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Stocks break Rs 400bn

trading mark

RECORDER REVIEW

KARACHI: After over two years for the first time the market capitalisation of the stock exchange crossed the Rs 400 billion mark where equities bound to reach new high levels with investment from foreign fund houses, local brokerage houses and financial institutions, spurted at every counter.

The trading week was full of records, the daily turnover on Wednesday was the highest attained in the history of the Karachi Stock Exchange were the index crossed the 1600 mark after over 18 months. A dealer said that blue chips buying by financial institutions and commercial banks since the resumption of trade after Eid holidays had encouraged individual investors.

The KSE-100 recorded an increase of 126.30 points and ended at 1626.10 from 1499.80 last week. The volume during the week was 736.952 million shares as against 411.291 million shares of the previous week. The market capitalisation moved to Rs 417.164 billion from Rs 387.523 billion.

The cut in interest rate on national saving schemes and T-bills has left barely few attractive avenues of investment and hence investible funds are finding their way into the share market. The money market has become quite liquid giving a big boost to institutional buying. Banks are in particular awash with excess liquidity which is seeking lucrative avenues of investment.

Another factor, which paved way and generated enthusiasm among the general investors, was the State Bank's decision to clearing all pending applications, allowing repatriation of profits of foreign investors.

The market for the last couple of weeks was dominated by fuel and energy stocks, which have been targeted for privatisation. Sui Northern Gas, Sui Southern Gas and KESC were the leaders in this sector. All these companies are expected to be privatised soon.

The setting up of the natural gas regulatory authority, which could hasten the process of privatisation of Sui Northern Gas and Sui Southern gas was said to be an aiding factor behind massive buying in the energy sector.

The buying in Hubco also recorded new heights as the government released $50.93 million debt service payment owed to foreign lenders. The analysts said that the prompt permission showed the government's intention to resolve the IPPs issue immediately. The government and the company have been locked in for the last couple of years over the high tariff dispute charges.

The euphoria and speculation about privatistion might have led to the market becoming over-weight in the short-term, which meant that a possible correction of 30 to 35 points could occur soon. However, there was no doubt that domestic investors had been in the process of re-rating the Pakistan spread for the several weeks and this re-rating still had some potential to barring any external shock.

Hubco on a business of 178.865 million shares moved to Rs 24.00 from Rs 22.05, PTCL closed at Rs 23.75, showing a rise of Rs 2.10 as around 57.258 million shares changed hands. Sui Northern Gas finished at Rs 19.95 from Rs 14.65 on a turnover of 71.440 million shares, ICI registered an improvement of Re 1.00 to Rs 11.25 on a volume of 55.683 million shares and PSO on trading 41.656 million shares rose by Rs 11.50 to Rs 224.00.