Weekly review: KSE-100 sheds 498 points amid pre-budget jitters

GIDC bill and proposed CGT hike also kept the market under pressure.

KARACHI:

The stock market remained under selling pressure amid pre-budget jitters with expectations over a cut in the discount rate also keeping investors sidelined. The benchmark Karachi Stock Exchange (KSE)-100 index shed 498 points (1.5%) during the week ended May 22.

It was the fourth successive week in the red for the KSE-100 index as volumes plummeted as well. The passage of the GIDC Bill and the Securities Exchange Commission of Pakistan’s rules regarding mutual funds also dampened investor sentiment throughout the week.

The week started off on a negative note and remained in the red for the first three days of the week. The index remained range-bound for the remaining two days and ended the week at 32,605 points. Trading volumes also showed a declining trend throughout the week and then dropped to a meagre 75 million shares on the final day of the week.

Investors chose to be on the sidelines as news regarding the upcoming budget continued to flow in and hinted towards the government employing more ways to increase revenue generation. Rumours about a hike in the Capital Gains Tax was a major cause of concern for investors and was highlighted as a contentious point by market participants.

Trading activity also slowed to a crawl because of the monetary policy announcement during the weekend. The State Bank cut the discount rate by 100 basis points on Saturday, which would have a positive impact on the market in the coming week.

Investor sentiment was also hurt by Parliament and Senate’s approval of the Gas Infrastructure Development Cess (GIDC) Bill which will allow the government to collect GIDC dating back to 2011 from industries. Although a majority of companies had been provisioning for the cess for the past few years, it is bound to impact their cash flows and could impact profitability moving forwards.

The market also came under selling pressure from mutual funds which began offloading their investments after the SECP issued guidelines for CPPI-based funds. The guidelines will impose limits on the exposure that a fund may take in risky assets and require enhanced disclosures to improve transparency.

Foreign investment proved to be a cause of concern for investors due to the declining trend in recent weeks. Although foreigners purchased net equity worth $3.5 million during the week; the number was down from $6.5 million from the previous week and $12.2 million in the week before that.

Average daily volumes dropped a massive 42.9% and stood at 109.1 million shares traded per day. Average daily values suffered a similar decline and were down 46.6% at Rs5.21 billion traded per day. The KSE’s market capitalisation stood at Rs7.08 trillion ($69.8 billion) at the end of the week.

Winners of the week

Indus Dyeing



Indus Dyeing and Manufacturing Company Limited manufactures and sells yarn.

J.D.W Sugar



JDW Sugar Mills Limited produces and sells crystalline sugar. The company is located in Rahim Yar Khan, and formerly named United Sugar Mills Limited.

Kohinoor Energy



Kohinoor Energy Limited owns and operates a 120MW, net capacity power plant, which is based on furnace oil fired diesel engines.

Losers of the week

Ibrahim Fibres



Ibrahim Fibres Limited, a part of the Ibrahim Group, operates a Polyester Staple Fiber manufacturing plant. The company manufactures a wide range of polyester staple fiber and it also manufactures a variety of blended as well as pure synthetic yarn. Ibrahim Fibres Ltd. also owns an in-house power generation plant.

Jahangir Siddiqui and Company



Jahangir Siddiqui & Company Limited is an investment company, offering share brokerage, money market, advisory and consultancy, underwriting and portfolio management services.

Shifa International Hospitals



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

Published in The Express Tribune, May 24^th, 2015.

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