By By Salman Siddiqui
KARACHI: Relaxation from market regulators on ‘accounting standards’ in accordance with the local demand helped the Karachi bourse bounce back on Friday.
KSE 100-share index posted a notable recovery of 226.54 points or 4.20 per cent and closed at 5,625.90 points. Its junior partner, the 30-share index, rose by 283.26 points or 5.25 per cent and concluded at 5,681.89 points.
Analysts said the notifications from the Securities & Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP) to allow companies listed at the local bourses to show impairment-losses on bourses in ‘equity held for sale’ instead of showing them in ‘net profit & loss accounts’ for one year period revived positive sentiments.
The notification helped turn the stock market indicators into positive, as the day turnover, positive closing stocks, market capitalisation and indices-points; all turned higher. Trading activity jumped up by 81 per cent to 162.430 million shares on the ready market as compared to 89.798 million shares changed hands a day earlier. However, no activity was seen in the future market as usual. The overall market capitalisation increased by Rs66 billion and stands at Rs1,766 billion as compared to Rs1,700 billion yesterday. Moreover, out of total 267 actives, the number of positive closing companies stands at 203 against 43 fell in red regions, while the value of 21 stocks closed unchanged.
Ahsan Mehanti at Shahzad Chamdia Securities said intense buying was witnessed following the SECP relaxed treatment for impairment of capital losses & its direct change to equity instead of profit & loss account. Investors sentiment remained positive throughout the trading session as the improved profitability is likely to be witnessed after amendment made by the SECP, he added.
For more on this article, please click on the following link: KSE recovers following SECP’s relaxation in accounting treatment: The News
Saturday, February 14, 2009
KSE recovers following SECP’s relaxation in accounting treatment: The News
Tuesday, January 13, 2009
Pakistan’s Fund Buys Shares to Support Stock Market: Bloomberg
By Khalid Qayum
Jan. 13 (Bloomberg) -- National Investment Trust, Pakistan’s biggest money manager, bought stocks for the first time from a 20 billion rupee ($250 million) fund announced this month to stabilize the market after a 58 percent slump last year.
“We bought shares for the first time today and will continue to buy at good rates and values,” Tariq Iqbal Khan, chairman of the state-owned National Investment, said in a telephone interview from Karachi today.
Pakistan shares fell for 13 consecutive sessions starting Dec. 15 when the stock exchange ended a trading curb that had prevented the benchmark index from falling below its Aug. 27 level of 9,144.93 points. The drop in the benchmark index last year was the first annual decline in seven years.
Pakistan’s benchmark Karachi 100 Index rose 0.3 percent to 6059.09 at the 3:30 p.m. local-time close. The gauge fell 1.7 percent yesterday after a 6.8 percent increase in the previous four sessions after National Investment said it would buy shares.
For more on this article, please click on the following link: Pakistan’s Fund Buys Shares to Support Stock Market: Bloomberg
Wednesday, December 24, 2008
KSE sees 10 IPOs in its worst year: The News
KARACHI: The outgoing year will be the worst year for the local stock markets. With only five trading sessions remaining, the benchmark KSE-100 index is down 51 per cent (61 per cent in US dollars).This is its worst performance since the introduction of the index in 1991 when Pakistan’s market was opened to foreigners as part of financial sector liberalisation.However, despite a record fall in equity values and slowdown in overall economy, the Karachi market saw 10 Initial Public Offerings (IPOs) in 2008 compared with nine in 2007. Interestingly, nine out of 10 offerings in 2008 were made before the imposition of price floor.
Unlike 2007, which saw nine IPOs worth Rs15.5 billion (including greenshoe option), the calendar year 2008 witnessed 10 IPOs worth Rs7.4 billion (including greenshoe option). A total of Rs17.4bn was received from investors in 2008 (excluding Media Times Ltd) against these offerings, resulting in a value-wise over-subscription of 2.4 times.In 2007, total amount subscribed was Rs27.2 billion, recording over-subscription by 1.8 times. However, the smaller size in terms of the value of IPOs compared to the previous year could be linked to non-appearance of government offerings in 2008.
For more on this article, please click on the following link: KSE sees 10 IPOs in its worst year: The News
Friday, December 12, 2008
Pakistan to remove its market floor: Financial Times
By Farhan Bokhari in Islamabad
Pakistan’s stock market regulator on Thursday night ordered the managements of the country’s three stock exchanges to remove an artificial floor introduced in August this year to prevent share prices from tumbling further after many months of declines.
However, the floor became controversial amid charges from angry investors who argued this artificial mechanism effectively brought activity to a virtual halt as daily volumes of shares traded fell to an all-time low.
The order requires the Karachi, Lahore and Islamabad stock markets to end the limit from Monday, in spite of many brokers and investors opposing such a move on the grounds it would see a flight of capital.
For more on this article, please click on the following link: Pakistan to remove its market floor: Financial Times
Sunday, November 16, 2008
Opportunities for Pakistan in the Global Financial Slump: Economistan
FREE MARKETS:Many opportunities abound for countries like Pakistan due to the dynamics of the essential commodity prices coupled with low shipping rates. Time to harness these to our advantage.
LIGHT AT THE END OF THE TUNNEL
By Saad Sarwar Muhammad
Monday, November 17, 2008
The whole world is undergoing a major financial crisis which has caused the downturn of almost all the developed world economies with job losses, bailouts and financial losses becoming the order of the day. In such unprecedented times of financial trouble the developed world is looking towards developing countries with huge reserves and financial muscle. Countries like China, Saudi Arabia and Turkey fit the bill. They were invited in the recently held summit of the G-20 to help the developed economies recover from the slump and in some way bail out the developed countries from the fiasco they are in.
The world has been undergoing a rollercoaster ride when it comes to the prices of different commodities, the stock market index levels and the value of dollar and yen versus other major currencies. Oil and Gold are two commodities that have hit a nosedive in recent times. Iran has reportedly given the intent to convert its reserves into Gold in order to overcome the deficit that can result in the reduction of price of oil. The value of dollar and yen is soaring at a time against major European currencies giving the indication of more trust in the resilience of the US economy as compared to the EU.
Pakistan has been suffering its own financial crisis lately, which somehow seems unrelated to the recent global recession. Pakistan’s problems have mostly been homegrown based on the energy crisis due to shortage of alternative energy power sources such as hydel, wind, solar and to some extent nuclear. Pakistan’s financial crisis has resulted from the withdrawal of funds from Pakistan’s stock market, the Karachi Stock Exchange (KSE) since the coming of the new civilian government. Pakistan’s stock market, KSE, has lost close to $36 billion dollars this year in market capitalization. Resultantly, the Pakistani rupee has also borne the brunt with the value of rupee falling from around 60 to a dollar from the beginning of the year to around 80 to a dollar at the moment (many currency dealers have also been arrested in the wake of the rupee devaluation, famous among them the firm of Khanani and Kalia). Not to mention the floor imposed on the KSE to allow the stock market to breathe a sigh of relief. The sigh has converted to deep sleep as the floor remains imposed after many many weeks.
For more on this article, please click on the following link: Opportunities for Pakistan in the Global Financial Slump: Economistan
Saturday, November 1, 2008
Pakistan can raise $5bn in 30 days: Dawn
By Yousuf Nazar
Given the current ‘political realities’, Pakistan seems to have little option but to go to the IMF. But the truth is Pakistan can raise $5 billion in the next 30 days if it wants to; even if Saudi Arabia does not extend oil credit facility.The United States wants Pakistan to work with the IMF and the government does not want to upset Washington. Otherwise why would it sit on proposals (like the exchangeable bonds and the securitisation of remittances) for months that could have raised a few billion dollars? The proposal from the Chinese to buy minority stake in the National Bank of Pakistan, likewise, was put in cold storage.Raising $5 billion will take Pakistan’s foreign exchange reserves to about $12 billion. This would represent a comfortable level of four months worth of next 12 months of imports as Pakistan’s annual import bill is likely to drop sharply to $33 billion from $40 billion in FY 2007-08 due to the collapse of the price of oil and these of other commodities such as edible oil. Four months of import cover is considered a reasonable level and the country can use this time to take steps, such as privatisation or joint ventures in strategic areas, to mobilise funds for its medium- term needs.Just consider the following four of the many ways the government can use to raise $5 billion for meeting the current crunch. These are not necessarily the most desirable options but are far better than carrying a begging bowl around the world.— Pakistan has about $1.8 billion in gold reserves. Borrowing or leasing against gold is a standard international practice. Pakistan can borrow for six months at the rate of around 2.1 per cent from the central bank of a friendly country such as the United Arab Emirates. India did this in 1991 for a short period.— Pakistan can borrow (not beg) at least US$1.5 billion from China on commercial terms by putting its shares in large government-owned corporations as collateral. China has, in the past year, extended loans to other countries (e.g. Congo) on the basis of proper collateral. The cost of loans secured against collateral can be significantly cheaper compared with other options.— Pakistan can get another $800 million in a few days if the US reimburses the remaining amount for 2008 it should pay under the Coalition Support Fund relating to expenditure incurred on combating terrorism. Pakistan has received only one instalment ($364.7 million in September 2008) for this year’s expenses. A senior military source told Internews that the amount for reimbursement was calculated on the basis of six-monthly reports. He said all bills related to the expenditure had been audited jointly by a team of Pakistani military officers and the US embassy.
For more on this article, please click on the following link: Pakistan can raise $5bn in 30 days: Dawn
Thursday, October 30, 2008
WSJ slams IMF's prescriptions: Business Recorder
NEW YORK (October 30 2008): An influential US newspaper has criticised the prescriptions of the International Monetary Fund (IMF)--cuts in government expenditures, devaluation, and tax increases--for bailing Pakistan out of the financial crisis, saying that the measures would have opposite effect.
"Pakistan needs market-oriented reform along the Chilean and Irish models, not the IMF's austerity prescriptions," The Wall Street Journal said in an editorial, titled 'Does the IMF have no fresh ideas?' "Pakistan's economic wellbeing matters not only for its 165 million citizens but also because it's a key country in the world-wide war on terror," the editorial said.
The Journal said the IMF declined comment on a Pakistan Finance Ministry spokesman's statement last week that the Fund "wants Pakistan to reduce its government expenditures, maintain a 'flexible' exchange rate and 'increase' its tax-to-GDP ratio".
For more on this article, please click on the following link: WSJ slams IMF's prescriptions: Business Recorder
Sunday, October 26, 2008
Pakistan Extends August Stock Trading Curbs Until Oct. 31: Bloomberg
By Farhan Sharif
Oct. 26 (Bloomberg) -- Pakistan extended trading restrictions on its stock market for the third time in a month to prevent a further slide.
``Some time is still required for the implementation of market stabilization measures,'' Adnan Afridi, managing director of the Karachi Stock Exchange told reporters today. Shaukat Tarin, the Prime Minister's finance adviser will visit the exchange on Oct. 31, after which a decision about ending curbs will be taken, he said.
The Karachi Stock Exchange's benchmark KSE 100 Index has lost more than one-third of its value this year. Board members met over the weekend to discuss extending the curb, which was scheduled to be lifted on Oct. 27. The board also discussed ways to prevent possible violence by angry investors.
For more on this article, please click on the following link: Pakistan Extends August Stock Trading Curbs Until Oct. 31: Bloomberg
Thursday, October 23, 2008
Pakistan to Start Put Options for Overseas Investors: Bloomberg
By Farhan Sharif and Pooja Thakur
Oct. 23 (Bloomberg) -- Pakistan's stock regulator will allow foreign investors to buy put options in seven state-run companies, before lifting trading curbs that have prevented equity sales for almost two months.
The government will guarantee up to 30 billion rupees ($369 million) to enable state-run funds to write put options on Oil & Gas Development Co. and six other stocks, the Securities & Exchange Commission said yesterday. The regulator also approved a 20 billion-rupee fund to buy equities.
The measure may encourage investors to hold onto their shares when trading restrictions are lifted on Oct. 27, capping further declines in the KSE100 Index that has lost more than a third of its value this year. Since the limits were imposed, the government has approached the International Monetary Fund for a bailout to avoid defaulting on its debt, deterring investors.
``If in one year's time, the situation improves globally and in the local market, they will benefit instead of selling their holdings at this point,'' said Tariq Iqbal Khan, chairman of National Investment Trust, Pakistan's biggest asset manager. ``If these foreign investors accept the option, and do not sell in the ready market, the overall selling pressure will be lightened.''
Overseas investors who held shares in the market on Aug. 27, when the government capped a decline in its benchmark KSE100 Index, will be able to buy these options, the regulator said.
A put option is an agreement that gives the buyer the right to sell a specific quantity of a particular security by a certain date. The option is not obligatory and is traded during its life. The holder hopes the stock will drop in price.
For more on this article, please click on the following link: Pakistan to Start Put Options for Overseas Investors: Bloomberg
Wednesday, October 15, 2008
KSE to remove ‘floor’ on 27th: Dawn
By Dilawar Hussain
KARACHI, Oct 14: The Board of directors of the Karachi Stock Exchange (KSE) decided on Tuesday to remove the ‘floor’ from under the KSE-100 index on Oct 27.“Normal trading parameters of 5 per cent upper and lower circuit breakers will be imposed from that day onwards,” a spokesman for the bourse said.The KSE had fixed a ‘floor’ under the index at the 9,144 points level on Aug 27 to prevent a further fall, after a fearful plunge in equity values by 41 per cent in less than four months. The measure had brought the market to a virtual halt with volume of shares traded at 11-year low on Tuesday, at just over half a million shares.The Chairman of the Securities and Exchange Commission of Pakistan (SECP), Raziur Rehman, told Dawn that the ‘floor mechanism’ had been put in place to give the market a ‘breathing space’. He expressed the hope that as the world equity markets were heading towards stability, the KSE would be able to absorb the shock, if any, from soft landing.Incidentally, the announcement of ‘floor’ removal coincided with the arrival of Prime Minister’s Adviser on Finance Shaukat Tareen, who had expressed his disapproval of the ‘floor’ and turned down a request for closure of the market.Analysts were worried over a possible 20 per cent drop in the index in the first week after the planks are pulled from under the ‘floor’. The big scare was the foreigners’ selling, who still held $2 billion in equities.The KSE spokesman said the board had discussed with the finance ministry, SECP, SBP and other stakeholders three critical areas of liquidity; risk management and restoring investor confidence. It said the ministry and the SECP would “implement full set of stabilisation measures prior to Oct 27”.
For more on this article, please click on the following link: KSE to remove ‘floor’ on 27th: Dawn
Friday, October 10, 2008
Pakistan's Market Policy: Economistan.com
FREE MARKETS:Pakistani economy along with the Pakistani rupee would be better served if the floor on KSE remainson for another month or so.
Foreign investors have repeatedly asked for the KSE index to be traded free from the floor imposed at 9000 points. If such a demand is met anytime soon and the market capitalization goes down by $15 billion, it would result in the further devaluation of the rupee from its current parity of 80 to a dollar to 90 to a dollar or beyond according to our extrapolation of data.
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