Weekly review: Foreign buying propels KSE-100 to record high

Volumes jump 57% as positive budget and economic news revive investor confidence.


Bilal Umar May 31, 2014
Volumes jump 57% as positive budget and economic news revive investor confidence.

KARACHI:


The stock market received the boost it needed as heavy buying by foreigners fuelled gains in the benchmark KSE-100 index that rose 981 points (3.4%) to close at a new record high of 29,737 during the week ended May 30.


Volumes shot up 57% as investor confidence revived on the back of foreign buying coupled with positive news about the upcoming budget and continuous improvement on the macroeconomic front.

The rally was broad-based with index heavyweights like oil and gas, banking and cement sectors all recording decent gains throughout the week and propelling the KSE-100 index to unprecedented highs. The index closed in the black in all but one of the five trading sessions of the week.

Net foreign buying clocked in at $29.5 million for the week, up from $7.8 million in the previous week. A massive net inflow of $16 million was registered on Thursday which coincided with return of heavy trading volumes at the bourse and a huge gain of 557 points for the KSE-100 index on that day alone.

The momentum continued on Friday with volumes holding steady near the 250-million-share mark and another net inflow of $7.8 million. The increase in foreign inflows came as a result of the MSCI changes coming into effect during the week.

K-Electric was the major beneficiary of the changes as it made its debut on the MSCI Frontier Markets index. The company’s share price rose 10.7% during the week.

News flow pertaining to the upcoming budget was also largely positive as things became clearer regarding the capital gains tax (CGT). Reports in the media revealed that the government would increase the CGT rate to 12.5% in the budget as compared to 17.5% suggested in earlier reports.

The National Economic Council also approved the development budget for the upcoming fiscal year, bumping up outlay by 14% to Rs1.31 trillion. The news was received positively by investors and attracted interest in the cement sector, which saw DG Khan Cement, Lucky Cement and Fauji Cement all outperforming the market.

The banking sector remained in the limelight as banks refused to participate heavily in the T-bill auction conducted during the week, preferring to keep investing in PIBs instead. The auction managed to raise only Rs80 billion as compared to the target of Rs400 billion.

United Bank, MCB Bank, Habib Bank and Allied Bank all outperformed the KSE-100 index in the week.

The country’s macroeconomic situation continued to improve as a payment of $375 million under the Coalition Support Fund was received from the US, helping foreign exchange reserves climb to $13.44 billion.

Average volumes shot up 57% to 235 million shares traded per day. Similarly, average value soared 80% to Rs11.15 billion per day. The market capitalisation stood at Rs7.04 trillion at the end of the week.

Winners of the week

Mari Gas Company



Mari Gas Company Limited specialises in the drilling, production and selling of natural gas.

Pakistan International Container Terminal



Pakistan International Container Terminal operates a container shipping facility in Karachi, Pakistan.

Abbott Laboratories



 

Abbott Laboratories (Pakistan) Limited manufactures, imports, and markets research based pharmaceutical, nutritional, diagnostic, hospital, and consumer products. The Company’s key products include antibiotics for respiratory tract infections, peptic ulcer disease, and dental infections.

Losers of the week

Millat Tractors Limited



 

Millat Tractors Limited assembles and manufactures tractors, implements, and equipments.

Pakistan Cables Limited



 

Pakistan Cables Limited manufactures and distributes copper rods, wires, cables and conductors, aluminium profiles and anodized fabrications.

Shifa International Hospitals Limited



 

Shifa International Hospitals Limited establishes and runs medical centers and hospitals in Pakistan. The Company’s clinical services include medicine, paediatrics, surgical, obstetric and gynecology, dentistry, rehabilitation services and ophthalmology. Shifa also provides diagnostic services including specialised diagnostics, radiology and clinical laboratory.

Published in The Express Tribune, June 1st, 2014.

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