The MSCI’s decision to make changes to Frontier Markets portfolio resulted in the benchmark KSE-100 index putting in a stunning performance and gaining 1,291 points to shatter past the 28,000 points barrier during the week ended April 4.
It was a great week for investors as the KSE-100 recorded five straight trading days in the green to hit an all-time high of 28,408 points at the close of trading on Friday. Foreign buying and the country’s macro-economic indicators also played a large part in the index’s fortunes.
The single biggest news of the week came from the changes implemented by the MSCI, a leading provider of investment decision support tools to worldwide investors, to its Frontier Markets portfolio.
From May 2014, the MSCI FM 100 portfolio will start to be reorganized by promoting UAE and Qatar to its emerging markets portfolio and including more companies from Pakistan. As a result, the share of Pakistan in the FM 100 portfolio will shoot from 4.3% to 8.9%.
The MSCI index is considered an important tool by foreign investors for assistance in their foreign buying and as a result of the reorganization; it is very likely that more foreign buying will be witnessed in the coming months.
Although the reorganisation won’t go into effect till May 2014, the impact of the decision was felt immediately. Foreigners purchased a net of $35.8 million worth of equity at the bourse during the week and were the prime reason behind the KSE-100’s strong performance.
The Oil and Gas Development Company and MCB Bank continued to be the darlings of investors following their last week’s performance and posted gains of 4.7% and 7.5% respectively. Both shares cumulatively contributed 308 point to the KSE-100’s gains during the week.
To add to the list of positives, the latest figures from the State Bank of Pakistan revealed that the country’s foreign exchange reserves neared the $10 billion mark, and stood at $9.86 billion of which $5.17 billion were held by the central bank.
Inflation figures for the month of March 2014 were also revealed during the week and stood at 8.5% as compared to 7.9% in February 2014. The slight increase came about as a result of a hike in food prices, but remained low enough to prompt the SBP to lower its FY 2014 inflation target to 8.5-9.5% from its double-figure original estimate.
Average daily volumes shot up by a staggering 89% and stood at 291 million shares traded per day. However, a lot of this increase in activity was in lower cap stocks and as a result average daily values were up by only 48% and stood at Rs11.12 billion per day. The market capitalisation of the KSE stood at Rs6.84 trillion at the end of the week.
Winners of the week
EFU General Insurance
EFU General Insurance Limited is an insurance provider. The Group offers a number of lines of coverage, including fire, marine, aviation, transport, motor and miscellaneous.
Pakistan Services Limited is the holding company for Pearl Continental Hotels (Private) Limited, which constructs, operates and manages hotels. The Group also owns a number of smaller companies that provide Rent-A-Car, travel arrangements and tour packages.
Pakistan Tobacco Company
Pakistan Tobacco Company Limited manufactures and sells cigarettes.
Losers of the week
Rafhan Maize Products Company produces corn oil, industrial starches, liquid glucose, dextrin, gluten meals, and other corn related products. The company also produces a wide range of co-products such as gluten feeds, meals, and hydrol.
Javedan Corporation Limited manufactures Portland cement, blast furnace slag cement and sulphate resisting cement.
International Steels Limited
International Steels Limited manufactures steel. The Company produces cold rolled sheet, and hot dipped galvanised sheet steels. Serves the construction, appliances, automotive, agricultural implements, and packaging industries.
Published in The Express Tribune, April 6th, 2014.
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