Index jumped sharply on Friday following PSO’s earnings announcement.
The bearish streak at the stock market finally came to an end as the benchmark KSE-100 index posted a gain of 180 points (0.7%) during the week ended February 28.
Trading activity remained lacklustre throughout the week and the index was headed towards closing another week in the red before a late rally on Friday. The index closing in the green brought an end to four consecutive weeks of closing in the negative.
The week started on a positive note with the index climbing by 0.7% on Monday. However, the next three days would see the index closing in the red amid falling volumes, resulting in a net decline of 0.5% for the week by Thursday.
However, all that changed on Friday as the KSE-100 index posted a solid gain of 304 points (1.2%) to close at 25,783, a net gain of 0.7% over the previous week. The market’s turnaround in fortune came as a result of a positive surprise in Pakistan State Oil’s (PSO) earnings, improved foreign exchange reserves position and expectation of healthy inflation figures for the month of February.
PSO surprised investors on Friday after it reported its earnings for the first half of the current fiscal year. The state-owned oil company reported earnings per share of Rs63.97 with a Rs4 cash dividend and a 10% stock dividend. The company’s share price closed at its upper circuit breaker and contributed heavily to the index’s gain on Friday.
Another major factor contributing to the index’s gain was the significantly improved foreign exchange reserves position of the country. The State Bank of Pakistan (SBP) reported that the country’s foreign exchange reserves jumped up to $8.65 billion following the receipt of the Coalition Support Fund payment of $353 million and other external payments.
The news was made sweeter by the government’s announcement during the week that it will auction spectrum for 3G and 4G licences on April 7 with the intention to raise at least $1.6 billion at base prices. If all goes according to plan, the government will manage to secure significant forex reserves from the auction.
With the March monetary policy announcement around the corner, investor sentiment was buoyed by expectations that inflation figures for the month of February will clock in at around 8%. If true, it is very likely that the SBP will maintain the status quo in the upcoming policy announcement.
Foreigners also continued to be net buyers and picked up a net of $5.51 million worth of equity during the week, taking the total net inflows for February to $9.52 million. The number is encouraging as foreigners offloaded equity in emerging markets across the world during the month.
Average trading volumes improved slightly by 7% and stood at 217.2 million shares traded per day while average daily values dropped 3.7% and stood at Rs6.69 billion traded per day. The market capitalisation of the KSE stood at Rs6.28 trillion at the end of the week.
Winners of the week
Pakistan Tobacco Company
Pakistan Tobacco Company Limited manufactures and sells cigarettes.
Murree Brewery
Murree Brewery Company specialises in the manufacture of beer and Pakistani made foreign liquor. The group also has juice extraction and food manufacturing divisions, located at Rawalpindi and Hattar respectively. Their glass division manufactures all the group’s bottles and jars.
TRG Pakistan
TRG Pakistan operates as an information technology company. The company provides business support and software services to companies. TRG Pakistan manages call centres and offices located in Pakistan and elsewhere throughout the world.
Losers of the week
Jahangir Siddiqui and Company
Jahangir Siddiqui and Company Limited is an investment company, offering share brokerage, money market, advisory and consultancy, underwriting and portfolio management services.
Tri-Pack Films
Tri-Pack Films Limited manufactures and sells biaxially oriented polypropylene (BOPP) films. The company’s products include plain film, composite, cigarette grade, pearlised and metalised types. These products are primarily for packaging use.
Standard Chartered Bank
Standard Chartered Bank Pakistan Limited is an international bank that provides consumer and wholesale banking services.
Published in The Express Tribune, March 2nd, 2014.
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