from the regional markets which were tumbling.
The benchmark KSE-100 index took a breather with foreign inflows clocking in at just $3 million as pressure from regional sell-off become evident amid falling volumes which declined 11.1% during the week and trading value of shares in dollars fell 6.4% compared to the previous week.
Moreover, analyst at JS Global Capital Furqan Ayub believes that investors concerns on a possible interest rate hike in the monetary policy announcement of the State Bank of Pakistan, which was due this week but has been now postponed to August 27, and widespread floods in the country also stifled the performance of the market. Resultantly, the KSE-100 Index shed 959 points, correcting by 4% to close at 22,715-point level.
Despite positivity at the macroeconomic front where Pakistan current account registered a surplus for the month July and negotiations with the Washington-based International Monetary Fund on the extended loan facility somewhat successful, the bourse had plenty reasons to extend the bull run.
But the sell-off in regional markets with all of them closing in the red and earnings announcements by some of the big names listed including Pakistan Petroleum, Hub Power Company, National Bank of Pakistan, United Bank and Engro Corporation which lagged market estimates sparked off the bearish trend.
Pakistan’s current account recorded a surplus of $46 million in July, against a deficit of $427 million in July 2012, owing to lower trade deficit and sharp growth in remittances to $1.4 billion.
The cement sector, which has been supporting the bullish trend, lost its charm as ravaging floods in the country resulted in negative expectations on future demand of cement, which may hurt the sector’s profitability.
Going forward
All eyes remain on the approval of the IMF loan in early September, whereas according to the finance minister, the government had submitted the letter of intent to the lending agency this week for an expected $6.36 billion extended fund facility after fulfilling all prior conditions laid down by the IMF.
Furthermore, market sentiments will take a cue from the upcoming monetary policy announcement where investors in the equity and the bond market expect a hike of 50-100 basis points in the interest rate and earnings announcement of Pakistan State Oil and Kot Addu Power Company.
PSO is expected to announce a dividend payout given the large cash payments it received at the end of June to reduce the circular debt levels.
However given the lack of triggers, analysts advise cherry-picking approach towards portfolio construction.
Winners
NetSol Technologies
NetSol Technologies Ltd provides information technology solutions and services. The company’s services include custom software development, technology outsourcing, systems integration, application development, and business intelligence consulting.
IGI Insurance
International General Insurance Company of Pakistan Limited provides property and casualty insurance products and services. The company’s products include fire, marine, and motor insurance.
JDW Sugar Mills
JDW Sugar Mills produces and sells crystalline sugar. The company is located in Rahimyar Khan, and was formerly named United Sugar Mills Limited.
Losers
Security Papers
Security Papers Limited manufactures paper for banknotes, financial instruments, watermarked university degree certificates, and other types of security papers. The company supplies its products in Pakistan and throughout the world.
Cherat Cement
Cherat Cement Company Limited manufactures and sells cement and clinker.
Clariant Pakistan
Clariant Pakistan Limited manufactures textile and leather chemicals, dyes, pigment preparations, and master batches. The company also acts as indenting agents for the parent, Clariant AG and affiliates, in the chemical, dyes, paper, emulsions, life sciences, and other sectors.
Published in The Express Tribune, August 25th 2013.