DAILY STOCK MARKET REPORT: 16th AUGUST,2011

Stock

Karachi Stocks Down 88.25 Points:
KARACHI, Aug 15: At close of trading, the KSE-100 index was at 11173.79, down 88.25 points.

August 15, 2011

5 TOP SCRIPTS GAINERS  AND LOOSERS

Rafhan Maize	Rs 57.22	UniLever Pak	Rs (261.49)
National Refinery	Rs 6.43	Nestle Pakistan	Rs (192.33)
Nadeem Textile	Rs 3.43	Millat Tractors	Rs (20.60)
Shell Pakistan	Rs 2.88	Service Industries	Rs (5.73)
Mehran Sugar	Rs 2.53	Attock Petroleum	Rs (4.70)

KSE 30 – Shares Index	Previous 10,768.60, Monday’s 10,668.67, minus 99.93 points.
KSE 100 – Shares Index	Previous 11,262.04, Monday’s 11,166.10, minus 95.94 points.
MARKET CAPITALIZATION	PreviousRs.3,000.316bn, Monday’s 2,976.379bn, minus 23.937bn.
VOLUME LEADERS	Pakgen Power,7.079m, Nishat Mills 1.210m, National Bank 1.159m,Lotte Pakistan 1.029m, Fauji Fertiliser 0.985m shares.
TOTAL VOLUME	25.904m shares
TOTAL	TONE:easy,total listed 638,actives 287,inactives 251,plus 75,minus 126,unchanged 86

Pakistani stock market value surges by US $4 billion.

KARACHI -- The market capitalization of the Pakistani stock market has grown by about $4 billion since November thanks to several positive developments, analysts said.

In less than four months, the market capitalization of the Karachi Stock Exchange (KSE) has surged from US $34 billion in October, to US $38 billion as of January 12, said Ahmed Nabil, chief investment adviser of the Pak-Oman Asset Management Company.

“Foreign investors’ continued interest in making investment in Pakistani stock market, release of $633m worth coalition support fund by the United States, IMF’s decision to extend deadline of levying the Reformed General Sales Tax (RGST) and impressive growth in remittances supported growth (of the) market and encouraged new investment,” Nabil said.

The market has recorded $70m in foreign investment since November that encouraged local investment at the bourse, improved its market capitalization and value of blue chip instruments, he said.

In Pakistan local investors usually follow foreign investment in the stock market, Nabil added.

The government has deferred the enforcement of the RGST after opposition parties came out strongly against it. But the tax will be enforced in July to increase the tax-to-GDP ratio, government revenues and to promote better documentation of sales and purchases, he said.

About 9% of Pakistan's GDP comes from tax revenues, well below the international standard of 15%. The IMF had sought to have Pakistan impose the RGST as of January 1, but has agreed to its postponement to July. Both the tax ratio and RGST are conditions for loans to Pakistan.

Tax changes needed to control budget deficit

Nabil said the government should collect taxes from the country’s rich, otherwise, it would be difficult for the rulers to control the fast-growing budget deficit and to raise the tax-to-GDP ratio to the required level.

A majority of parliament and the country’s rich oppose the government’s plan to increase taxes because they fear it will deteriorate the government’s fiscal discipline as the government has already borrowed some $4.75 billion from the State Bank of Pakistan and the commercial banks to meet its expenditures from July 2010 to January 1, Nabil added.

“The stock market is still attractive for investment as the shares of more than 450 companies are available at very reasonable rates,” Naeem Rafi, CEO of the Rafi Securities told Central Asia Online.

The majority of foreign and local investment has gone to oil and gas companies, while shares of other firms are still available at an attractive price, he said. Presently, some 600 companies trade shares on the KSE.

Rafi said medium- and long-term investment could ensure a good return to investors as the country’s economy seems poised to grow in 2011.

Rafi said the country received $5.3 billion dollars in remittances from Pakistanis working overseas during the second half of 2010, an increase of $761m over the corresponding period for 2009.

All of these positive developments have raised the foreign exchange reserves of the country to a current record high of $17.3 billion, which has improved investor confidence and paved the way for the stock market's steady growth, Rafi said.

He said the government should reduce its budgetary expenditures to control the deficit, impose taxes on the rich, eliminate subsidies and reduce dependency on foreign and domestic loans to strengthen the national economy.

Otherwise, he warned, the current improvement in the capital market, foreign exchange reserves, exports and remittances could prove momentary and once again key segments of the economy could end up in reverse gear.

Growth in value was year-long effort

The growth in valuation has been going on throughout the past year, points out Lahore Stock Exchange managing director Aftab Ahmed Chaudhry. He said the KSE-100 index of leading companies showed impressive growth in 2010.

“In January 2010 the benchmark index took off from 9,387 points … and it amounted to 12,020 points by gaining 1,633 points amid gradual improvement in trading and investment,” Chaudhry said.

The KSE hit a record 16,000 points in April 2008, but later dropped after the imposition of emergency rule by then President Pervez Musharraf, as well as the Lal Mosque operation that triggered a series of suicide blasts, followed by global and domestic economic downturns, he said.

From January 2009 the market gradually moved towards growth and this pattern continued in 2010, Chaudhry said. He predicts the index could reach 15,000 in 2011.

To sustain the momentum of market growth, the government should introduce new investment products, a margin trading system and provide incentives to investors and other stakeholders, he said.

Financial Results reporting season at KSE

KARACHI, Aug 15: Shares at the Karachi Stock Exchange fell nearly one per cent or by 96 points on Monday, which many analysts considered unusual during the financial results reporting season.

But the gloom pervaded on the equity market, which saw 8-month low turnover valued at Rs1.3 billion, on uncertainty that plagues the US and European markets and economy.
Several companies came up with their financial figures on Monday, with many more actively traded corporate yet to declare numbers. Two of the moderately traded companies that announced results on Monday included: Pakistan Tobacco Company and Cherat Cement.
For half year ended June 30, 2011 Pakistan Tobacco Company (PTC) posted profit after tax at Rs578 million, down from Rs1,197 million in the corresponding period of the previous year.
Earning per share (eps) dipped to Rs2.26, from Rs4.68. This was despite increase in gross turnover to Rs33.8 billion for the six months under review, from Rs30.6 billion in the same time last year.
The company paid Rs17.4 (2010: 15.6) billion in excise duty and Rs5 (Rs4.5) billion in sales tax, which put the net turnover figure almost flat at Rs11.3 billion compared to Rs11.4 billion last year.
Operating profit was further impacted by finance costs which rose to Rs62 million, from Rs46 million. Directors said that they were skipping the interim dividend for the first half, “keeping in view the cigarette market which has been declining for sometime as a result of excise-led prices”.
They added that the increase had dented profitability of the legitimate industry including PTC.
Cherat Cement: The company reported profit after tax at Rs68.7 million and earning per share (eps) of Rs0.72 for the year ended June 30, 2011 which represented a turnaround from loss after tax of Rs13.8 million and loss per share at Rs0.14 the earlier year.
Net turnover increased to Rs4.2 billion for the year under review, from Rs3.4 billion the previous year. The board did not declare a dividend for the year ended June 30, 2011.
The annual general meeting (AGM) of shareholders would be held on Oct 31 at the factory premises in Village Lakrai, Nowshera, Khyber Pakhtunkhwa, which a small stakeholder complained ensured no shareholder presence from Karachi.

Karachi Stocks lose 96 points as support turns shy.

KARACHI, Aug 15: The share market on Monday passed through another dull trading session as leading investors kept to the sidelines most of the time apparently awaiting the return of the prodigal son but there were no signs of his immediate comeback.
The benchmark KSE 100-index suffered a fresh fall of 95.94 points at 11,166.10 after initial rise as leading base shares remained under pressure under the lead of food giants Nestle Pakistan and Unilever Pakistan, which together contributed 52 points to the total.
The investor disinterested to go beyond jobbing affair was also well-reflected in the daily volume figure, which dropped to 26m shares from the previous 54m shares, hitting eight sessions low as only Rs1.3 billion shares were traded.
The turmoil on the global financial and commodity markets will continue as most of the problems behind it are basically linked mainly to US economic worries, said analyst Ahsan Mehanti.
He said some of the local issues, notably political uncertainty and proverbial market sluggishness during the holy month of Ramazan also played their role in the prevailing investor behaviour.
Analyst Salman Naqvi said the weakness of the energy and fertiliser sectors on active profit-selling at the inflated levels weighed heavily against the underlying sentiment and the situation was further aggravated by the absence of buying support even at the decline.
Minus signs again led the market decline under the lead of Unilever Pakistan and Nestle Pakistan, off by Rs261.49 and Rs192.33, while Rafhan Maize and National Refinery were among the top gainers, up Rs57.22 and Rs6.43.
The active list was led by Pakgen Power, up 62 paisa at Rs20.39 on 7m shares followed by Nishat Mills, easy by 68 paisa at Rs42.64 on 1.210m shares, National Bank, lower 47 paisa at Rs45.56 on 1.159m shares, Lotte Pakistan, easy 11 paisa at Rs10.68 on 1.029m shares, Fauji Fertiliser, off Rs1.63 at Rs153.55 on 0.985m shares, NIB Bank, unchanged at Rs1.39 on 0.864m shares and JS & Co, off 14 paisa at Rs5.92 on 0.820m shares.
They were followed by PTCL, steady by nine paisa at Rs11.51 on 0.685m shares, Fauji Fertiliser Bin Qasim, lower 37 paisa at Rs46.82 on 0.675m shares and TRG Pakistan, steady by three paisa at Rs1.98 on 0.616m shares.
FUTURE CONTRACTS: Engro Corporation led the list of actives, sharply lower by Rs4.07 at Rs128.65 on 0.442m shares followed by Nishat Mills, easy 60 paisa at Rs42.88 on 0.302m shares and Pakistan Oilfields, off Rs4.01 at Rs345.16 on 0.282m shares.
They were followed by Attock Refinery, up 60 paisa at Rs113.37 on 0.237m shares and National Bank, lower 56 paisa at Rs45.76 also on 0.237m shares.
DEFAULTER COMPANIES: The activity on this counter was also slow as investors were not inclined to make fresh commitments but some of them took profits at the rise.
Japan Power led the list of actives, lower 11 paisa at Rs0.99 on 0.112m shares followed by Invest Bank, easy by one paisa at Rs0.27 on 2,548 shares, Ravi Textiles, firm by one paisa at Rs0.89 on 2,436 shares and Quice Foods, higher by 87 paisa at Rs5.87 on 1.504m shares.

Mohammed Saleem Mansoori
Equity Trader,
Rafi Securities (Pvt.)Ltd.