Weekly review: KSE-100 welcomes 2015 by hitting record high
Low inflation numbers raise hopes for a bigger discount rate cut.
Low inflation numbers raise hopes for a bigger discount rate cut.
KARACHI:
The stock market continued its rampant upward drive as the benchmark KSE-100 index welcomed 2015 by hitting a new all-time high after climbing 738 points (2.3%) to close at 32,731 on Friday.
The index followed up on its strong performance in the previous week, during which it gained 982 points, by closing in the black in four of the five trading days of the week. The week started off slowly, with the index closing negative on Monday, but the mood changed quickly and the index never looked back from thereon.
A small gain of 47 points on Tuesday was followed by a solid gain of 177 on Wednesday. The start of the New Year saw the release of inflation figures for the month of December, which launched the KSE-100 towards a new record high with gains of 349 and 251 points on Thursday and Friday, respectively, to close at 32,731.
The big news of the week was the inflation figures for December with the Consumer Price Index clocking in at 4.3% for the period. Declining prices of food items and petroleum products was the main reason behind the low number and with petroleum prices falling further; the number is expected to remain low for the rest of the fiscal year.
The number, despite being a bit higher than expert consensus, was welcomed by investors who now expect the State Bank to cut the discount rate by at least 100 basis points, as opposed to earlier expectations of a 50-basis-point cut, in the monetary policy announcement due later this month.
The rest of the news flows were a mixed bag which resulted in sector-specific buying in some stocks while other sectors suffered due to the impending rate cut and the upcoming hike in gas prices.
On the macro front, the country’s foreign exchange reserves position looked strong with the reserves hovering in the $15 billion region. However, foreigners again took a cautious approach towards the bourse and were net sellers of $15 million worth of equity as opposed to a net inflow of $7.8 million in the previous week.
With the gas tariff hike on the way, certain big cement manufacturers took a hit due to their reliance on gas for their captive power plants. However, smaller cement manufacturers witnessed a great week at the bourse as they are likely to benefit when the bigger manufacturers raise prices to offset the gas tariff hike.
Engro Corporation’s fertiliser subsidiary Engro Fertilizers was one of the star performers at the bourse and rose 15.3% during the week after the approval of 60 mmcfd gas supply to its plant till the end of 2015. The company is expected to post impressive earnings growth for the year ended 2014.
Average trading volumes remained steady and stood at 232 million shares traded per day. While average daily values shot up 19% and stood at Rs12.8 billion daily. The Karachi Stock Exchange’s market capitalisation stood at Rs7.49 trillion ($73.3 billion) at the end of the week.
Winners of the week
Engro Fertilizers
Engro Fertilizers Limited manufactures agricultural fertilisers. The company produces nitrogenous, phosphatic, and blended fertilisers for balanced crop nutrition and increased yield. Engro markets its products throughout Pakistan.
National Foods
National Foods Limited is a diversified food manufacturer. The group’s products include recipe blends, dehydrated vegetables, pickles, salts, snack foods, desserts, and a number of kinds of health foods.
EFU Life Assurance
EFU Life Assurance Ltd provides a variety of insurance services. The company’s services include loan protection plan, savings plan, executive pension plan and education plan.
Losers of the week
Pak Suzuki Motors
Pak Suzuki Motor Company Limited manufactures, assembles and markets cars, pickups, vans and four by four vehicles.
JDW Sugar Mills.
JDW Sugar Mills Limited produces and sells crystalline sugar. The company is located in District Rahim Yar Khan, and formerly named United Sugar Mills Limited.
Sui Southern Gas Company
Sui Southern Gas Company Limited transmits and distributes natural gas, and constructs high pressure transmission and low pressure distribution systems. The company’s transmission system extends from Sui in Balochistan to Karachi in Sindh.
Published in The Express Tribune, January 4th, 2015.
The stock market continued its rampant upward drive as the benchmark KSE-100 index welcomed 2015 by hitting a new all-time high after climbing 738 points (2.3%) to close at 32,731 on Friday.
The index followed up on its strong performance in the previous week, during which it gained 982 points, by closing in the black in four of the five trading days of the week. The week started off slowly, with the index closing negative on Monday, but the mood changed quickly and the index never looked back from thereon.
A small gain of 47 points on Tuesday was followed by a solid gain of 177 on Wednesday. The start of the New Year saw the release of inflation figures for the month of December, which launched the KSE-100 towards a new record high with gains of 349 and 251 points on Thursday and Friday, respectively, to close at 32,731.
The big news of the week was the inflation figures for December with the Consumer Price Index clocking in at 4.3% for the period. Declining prices of food items and petroleum products was the main reason behind the low number and with petroleum prices falling further; the number is expected to remain low for the rest of the fiscal year.
The number, despite being a bit higher than expert consensus, was welcomed by investors who now expect the State Bank to cut the discount rate by at least 100 basis points, as opposed to earlier expectations of a 50-basis-point cut, in the monetary policy announcement due later this month.
The rest of the news flows were a mixed bag which resulted in sector-specific buying in some stocks while other sectors suffered due to the impending rate cut and the upcoming hike in gas prices.
On the macro front, the country’s foreign exchange reserves position looked strong with the reserves hovering in the $15 billion region. However, foreigners again took a cautious approach towards the bourse and were net sellers of $15 million worth of equity as opposed to a net inflow of $7.8 million in the previous week.
With the gas tariff hike on the way, certain big cement manufacturers took a hit due to their reliance on gas for their captive power plants. However, smaller cement manufacturers witnessed a great week at the bourse as they are likely to benefit when the bigger manufacturers raise prices to offset the gas tariff hike.
Engro Corporation’s fertiliser subsidiary Engro Fertilizers was one of the star performers at the bourse and rose 15.3% during the week after the approval of 60 mmcfd gas supply to its plant till the end of 2015. The company is expected to post impressive earnings growth for the year ended 2014.
Average trading volumes remained steady and stood at 232 million shares traded per day. While average daily values shot up 19% and stood at Rs12.8 billion daily. The Karachi Stock Exchange’s market capitalisation stood at Rs7.49 trillion ($73.3 billion) at the end of the week.
Winners of the week
Engro Fertilizers
Engro Fertilizers Limited manufactures agricultural fertilisers. The company produces nitrogenous, phosphatic, and blended fertilisers for balanced crop nutrition and increased yield. Engro markets its products throughout Pakistan.
National Foods
National Foods Limited is a diversified food manufacturer. The group’s products include recipe blends, dehydrated vegetables, pickles, salts, snack foods, desserts, and a number of kinds of health foods.
EFU Life Assurance
EFU Life Assurance Ltd provides a variety of insurance services. The company’s services include loan protection plan, savings plan, executive pension plan and education plan.
Losers of the week
Pak Suzuki Motors
Pak Suzuki Motor Company Limited manufactures, assembles and markets cars, pickups, vans and four by four vehicles.
JDW Sugar Mills.
JDW Sugar Mills Limited produces and sells crystalline sugar. The company is located in District Rahim Yar Khan, and formerly named United Sugar Mills Limited.
Sui Southern Gas Company
Sui Southern Gas Company Limited transmits and distributes natural gas, and constructs high pressure transmission and low pressure distribution systems. The company’s transmission system extends from Sui in Balochistan to Karachi in Sindh.
Published in The Express Tribune, January 4th, 2015.