STOCK MARKET UPDATE:09.05.2012

Stock

Karachi Stocks Up 97.91 Points:
KARACHI, May 09: The KSE-100 index was at 14611.87, up 97.91 points. (today1.00PM).

May 8, 2012

 5 TOP GAINERS  &  LOOSERS:

Unilever Food	Rs 142.38	Nestle Pakistan	Rs (96.57)
Rafhan Maize	Rs 137.62	UniLever Pak Ltd	Rs (52.85)
Wyeth Pak	Rs 22.81	Pak Oilfields	Rs (5.61)
Indus Dyeing	Rs 19.41	Al-Ghazi Tractor	Rs (5.26)
Siemens Pakistan	Rs 18.97	Millat Tractors	Rs (4.14)

KSE 100-index loses 104 points

KARACHI, May 8: Shares on the Karachi Stock Exchange fell on Tuesday with the KSE-100 index down 104.01 points or 0.71 per cent to close at 14,513.96 points.
Market experts took it as a natural pull back after days of bull-run while many others thought that investors had decided to take profit, as they fretted over the political developments.
Most market participants thought that political headwinds could set the direction of the market in the latter part of the week.
“That may also be the deciding factor in keeping foreign investors’ interest alive in Pakistan equities,” one market expert said.
A slower move during the day, made many suspect that foreign investors may have withdrawn, but the figures released by the National Clearing Company of Pakistan Limited (NCCPL) in the evening showed satisfactory net foreign inflow of $2.33m during the day.
Mutual funds were the biggest sellers with the group accounting for sale of $6.45 million worth equity. The signing of demutualisation act by the president was for most a non-event, though some were thoughtful over the meeting of 119 days deadline for implementation.
The upcoming budget could be a major trigger with market hopeful of a fair treatment to listed companies in the matter of tax rate and other concessions and incentives.
Dealers said that oil stocks came down in line with decline in oil prices, cement scrips again fell out of favour and fertilizer shares were mixed.
Analyst Hasnain Asghar Ali at Invisor Securities said that the market stayed under bearish spell after initial strength, though consolidation on adjustment provided support to prevent an extended decline.
He observed that various infrastructural issues hindering industrial growth were being addressed. Yet, the still lingering issues continued to keep the economic and financial horizon vulnerable.
Countering all odds, the inherent potential of the local equities to trade at improved multiples upon availability of ideal infrastructure continued to keep the active participants in search of deep discounts mainly in the frontline stocks offering consistent growth and high dividend yields, he said.
Ahsan Mehanti, analyst at Arif Habib Corp stated that the Pakistan stocks closed bearish on investor concerns after allegations by US Secretary of State on presence of terrorist leadership in the country.
Limited foreign interest, fall in global stocks and commodities on eurozone debt crises, outstanding circular debt issues in Pakistan energy sector played catalyst role in bearish sentiments amid consolidation in stocks across the board at KSE, analyst contended.
The KSE-30 index dropped 89.44 points to 12,673.35 points.
Market capitalisation stood trimmed to Rs3.706 trillion on Tuesday, from Rs3.731 trillion the earlier day. Volume of business shrank by 11 per cent to 226 million shares, from 254 million shares the earlier day.
The traded value, however, showed a slower decline of 6 per cent to Rs9.629 billion, from Rs9.074 billion due to big increase in the high-value Engro stock.
Among the 384 stocks active on Tuesday, interestingly, the plus and minus signs were equal at 160 each. Another 64 shares remained unchanged.
PTCL was again the volume leader with 31m shares traded, down 7 paisa to Rs16.05. D.G. Khan Cement conceded 75 paisa to Rs45.84 on 27m shares and Engro Corporation gained Rs5.20 to Rs113.27 on 14m shares.
The three top volume stocks contributed 83 million shares or 37 per cent to the aggregate turnover for the day. Jah Sidd Co was up 18 paisa to Rs16.46 on 14m shares, Fauji Fertiliser added 68 paisa to Rs127.03 on 7m shares; Lotte Pak edged higher by 9 paisa to Rs9.12 on 7m shares.
National Bank of Pakistan lost 39 paisa to Rs47.89 on 7m shares, Fatima Fertiliser Co added 12 paisa to Rs25.61 on 7m shares, Fauji Cement shed 17 paisa to Rs6.53 on 6m shares and Nishat Mills was down 93 paisa to Rs53.50 on 5m shares.

Exchange traded funds rules okayed

ISLAMABAD, May 8: The Securities and Exchange Commission of Pakistan (SECP) has prescribed detailed requirements for launching the Index Tracking Exchange Traded Funds by the Asset Management Companies in Pakistan.
Earlier, the SECP had approved regulations governing listing and trading of exchange traded funds (ETFs) on the Karachi Stock Exchange, said a statement issued here on Tuesday.
The SECP circular stipulates the regulatory requirements for the authorisation of ETFs, including investment restrictions, issuance and redemption of creation units, pricing and dealing, additional disclosure requirements, role of the authorised participants and fees and expenses, it added.
ETF is a hybrid between an open-end and closed-end mutual fund. It continuously issues shares which trade on a stock exchange and unlike a traditional open-end collective investment scheme (CIS), the ETF does not sell or redeem its individual shares (ETF shares) to and from retail investors at the net asset value.
Instead, certain financial institutions known as authorised participant (AP) purchase and redeem ETF shares directly from the ETF in creation units, it added.
The statement said that the ETFs provide investors with a number of benefits including trading flexibility, portfolio diversification, lower expense ratio and transparency.
The ETFs are among the fastest growing investment products which due to a growing demand are being customised to cover specific arrays of regions, sectors, stocks, commodities, bonds, futures and other asset classes.
It is anticipated that innovation in investment products such as ETFs will help widen investors’ choice and create new business opportunities for financial services providers like fund managers and brokers.
In the longer term, the ETFs are expected to facilitate the development of capital market in Pakistan, particularly the mutual fund industry.—APP

President gives assent to Stock Exchanges demutualization
ISLAMABAD: President Asif Ali Zardari Monday gave assent to Stock Exchanges (Corporatization, Demutualization & Integration) Act, 2012 which will further strengthen the country’s stock markets. It was approved in joint session of parliament on March 27, 2012 and enacted into law by President signing it today in ceremony at Aiwan-e-Sadr.
It was attended by Finance Minister Dr Abdul Hafeez Sheikh, Chairperson National Assembly standing committee on finance Fauzia Wahab, Chairman Securities & Exchange Commission of Pakistan Muhammad Ali, Commissioner SECP Imtiaz Haider, Chairman Karachi Stock Exchange Muneer Kamal, Chairman Islamabad Stock Exchange Rahid Zahir and senior officials.
The law requires stock exchanges to be demutualized within 119 days of its promulgation in accordance with timelines specified for completion of various milestones involved in demutualization exercise. At present Pakistan stock exchanges are operating as non-profit companies with mutualized structure wherein members have ownership as well as trading rights.
This structure inherently creates conflict of interest as members predominantly control affairs of stock exchange which results in lack of transparency in their operations and compromises investors’ interest. Due to lack of resources stock exchanges have not been able to grow to expectations of investors as trading activity is mostly concentrated in three buildings of these exchanges with dominant share going to KSE.
Corporatization, demutualization of stock exchanges would entail converting their structure from non- profit, mutually owned organization to for-profit entities owned by shareholders. Demutualization would result in increased transparency at stock exchanges and greater balance between interests of various stakeholders by clear segregation of commercial, regulatory functions and separation of trading rights and ownership rights. Demutualization is well-established global trend and almost all stock exchanges worldwide operate in demutualized set up.
The enactment of this law will bring Pakistan capital market on par with other international jurisdictions like India, Malaysia, Singapore, USA, UK, Germany, Australia, Hong Kong, Turkey among others. It will help expand market outreach, attract new investors, improve liquidity and enable stock exchange to attract international strategic partners. It will also facilitate consolidation of brokers leading to financially strong entities.
The development of this law depicts government’s commitment to promoting development of Pakistan capital market and its trust reposed in stock market for continued growth of economy. It provides framework for corporatization, demutualization, integration of stock exchanges and drafted after consensus with all stakeholders.
Apart from demutualization of stock exchanges, to make capital market vibrant, government is revamping Capital Gain Tax regime whereby calculation and deduction is being centralized and automated. Revamped regime would not only address issues faced by capital market but also help in documenting economy resulting in broadening tax base and ensuring 100 per cent coverage of all taxable transactions in securities market while attracting foreign portfolio investment.

ANNOUCEMENTS/COMPANY NEWS:

Silkbank posts Rs 172m gross profit: KARACHI - The Board of Directors of Silkbank announced a profit before tax of Rs. 172 million in the first quarter of 2012 which translates to an increase of 9.7pc over the previous corresponding period. This is despite an increase in administrative cost by 13.8pc over the previous corresponding per

MOHAMMED SALEEM MANSOORI