Weekly review: Karachi Stock Exchange dips below 18,000 points amidst fog

The stock market failed to
maintain its position above the
18,000-point barrier as the
worsening law and order situation
in Karachi and weak macroeconomic
data took its toll on the benchmark
KSE-100 index, which closed down
221 points or 1.2% during the week
ended March 8.
A variety of positive sector-specific
news could not save the index from
losses as investors also shifted their
focus towards the political scenario
where the current government is due
to complete its tenure in the coming
week and pave the way for a caretaker
setup until general elections, due to be
held in May.
The week started off on a negative
note following a massive bomb blast in
Abbas Town, Karachi on Sunday
evening which left 50 people dead and
140 wounded. The already tense
situation was intensified when the
Muttahida Qaumi Movement
announced that it will go on an
indefinite strike unless the
perpetrators were captured. However,
the party cancelled those plans on the
insistence of trade unions.
On the macro front, the foreign
exchange reserves of the country
dipped below the $13 billion mark
declining $380 million during the week
to close at $12.81 billion. The forex
reserves have been on a constant
decline after hitting a record high
above $18 billion in July last year.
Auction of treasury bills was also held
during the week where cut-off yields
rose 2-9 basis points. The increase in
yields meant that further monetary
easing was unlikely and with inflation
slowly creeping up, a round of
discount rate hikes might be on the
horizon, which will have a negative
impact on the market.
There was bad news for the telecom
sector, as the contentious International
Clearing House (ICH) issue was raised
in the United States, where the Federal
Communications Commission (FCC)
prohibited US telecom providers from
paying anything above the pre-ICH
rate of 2 cents per minute for
termination of calls to long distance
and international operators in
Pakistan.
Under the ICH regime, this rate has
been hiked up to 8.8 cents per minute
and resulted in windfall profits for
telecom operators in Pakistan, as the
arrangement did not require any
additional expenditure. Pakistan
Telecommunications Company (PTCL),
the operator of the ICH, took a beating
and shed 11% of its value during the
week.
However, it was not all bad news as
there were positives for the fertiliser,
refinery and chemical sectors all
emanating from pending decisions of
the Economic Coordination Committee.
Engro was the main beneficiary on the
fertiliser end as the ECC is likely to
approve gas supply of 79 million cubic
feet per day (mmcfd) to its Enven
plant. The stock climbed 4.4% during
the week.
The refinery sector also received
positive news as the ECC was expected
to increase deemed duty – customs
and surcharge duty on imported oil –
from 7.5% to 9% on refinery products.
Similarly, the ECC is also likely to
approve an increase in import duty on
purified terephthalic acid (PTA) from
3% to 4%, resulting in a boost to local
manufacturers of PTA.
Average daily volumes plummeted
27% to 236 million shares. Similarly,
average daily values declined 21% to
Rs7.07 billion. The market
capitalisation of the KSE declined 1%
to Rs4.46 trillion by the end of the
week.
Winners
Dawood Hercules
Dawood Hercules Corporation
produces urea fertilisers. The
company also produces anhydrous
ammonia for manufacturers of soda
ash, fructose, and other chemicals.
Attock Refinery
Attock Refinery, a subsidiary of the
Attock Oil Company, specialises in the
refining of crude oil
Nishat Chunian Power
Nishat Chunian Power owns, operates
and maintains a fuel-fired power
station for the generation, supply and
transmission of electric power in
Kasur, Punjab. The company is a
subsidiary of Nishat (Chunian)
Limited.
Losers
Jahangir Siddiqui and Company
Jahangir Siddiqui and Company is an
investment company offering share
brokerage, money market, advisory
and consultancy, underwriting and
portfolio management services.
JS Bank
JS Bank is a full service commercial
bank. The bank provides a wide range
of banking products and services
including retail and consumer,
treasury, corporate and commercial,
and investment banking.
Azgard Nine
Azgard Nine manufactures and
exports textile products such as denim
fabrics, and apparel. The company also
manufactures and sells urea and
phosphatic fertilisers from its fertiliser
plants.
Published in The Express Tribune,
March 10th, 2013.
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