KSE outlook: Top analysts do not foresee end to bull-run
They are optimistic despite recent 300-point dip in the market.
The index has increased on average 26.6% every year since 2009. PHOTO: FILE
KARACHI:
In an otherwise booming stock market, the sudden loss of roughly 300 points in the benchmark index during the last 10 days of 2013 is unsettling for most retail investors.
The Karachi Stock Exchange (KSE) 100-Share Index has increased 49.5% between January 1 and December 30. Does the recent dip mean 2014 will finally mark an end to the two-year bull-run on the Karachi bourse?
“Typically, funds liquidate their positions at the end of every year to show their annual performance,” BMA Capital Management CEO Moazzam M Malik said while speaking to The Express Tribune.
He noted that many fund managers tend to liquidate their positions around Christmas and start buying stocks again after New Year. “Therefore, one tends to see a dip because of seasonal factors,” he added.
Countering the speculations about an imminent drop in the KSE-100 index, Malik said investors have long-term interest in the Pakistani equity market. “It’s been a very strong market and some kind of adjustment is required. So I think one can see some level of adjustment with a little dip and then (the index) will start going up again,” Malik said.
His brokerage house estimates that the KSE-100 index will likely touch 29,500 points by the end of fiscal year 2013-14, which reflects over 16% return in six months. The index has increased on average 26.6% every year since 2009.
Standard Capital Securities Head of Research Faisal Shaji said the index can reach 28,000 by June. His brokerage house foresees more than 20% growth in corporate earnings and 6-7% dividend yield next year.
Shaji expects foreign participation to grow in 2014. “Foreign interest in the Pakistani equity market remained high in 2013 with a gross portfolio investment of Rs196.5 billion, which is equal to more than $2 billion,” he said.
Net portfolio investment was Rs39.5 billion or roughly $400 million over the same period.
“I expect to see more public offerings on the bourse,” Shaji noted. The number of listed companies on the KSE is 561, which is down from 573 a year ago. In contrast, only three new listings took place during 2013.
KASB Securities recently held a poll among top domestic institutional clients, including banks and asset management companies. Its findings reflect broad-based optimism about improvement at the macro-level next year.
“Our key take away from the survey is that optimism on equities for 2014 is driven largely by top-down considerations – both political and economic,” the survey said.
About 85% of respondents expected ‘improvement’ or ‘significant improvement’ in macros while not a single respondent said he expected the macros to worsen. “This highlights the investment community’s continued belief in the government’s reform plans,” it said.
Published in The Express Tribune, December 31st, 2013.
In an otherwise booming stock market, the sudden loss of roughly 300 points in the benchmark index during the last 10 days of 2013 is unsettling for most retail investors.
The Karachi Stock Exchange (KSE) 100-Share Index has increased 49.5% between January 1 and December 30. Does the recent dip mean 2014 will finally mark an end to the two-year bull-run on the Karachi bourse?
“Typically, funds liquidate their positions at the end of every year to show their annual performance,” BMA Capital Management CEO Moazzam M Malik said while speaking to The Express Tribune.
He noted that many fund managers tend to liquidate their positions around Christmas and start buying stocks again after New Year. “Therefore, one tends to see a dip because of seasonal factors,” he added.
Countering the speculations about an imminent drop in the KSE-100 index, Malik said investors have long-term interest in the Pakistani equity market. “It’s been a very strong market and some kind of adjustment is required. So I think one can see some level of adjustment with a little dip and then (the index) will start going up again,” Malik said.
His brokerage house estimates that the KSE-100 index will likely touch 29,500 points by the end of fiscal year 2013-14, which reflects over 16% return in six months. The index has increased on average 26.6% every year since 2009.
Standard Capital Securities Head of Research Faisal Shaji said the index can reach 28,000 by June. His brokerage house foresees more than 20% growth in corporate earnings and 6-7% dividend yield next year.
Shaji expects foreign participation to grow in 2014. “Foreign interest in the Pakistani equity market remained high in 2013 with a gross portfolio investment of Rs196.5 billion, which is equal to more than $2 billion,” he said.
Net portfolio investment was Rs39.5 billion or roughly $400 million over the same period.
“I expect to see more public offerings on the bourse,” Shaji noted. The number of listed companies on the KSE is 561, which is down from 573 a year ago. In contrast, only three new listings took place during 2013.
KASB Securities recently held a poll among top domestic institutional clients, including banks and asset management companies. Its findings reflect broad-based optimism about improvement at the macro-level next year.
“Our key take away from the survey is that optimism on equities for 2014 is driven largely by top-down considerations – both political and economic,” the survey said.
About 85% of respondents expected ‘improvement’ or ‘significant improvement’ in macros while not a single respondent said he expected the macros to worsen. “This highlights the investment community’s continued belief in the government’s reform plans,” it said.
Published in The Express Tribune, December 31st, 2013.