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Thursday, 7 June 2012

STOCK MARKET UPDATE: 08.06.2012


STOCK:


Karachi Stocks Down 30.69 Points:
KARACHI, June 07: At close of trading, the KSE-100 index was at 13715.04, down 30.69 points.

June 7, 2012
5 TOP GAINERS  &  LOOSERS:

Unilever Food
Rs 111.68
Nestle Pak
Rs (20.32)
Rafhan Maize
Rs 100.50
Indus Motor Co
Rs (7.90)
Wyeth Pak
Rs 15.54
Tri-Pack Films
Rs (6.42)
Colgate Palmolive
Rs 13.84
Sanofi-Aventis
Rs (5.28)
Clover Pak
Rs 4.43
Service Ind
Rs (4.97)

KSE -100 Share Index Dawn 28 points
KARACHI, June 7: Shares fell on the Karachi stock market on Thursday with the KSE-100 index down by 28.28 points to close at 13,717.30 points.
It wiped off the greater part of gains secured a day earlier.
The reality, however, was not as scary as appeared on the chart with a mammoth 200 stocks of the 351 actives ending in the red and only 78 in green.
Floor traders explained that the losses were fractional as was evident by drop of share prices in paisas in all but one scrip among the 10 stocks recording the heaviest turnover on Thursday.
The volume though swelled by 43 per cent, the activity was all but dull.
A broker admitted that the recovery in the global commodities and stock markets should have spurred buying in the local bourse, but the small investors, spooked by incessant selling by foreigners in the past few days, decided to remain on the sidelines.
The redeeming feature on Thursday, was, however net foreign buy of $0.05 million worth equity, which went on to calm the market.
Investors were also anxious over what would come to pass in the Monetary Policy to be announced by the State Bank of Pakistan on Friday for the months of June and July.
Most analysts avoided speculating on the outcome as it would be the last announcement of the current fiscal year.
Ahsan Mehanti at Arif Habib Corp commented that the stocks closed lower amid thin trades in the post budget profit-taking as investor remained cautious ahead of SBP Policy announcement. Other concerns were listed as subdued foreign interest on an uncertain global stocks and commodities situation, fears over fall of rupee against the dollar amid macroeconomic instability and uncertainty over Pak-US relations on NATO supplies issue.
Samar Iqbal, equity dealer at Topline Securities, observed that dull activity was seen throughout the day at local stock market.
In the absence of any trigger, most of the investors remained on the sidelines as evident from low volumes over the earlier average daily trading. Profit-taking was seen in cement stocks while energy stocks showed a mix performance in spite of increase in crude oil.
The market capitalisation based KSE-30 index closed weaker by 14.33 points to 11,871.14 points.
There was reduction of Rs10 billion in market capitalisation, which fell to Rs3.507 trillion on Thursday, from Rs3.517 trillion the previous day.
Turnover increased by 33 million shares to 111 million shares on Thursday, from 78 million shares the previous day.  Yet, the more appropriate measurement of trading value showed dropped to Rs2.760 billion, from Rs3.397 billion on Wednesday.
Nestle Pakistan recorded the heaviest fall for the day, amounting to Rs20.32 to Rs4047.43, followed by Indus Motor Company down by Rs7.90 to Rs269.77.
The advancing shares were led by Unilever Food, up by Rs111.68 to Rs2,872.50 and Rafhan Maize higher by Rs100.50 to Rs2,830.50.
On the active list, Jahangir Siddiqui Co. with turnover of 16m shares fell by 87 paisa to Rs13.03.
DG Khan Cement added 2 paisa to Rs41.10 on 7m shares; Azgard Nine lost 70 paisa to Rs5.62 on 5m shares, Bank-Islami Pakistan, once again was in demand, the price crossing the par value to Rs10.24 on 5m shares; Engro Corporation conceded Rs1.08 out of the earlier day’s gains and closed at Rs110.26 on 5m shares.
Fauji Cement slid 5 paisa to Rs6.06 on 4m shares, JS Investments tumbled by 71 paisa to Rs6.80 on 4m shares; Lafarge Pakistan, one of the three active stocks on the cement sector, was down by 13 paisa to Rs4.49 on 3m shares; Pak Elektron slipped by 3 paisa to Rs6.29 on 3m shares and the telecom, PTCL added 14 paisa to Rs15.03 on 3m shares.

Federal Budget 2012: The Karachi Stock Exchange
KARACHI, June 7: The Karachi Stock Exchange has asked for more.
The board of directors of the exchange, which met on Wednesday, discussed the implication of the Finance Bill 2012 on the stock market.
The board was said to have decided to approach the Ministry of Finance for consideration and acceptance of the proposals submitted by the KSE.
However, to sweeten the demands, the board first “appreciated the efforts put in by the Ministry of Finance and praised the Federal Budget 2012 announced by the Minister for Finance on June 1.”
An announcement by the exchange on Thursday stated that the board was “also highly appreciative of the acceptance of some of the proposals submitted by the KSE.”
The directors said they believed that the various components of the Federal Budget 2012 would have healthy impact on the capital market in the country.
The directors stated that they were of the view that some of the important proposals presented by the exchange which as to date were not part of the Finance Bill, 2012 needed to be reconsidered by the government in the best interest of investors and stakeholders of the capital market and in particular with respect to the recently promulgated Stock Exchanges (Corporatisation, Demutualisation and Integration) Act, 2009.
Those proposals included: First, compulsory distribution of dividend by the profit making listed companies in order to improve both market liquidity and to enable small investors to share in listed companies’ earnings. “This will have additional revenue generation for the government also,” the exchange said.
Second, the KSE asked for reduced rate of tax for listed companies so that the vast swathe of undocumented businesses comes under documentation and become part of a better governance structure.
Third, Capital Gains on Corporatisation and Demutualisation which was accepted in the past but due to an oversight an anomaly continues to exist was required to be rectified in respect of exemption of (i) Capital Gains on Corporatisation and Demutualisation, (ii) difference of amount on to issuance of shares due to Corporatisation and Demutualisation and (iii) Gain on subsequent sale of shares to the strategic investors and to the public.
Fourth, the bourse asked for an appropriate method for calculation of Capital Gains for Non-Residents so that the country could benefit from Non-Resident Pakistanis’ investments much like India and China have benefited from their respective diasporas and finally, the KSE called for reduction in powers for amending assessment in order to avoid economic uncertainty and to establish and enhance investor confidence.

Tax incentives sought for small shareholders
ISLAMABAD, June 7: The Senate Standing Committee on Finance on Thursday recommended measures to provide more dividends to small shareholders and offer tax incentives to listed companies in order to encourage listing in the stock markets.
Out of many recommendations forwarded by Senator Ishaq Dar on behalf of all opposition senators, two called for adopting measures for securing the interests of minority share holders and promote listing in the capital markets.
Recommendation number 8, presented by the Senator Dar read: “Listed companies with free reserves of more than 50 per cent of its paid up capital must distribute at least 40 per cent of taxed profit as cash dividends.”
The recommendation was opposed by the newly elected PPP senator, Osman Saifullah Khan, who said that such a move would cause serious reinvestment issues for the listed companies.
“If the excess capital is forcefully released as dividend by the company than there would be limited space for future growth,” Senator Saifullah said, adding that better investments and improving the company’s standing would eventually benefit all share holders including small shareholders.
“With improved performance of the company – the share prices would also rise. The small shareholders can always enjoy the gains by selling the shares of that company at higher value,” he said.
In reaction to it, Senator Dar said that the same clause was included in the Finance Bill 1999 and as a result of it ‘higher revenue collections as well as better performance of listed companies was reported’.
However, Senator Saifullah withdrew his objection after all members of the committee and the FBR chairman supported the recommendation, saying that it was ‘morally correct to have considerations for small shareholders’.
The committee also approved another recommendation by Senator Dar, which said: “The tax difference of 5 per cent between a private limited company and a public listed company should be introduced to incentivise the companies to opt for listing on the Stock Exchanges of Pakistan.”
Chairperson of the committee, Senator Nasreen Jalil said that this recommendation would help improve activity at the stock markets.
It was decided that both the recommendations would become applicable from the next fiscal year that is July, 01, 2013, so that all the stake holders including the stock exchanges and the regulator may devise necessary rules in this regard.
MOHAMMED SALEEM MANSOORI

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