KSE board decides to keep market floor in place

KARACHI: The board of directors of Karachi Stock Exchange (KSE) on Thursday decided to keep the market floor in place, however didn’t give an exact date for its removal or further review as was practiced earlier.A statement issued by KSE after the meeting of board of directors didn’t explicitly mentioned the decision taken on market floor and just stated: “All stakeholders including KSE would like the market to return to normal trading parameters at the earliest.”“We may expect this to happen within month of October and final outcome of the discussion will be reached shortly after Eid,” the meeting observed while reviewing the market floor second time during the current month. Well-informed sources confided that market floor could be lifted sometime in mid of October following introduction of a fresh fund, being worked out by the government to stabilise the stock market.“The size of the fund is yet to be announced, however it has been decided in principle to create this fund and it might be in the range of Rs 20 to Rs 30 billion,” sources disclosed.Dawood Jan Mohammad, Member-Director on KSE board when contacted declined to give further details of the meeting. “Whatever we want to share with media has been mentioned in the official statement,” was the brief response of member about the today’s deliberations of the meeting and said that after Eid, the matters would be taken up for review. The statement further stated that KSE has been in discussions with a wide range of stakeholders on a comprehensive road map to enable the market to return to normal trading parameters. Recent events in the global equity markets have further highlighted the need to develop an integrated package so that the Pakistani capital markets can operate in a stable manner. In this context discussions are going on with the Ministry of Finance, Economic Advisory Council and Securities & Exchange Commission of Pakistan.The KSE has been placed under the floor since August 27, 2008 to prevent it from plummeting after it plunged from its record levels of 15,776 points in mid April this year to below 9000 level.All eyes are now set on the government for a bailout plan for the market which, according to market players, needs the government’s help in this crucial situation. The KSE MD accompanied by three top brokers met Governor SBP few days back to discuss the situation in the market and sought the help with the regard to injection of liquidity in the market.“Government will have to come to rescue the market because it still holds 50 percent of the total equity. If market loses further, it will not be a good omen for the foreign investors and the capital flight may increase further,” Siddique Dalal, a broker said while deploring that least was done so far on the part of the government to stabilise the market.A former member-director on KSE board Haji Ghani said that the creation of new fund of Rs 20 to Rs 30 billion almost looked certain and it will hopefully support the market to a great extent.

POL, ARL and APL announce dividends

KARACHI: Attock Refinary Limited (ARL) has announced Rs 8.00 i.e. 80 percent final cash dividend for the year ended June 30, 2008. Company also announced bonus share in the proportion of one share for every five shares, Karachi Stock Exchange announced on Thursday. ARL posted Rs 6.147 billion profit after tax during the year under review against Rs 748 million in the previous year. EPS also rose to Rs 28.24 during the year against Rs 7.10 in the previous year.Attock Petroleum: Attock Petroleum Ltd. (APL) declared final cash dividend of Rs 20 per share i.e. 200 percent for its shareholders in the year ended June 30, 2008.It also announced 20 percent bonus shares for the said year, KSE announcement said on Thursday.APL earned Rs 2.641 billion in 2007-08 compared to Rs 1.728 billion during the last year and company’s eps also jumped to Rs 55.03 during the year under review over Rs 36.01 in the previous year. Net sales rose to Rs 60.130 billion in the year under review compared to Rs 49.939 billion in the previous year whereas cost of production also saw substantial increase during the year.Pakistan Oilfields: Pakistan Oilfields (POL) announced final cash dividend at Rs 16 per share i.e. 160 percent for ended June June 30, 2008, KSE announced. Company also declared 20 percent bonus shares for the year under reveiew.According to financial results for 2007-08, the profit after tax jumped to Rs 8.616 billion in 2007-08 over Rs 5.939 billion in the previous year whereas eps soared to Rs 43.71 in the said year against Rs 30.13 in the previous year. The net sales also spiked to Rs 16.739 billion from Rs 14.239 billion a year before. staff report

KSE gains 2.9 pts, volumes continue to fall

KARACHI: The Karachi stock market witnessed a positive trading week on support from buying activities as increased expectations of funding by World Bank and Asian Development Bank in economic assistance to Pakistan raised investor’s confidence, analysts said on Saturday.

The Karachi Stock Exchange (KSE) 100-share index gained a modest 2.9 points or 0.03 percent to close at 9,184.24 points as compared with previous week’s 9,181.35 points.

While the continuation of the price floor mechanism is hampering activity in the normal market, more than normal off-market transactions have been witnessed since there is no price limit prevailing there.

The average turn over volume plunged to 0.193 million shares compared to 1.83 million shares traded previous week.

Muneeba Saeed, Analyst at Invest Cap Research said volumes at the KSE fell to 0.193 million shares on Friday, a level witnessed never before, on the back of shattered investors’ confidence. Despite attractive valuations, the KSE 100 index remained frozen at the same level throughout the week, highlighting abysmally low investors’ interest.

Although the KSE board’s decision to finally remove floors and the declining value of oil in the international market was expected to provide support to the local bourse, but the declining rupee against the dollar and depleting forex reserves fanned panic amongst investors.

Atif Zafar, Analyst at JS Global Securities said in his comments with hardly any activity in the official cash and derivatives counter, substantial increase in transactions at the off-market counter was seen.

A portion of the transactions in off-market are the actual buying and selling of the investors, thus reflecting the true market value of the stocks. Based on this week’s transaction, we estimate that KSE index is expected to close at 7,400 points, 19.4 percent down from the official closing of 9,184 points. At the normal counter, average daily volumes last week were at record low because buyers were getting shares at discounted prices in the off-market.

With CFS rate jumping to a 7-year high of 63 percent on October 9, 2008 and many investors unable to rollover their position, the regulator decided to roll over positions forcefully. On Oct 14, 2008 NCCPL decided that investors having position as of October 9, 2008 would have their contract extended for another 22 business days.

This forced rollover reduced activity at the CFS counter. Hence, average daily volumes in CFS declined to 0.3 million shares or Rs 21.9 million only with CFS rate closing the week at 59.46 percent.

Ahsan Mehanti, Analyst at Shahzad Chamdia Securities in his comments over reasons for positive index said recovery in Asian capital markets, easing liquidity crunch, positive expectations regarding maintenance of price floor up to October 27 and hopes on market recovery after PM advisor’s appointment helped investors’ sentiments get positive. staff report