Sunday, January 03, 2010
By Salman Siddiqui
KARACHI: With an aggregate marginal decline of 35 points during the last week, the Karachi stocks market posted a robust recovery of 60 per cent in the calendar year of 2009 out of record 58 per cent decline incurred in the preceding year of 2008.
The reinstatement of deposed judges in March, development of amiable ties between leading opposition party in the centre the PML-N friendly and the ruling party the PPP proved to be the major confidence boosters for investors on political front.
The inclusion of Pakistan into Frontier Markets of Morgan Stanley Capital International Barra (MSCI Barra) at the end of May, and improvement in country foreign exchange reserves above $13 billion at present with the availing of IMF $11.3 billion standby loan package since November 2008 together convinced overseas investors to stage instant return to local markets. The 2.5 per cent cut in State Bank’s lending rates, called discount rate, during the year to 12.5 per cent at present kept locals building positions across the board during the year.
The KSE 100-share Index bagged 60 per cent or 3,521.91 points on yearly basis and closed at 9,386.92 points.
Also, the parallel running free-float market capitalisation based 30-Index regained approximately 80 per cent or 4,364.59 points during Jan-Dec 2009 and settled at 9,849.92 points.
During the same year, the overall market capitalisation jumped by more than Rs800 billion to Rs2,705 billion on Dec-31.
“Average daily turnover for 100-Index was recorded at 134.3 million shares compared with 91.4 million shares traded in 2008. Excluding the floor period (Aug-Dec 2008), turnover for the year 2009 was still higher by six per cent on yearly basis,” calculated Ayub Ansari at Invest & Finance Securities.
Though the local market recovery was broad based, the E&P (+127 per cent) and Fertilizer (+99 per cent) stocks fared better than others. E&P scrips rallied on the back of higher dividend yields and a rebound in international oil prices, whereas the fertilizer sector perked up owing to higher DAP and urea offtake following improved agricultural growth. However, the Insurance (-22 per cent) and Cement (+11 per cent) sectors underperformed due to recognition of impairment losses and a sharp decline in cement prices, respectively, reported Syed Atif Zafar at JS Research.
He maintained that eventual macro recovery and inclusion in the MSCI Frontier Market Index encouraged offshore investments to return to Pakistan. During the year, foreigners bought and sold shares worth $1,066 million and $1,044 million respectively, thus resulting in net buying of $22 million. With this, the estimated foreigners’ holdings have surged to $2 billion worth shares from $1.3 billion at the beginning of year 2009. The foreign investors reportedly own around 20 per cent of the free float on Karachi bourse.
Earlier, the imposition of the price floor and exclusion from the MSCI Emerging Markets Index along with the global financial crisis had caused a mass exodus ($446 million) of foreign portfolio investments from the equity market in 2008, he added.
Increase in terrorist activities and military offensive against the militants in Swat and South Waziristan Agency (SWA) and surrounding and bordering areas with the Afghanistan, however, continued to mount selling pressures and kept investors on sideline of market time to time.
Among the notables, terrorists attacked and made the GHQ hostage for about 16 hours and attempted to kill and kidnap Sri Lankan cricket team were the two big awful events during the year. Otherwise, terrorists attacked many security installations in the country including Manawa and public places like Peshawar and Lahore markets and grand Ashura procession in Karachi.
Furthermore, months long political crisis before the expiry of National Reconciliation Ordinance (NRO) and the Supreme Court larger bench hearing on NRO made investors react to political gambling a number of times.
KSE records during 2009
KSE 100-index Record Dates
Opening Level 5,865.01 points Jan-01
Closing Level 9,386.92 points Dec-31
Highest Closing Level 9,845.74 points Oct-15
Lowest Closing Level 4,815.34 points Jan-26
Maximum Increase in a Day 321.98 points Apr-10
Maximum Decrease in a Day 426.83 points Oct-19
Minimum Increase in a Day 1.64 point Nov-26
Minimum Decrease in a Day 2.62 point Jun-08
Turnover Record Dates
Maximum in a Day 493.09 million shares Apr-08
Minimum in a Day 48.05 million shares Mar-09
Yearly movements in blue chips
Symbols Opening on Close on Difference
Jan-01 (Rs) Dec-31 (Rs) (Rs)
AICL 101.84 123.30 21.46
DGKC 21.27 32.56 11.29
EFUG 133.01 97.60 -35.41
ENGRO 96.46 183.27 86.81
FFBL 12.90 26.13 13.23
HBL 74.86 123.44 48.58
LUCK 31.27 66.24 34.97
MCB 125.81 219.68 93.77
NBP 50.32 74.37 24.05
OGDCL 49.99 110.61 60.62
POL 102.49 230.77 128.28
PPL 100.62 189.59 88.97
PSO 144.58 297.44 152.86
PTCL 16.89 17.65 0.76
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