PKR/USD - Speculation or demand?

Highlights

• PKR/USD parity - the major factors influencing PKR         
• Interbank & open Market gaps providing speculating opportunities         
• Is IMF program the only way out?

We have talked to several forex traders and got their feeler on the recent movement of Pak Rupee against US Dollar, where the former experienced a freefall against the later. In today's Value Seeker, we discuss the influencing factors behind the aforesaid downward velocity of PKR against USD.

PKR/USD parity - the major factors influencing PKR

PKR has been continuously heading downwards because of numerous economic and speculative reasons. The prime reason behind the massive fall in PKR is identified as the payments of IMF loans. These payments started from Jun-12 and PKR since the same period has shed its worth by alarming 4.7% till now. Moreover, poor law & order situation in the country coupled with energy crises can be classified as the reasons that are forcing foreign flows to diminish by hurting the country of its export front. Conversely, it has led to outflow that resultantly have impacted the PKR value in the negative way. This has inflated the transfer of money through grey channels. Furthermore, short term gain opportunities for individuals amid limited investment avenues in the country also played its due role and speculators grasped this opportunity with warm welcome.

Interbank & open Market gaps providing speculating opportunities

Looking through the historical trend, not only has PKR touched its all-time low against the greenback (over Rs99.75) in the open market, but also discount to interbank market has widened further to ~1%. The same situation was observed back in Jun-12 when open market-interbank discount stood at an average of 2.3%. SBP is expected to curb off speculation in the open market. With our discussions with different forex traders it came to our knowledge that the current upward trend is encouraging the investors to book their gains before they take new positions in the currency market. Therefore, Rs98.50/USD remains the resistance level for short term, while investors are said to take the new positions at Rs97.20/USD.

Is IMF program the only way out?

Although workers' remittances and Collation Support Funds (CSF) are supporting the USD inflows in the country, these avenues are not enough to support the government reserves. The reserves fell to their 40 month lowest level of USD13.4bn. The previous minimum level was realized at USD12.86bn during end of August, 2009 which was due to IMF payments coupled with financing of the oil import bill. In the short run CSF and energy support funds of USD700-800mn is likely to support the reserves, however, going forward the door of IMF looms at large as it seems to be the only way to support the reserves and in effect limiting the downward spiral that PKR has been stuck in against the greenback.  

ValueSeeker 18-December-12 

Ousting of nominee chairman of KSE board

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has made a move to protect its nominated chairman of the KSE board, as the commission has expressed concern over the convention of extraordinary general meeting (EOGM) on November 4 with a sole agenda of amending Articles of Association and oust SECP-nominated director as chairman of the board.

However, the KSE directors and members confirmed that the extraordinary general meeting would be held as per the schedule and with the same agenda.

Rumble in the bourse

KARACHI: Nominee directors of the Karachi Stock Exchange (KSE) met with the chairman of the Securities and Exchange Commission of Pakistan (SECP) on Monday to discuss possible recourses to differences amongst the members of the board of directors of the exchange. The meeting was also attended by other high-ranking officials of the SECP along with nominee directors:

Farrukh Junaidi, KSE Chairman Zubyr Soomro, Farhan Malik and Adnan Afridi.

Sources privy to the meeting revealed that nominee directors expressed concerns regarding the "weakening of governance at KSE". However the regulator decided not to issue an official press release regarding the meeting. When contacted, SECP's spokesperson responded by saying, "SECP has no comment on the KSE issue". However The Express Tribune has also learnt that participants of the meeting will convene once again today (Tuesday) morning to continue deliberations.

KSE investors to focus on meetings with IMF

KARACHI: Focus of investors at the Karachi Stock Exchange (KSE) will shift to the meetings between the International Monetary Fund (IMF) and Pakistani officials, since most large companies have already announced their results, dealers said.

“As the result season is coming to its close, investors will look towards new triggers, particularly on economic and political front,” said Saeed Khalid, an analyst at Invest Capital. “Moreover, the upcoming Eid season is expected to drain the investment from the market, but foreigners’ interest will play a key role for the market to sustain the current levels.”

Increase in floods loss estimates drags KSE down

KARACHI: Prices at the Karachi share market dropped on Thursday as investors opted to book profits in leading scrips after World Bank and Asian Development Bank raised flood loss estimates, dealers said.

“Intense profit-taking was witnessed at the local bourse as World Bank and Asian Development Bank raised flood loss estimates to $16 billion,” said Ahsan Mehanti, a director at Arif Habib Investments.

The KSE 100-share index lost 69.17 points, or 0.65 percent, to close at 10,634.99 points. The KSE 30-share index shed 67.76 points, or 0.66 percent, to end at 10,201.18 points.
Shares of 407 companies were traded, out of which 176 advanced, 209 declined, while 22 remained unchanged.

Major Companies Declare Results

KARACHI: Engro Corporation has announced an interim cash dividend of Rs2 per share as the company’s net profits stood at Rs4.058 billion, translating into an earning per share (EPS) of Rs13.41 for the nine-month period ended on September 30, a company statement said on Thursday.

Last year, the company’s profits stood at Rs2.7 billion with an EPS of Rs8.25.

The major growth drivers were its fully-owned fertiliser entity, Engro Fertiliser Limited and trading subsidiary, Engro Eximp businesses, posting profits of Rs2.9 billion and Rs989 million, respectively, it said.

KSE AGM lashes out at Afridi-led management

KARACHI: The management of Karachi Stock Exchange (KSE) came under fire at the annual general meeting (AGM) on Thursday over its exceedingly high remunerations, perks and privileges and poor performance.

Members discussed in detail the remuneration packages of the management led by Adnan Afridi, the managing director. A member said that traditionally management avoided taking such perks and privileges in fragile economic situation, even if funds were available.

He said that the case was different in KSE where the management took heavy remuneration, allowances and bonuses during the last two years, although revenue had been falling.

Reshuffling at Karachi bourse on the cards

KARACHI: A large-scale reshuffling is anticipated at the higher offices of the Karachi Stock Exchange (KSE) as with the change of guards, the team setup by Managing Director Adnan Afridi would be left leaderless, a KSE member said on Wednesday.

“I believe that the new chief executive would hardly continue with the lucratively paid team setup by the managing director, which also includes his relative,” the member said requesting anonymity.
The KSE managing director has finally decided to step down and tendered his resignation a few days before the expiry of his term as the continuation at the same office was not on the agenda.

Strong results anticipation pushes KSE up

KARACHI: The Karachi share market surged on Wednesday in anticipation of strong financial results by major companies, dealers said. “Positive activity was witnessed as investors await major earnings announcements this week,” said Ahsan Mehanti, a director at Arif Habib Investments.

The KSE 100-share index gained 46.01 points, or 0.43 percent, to close at 10,704.16. The KSE 30-share index rose 39.14 points, or 0.38 percent, to end at 10,178.53. Shares of 370 companies were traded, out of which 214 advanced, 138 declined, while 18 remained unchanged.

SBP’s gloomy report brings KSE down

KARACHI: The Karachi share market ended lower on Tuesday following the central bank’s forecast of lower economic growth and higher fiscal deficit, dealers said.

“Selling activity was witnessed†in the overbought market as the State Bank of Pakistan report indicated fiscal deficit rising to 6.3 percent of GDP in FY10 and GDP growth falling to 2-3 percent,” said Ahsan Mehanti, a director at Arif Habib Investments.

KSE’s net income declines by 78.31pc

KARACHI: The net income of the Karachi Stock Exchange (KSE) for the year ended on June 30 declined by a significant 78.31 percent to reach Rs68.094 million against Rs314.085 million last year, the KSE’s directors’ report said on Monday.

The depressing performance is attributed to decline in operating income, reversal of management fee and increased administrative expenses, which resulted in a loss of Rs372.092 million against the loss of Rs174.895 million last year.

PC wants margin financing in stock markets

ISLAMABAD: The Privatisation Commission has approached the Securities and Exchange Commission of Pakistan (SECP) for introduction of margin financing in capital markets to pave the way for floating OGDCL convertible bonds.
The commission has written to the finance ministry seeking reintroduction of margin financing in the capital markets to increase market volumes and obtain better value for the planned convertible bonds.

Foreigners’ holding at KSE hits 26.5pc

KARACHI: The foreign investors’ holding in the local bourse has reached 26.5 per cent of its free float, which is the highest level since July 2008, according to the data issued by the National Clearing Company Pakistan Limited (NCCPL) on Tuesday.

Volumes plunge by 39 per cent

KARACHI: The Karachi share market, which witnessed dull trading during the week ended on March 23 with average daily volumes plunging by 39 per cent, is likely to remain under pressure next week as even results of blue-chip companies failed to generate excitement due to various economic and tax-related issues, dealers said.

“With some key corporate announcements, including Oil and Gas Development Company and Pakistan Petroleum Limited due next week, we do not foresee any major activity unless foreign funds come back into the market,” said Sara Shahid, an analyst at Elixir Securities.

KSE under pressure on uncertainty regarding CGT rate

KARACHI: Despite announcement of healthy corporate results on Wednesday, the market witnessed depressed activity amid low volumes because of the uncertainty over agreed mechanism of the capital gains tax on shares trading in the coming budget.

“The reports regarding likely revision of capital gains tax rate on stocks, already agreed with the Finance Ministry, put pressure on the market,” said Khurram Schehzad, head of research at Invest Capital.

New listings on KSE fail to cheer investors

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.

SECP wants mutual funds exempted from workers fund

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has called upon the Finance Ministry to exempt pooled-investment and open-ended mutual funds from contribution to the Workers Welfare Fund.

In its recommendations for the Finance Bill 2010, the commission said mutual funds, provident funds, approved pension funds, gratuity funds and superannuation funds are structured as trust in compliance with the commission’s regulatory framework and income tax rules.

SECP detects 22 cases of insider trading, other irregularities

KARACHI: The Securities Market Division of the Securities & Exchange Commission of Pakistan (SECP) has detected 22 cases of violation of laws, including insider trading and imposed penalties on the stock exchange members and other market stakeholders, said a statement issued on Monday.

During the last one year, the Securities Market Division had detected 22 cases of insider trading, price manipulation, short- and blank-selling, wash trades, broker misconduct and non-compliance of the listing regulations, it said.

Investors opt to book profits on KSE

KARACHI: Investors at the Karachi bourse on Tuesday opted to book profits in the oil and gas sector after the KSE 100 Index briefly breached the 10,500 points mark to close at 10,419.82 points.

Blue-chips Oil and Gas Development Company Limited (OGDC) and Pakistan Petroleum Limited (PPL) remained the main stocks. OGDCL fell by 0.55 per cent to Rs131.13 with a turnover of 3.37 million shares, while PPL lost 1.28 per cent to Rs200.50 with a turnover of 3.09 million shares.

During the last five consecutive sessions, the KSE Index had witnessed an increase of four per cent.

KSE devises mechanism for rectification of erroneous trade

KARACHI: The Karachi Stock Exchange (KSE) has announced to device an automated mechanism to rectify ëan erroneous tradeí with effect from April 15, 2010.

“This system will only allow the trading members to rectify their client-code (i.e. Unique Identification Number or UIN) and/or quantity of the shares. The option to change the price of the scrip will not be available in this mechanism,” reads KSE notice issued on Thursday.

Trade rectification charges shall be applicable on one side (beneficiary UIN) at Rs2.68 per Rs100,000/= worth transaction for ready market and Rs3.75 per Rs100,000/= for all other markets’ rectification trades.