KARACHI: The new listings and initial public offerings at the Karachi Stock Exchange, which are usually considered a positive development, failed to cheer investors, as these scrips were trading below their offer price, analysts said.
With the local bourse posting a handsome return of 14 per cent so far in the current year, another positive development that is being witnessed is the much-needed new listing at the local stock market, they said.
After a depressing last year, which saw only three initial public offerings (IPOs), as compared with an average of eight public offerings per annum during the last decade and around 30 per annum in 1990s, the Pakistani market has so far attracted five initial public offerings this year.
“Though the response from previous four public offerings was encouraging except for Agritech that was undersubscribed, the shareholders have not benefited as these stocks are trading below their offer price,” said Farhan Mehmood, an analyst at the Topline Securities.
Out of Rs1.5 billion offered to the general public through four public offerings, the total subscription amount stood lower at Rs1.2 billion. Only Agritech undersubscribed by 0.23x, whereas others received good response.
During the current year, two fertilizer companies, Fatima Fertilizer and Agritech, preferred to tap local markets, while one from construction, Safe Mix, Amtex from the textile sector and Wateen Telecom from the telecommunication sector.
After a gap of four years, Wateen is the first telecom company to be listed at the local bourses after WorldCall.
Interestingly, share prices of Fatima Fertilizer, Safe Mix, Amtex and Agritech are trading below their offer price. Though the price discount is lower in Safe Mix, Amtex, Fatima Fertilizer and Agritech is trading at almost 21 per cent discount to its offer price of Rs30.
“This clearly indicates that the subscribers have not made money and that is why we are not seeing enthusiasm by small investors in the public offerings, which will hurt investorsí confidence for the upcoming offerings,î said Farhan.
Higher pricing coupled with liquidity crunch being faced by local investors are the major reasons for the lack of enthusiasm, despite the fact that the broader market is performing well, he said.
The benchmark KSE-100 Index has posted massive gains of 1,300 points from January to April.
According to statistics, the KSE Index stood at 9,400 points on January 1, which burgeoned to 10,700 points, at present.
According to analysts, the recent positive trend has been given spur by foreign investors who resorted to buying at the market. This positive trend is likely to continue till June, they said.
Source The News
No comments:
Post a Comment