PRO 04-10-2012_Layout 1 10/4/2012 1:03 AM Page 1
Thursday, 4 October, 2012
Bulls catapult index to 54-month high KSE index hits historic high of 15,712.21 points KARACHI
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ISMAIL DILAWAR
HE Karachi stock market closed Wednesday at what the Exchange said was its “highest” level with benchmark 100-share index peaking to a historic 15,712.21 points. According to official data, this jump by the index happens to be the 54-month high as on April 18, 2008 the benchmark had climbed to its highest level, 15,676.34. Wednesday’s upward movement by the index marks an increase of 35.87 points compared to that of April 2008. The KSE said the maximum increase in KSE-100 index was 960.50 points on June 24, 2008 against a maximum decrease of 696.25 points the market had witnessed on December 31, 2007. On July 14, 1998 the index had nosedived to its lowest level of 765.74 points with market capitalization for the day standing at Rs 234.145 billion only. The highest trading turnover at KSE was recorded at 1.122 million on April 16, 2004 with the index standing at 5,582.28 points. “KSE 100 index breaks the previous record,” said the regulators at Karachi Stocks Exchange (KSE) in a statement. The investors’ hope for a further rate-cut, of at least 50 basis points, by the central bank on coming Friday, Oct 5, is said to be the major stimulus for the index hitting the historic high. “Highest ever closing by KSE index today amid hope that the interest rate will further decline,” viewed Mohammad Sohail, a senior stock analyst and chief executive officer of Topline Securities. Ashen Mehanti, another senior equity market
observer and director at Arif Habib Securities, believes that the decrease of previously doubledigit Consumer Price Index inflation to 8.79 percent during September had raised the speculations for a 50 to 100 basis point cut by the State Bank in its next monetary policy decision due tomorrow on Friday. “Pakistan stocks closed bullish… after Sep ‘12 CPI Inflation stood at 8.79pc YoY raising speculations ahead of SBP policy rate announcement due on Oct 5,” the analyst said on Tuesday. Farhan Mahmood of InvestCap Research said the local market had already priced in the impact
of 50 to 100 basis points decrease in the discount rate as the banking stocks plunged by 8 percent in last two months while the KSE 100 index was up 6 percent. Another InvestCap analyst Abdul Azeem viewed that the benchmark touched the highest level of its current rally on Wednesday. The day saw the KSE 100 index gaining 64 points or 0.41 percent compared to Tuesday’s 15,648.29 points. The index hit the intraday high of 15,747.64 points and then slid to the intraday low of 15,607.10 points. The trading turnover at the ready counter was recorded, however, lower at 107.651 million shares as against 140.793 million of the previous session. The trading value for the day accumulated to Rs 4.2 billion against Tuesday’s Rs 5.9 billion. While the market capital stood almost flat at Rs 3.964 trillion compared to Rs 3.947 trillion of the previous day. “Turnover was not as healthy as it should have been at this level,” viewed Abdul Azeem of InvestCap Research adding that the index needed healthy volumes to take it further up towards 15,850 points level. The analyst foresees the index moving towards new highs. “The index still has the potential to go further up towards 15,850 points. Closing above 15,570 points is expected to be a confirmable zone,” he said. The day’s volume leader was Jahangir Siddiqui Company which saw its 13.354 million shares traded each at Rs 13.43 in opening and Rs 13.99 in the closing. The trading volumes on the future market dip to 7.877 million shares against 12.543 million of Tuesday.
ADB enhances Pakistan’s growth projection to 3.7 per cent ISLAMABAD APP
The Asian Development Bank (ADB) has enhanced Pakistan’s growth forecast for the year 2012 to 3.7 from 3.6 percent projected earlier. For Asia, the bank has scaled back 2012 and 2013 growth forecasts, saying that after years of rapid growth, the region must brace for a prolonged period of moderate expansion amidst an ongoing slump in global demand. In its Asian Development Outlook 2012 Update, the bank predicted Pakistan’s growth at 3.7 percent, which was early predicted at 3.6 percent by the Asian Development Outlook re-
leased in April this year. It is pertinent to mention here that the Asian Development Outlook and the Asian Development Outlook Update are ADB’s flagship economic reports, which analyze economic conditions and prospects in Asia and the Pacific, and are issued in April and October, respectively. The report has projected the same growth rate of 3.7 percent for the next year (2013) against the prediction of 4 percent. The report has scaled back 2012 and 2013 growth forecasts for India, which will slow to 5.6% in 2012, down from 6.5% in 2011. Chinese ecnomy is forecast to grow by 7.7% this year and 8.1% in 2013, a drop from the 9.3% posted in 2011. For overall South Asia, the
A late cut too many? Another rate-cut to slash banks profit by half in 2013
growth has been predicted at 5.5 percent as compared to 6.2 percent in 2011. The report projects the region’s gross domestic product (GDP) growth dropping to 6.1% in 2012, and 6.7% in 2013, down significantly from 7.2% in 2011. The report notes that the ongoing sovereign debt crisis in the Euro area and looming fiscal cliff in the US could have disastrous spillovers to the rest of the world, particularly developing Asia. The projected slowdown is likely to ease price pressures, however, with inflation falling from 5.9% in 2011 to 4.2% for both 2012 and 2013, assuming there are no spikes in international food and fuel prices.
KARACHI STAFF REPORT
With expectations of yet another policy rate cut in upcoming monetary policy, one of the major concerns for investors is the earnings outlook of Pakistan banks. The local banks are already facing margin compression due to 350 bps cut in discount rate and 100bps rise in minimum deposit rate in less than 1.5 years. “We believe that contrary to common perception if discount rate is cut by 50-100bps, banks annualized earnings will be negatively affected by 3-7 percent,” said Topline analyst Farhan Mahmood. The analyst said if the central bank cut the discount rate by 50bps, the 2013 estimated profits of his sample banks would increase by 3 percent now compared to earlier projection of 6 percent. He said his side had downgraded earnings growth to 6 percent from 14 percent on August 13, 2012 after the SBP surprised the market by slashing rate by 150bps. Last time in 2011 when SBP reduced discount
PARCO acquires LPG giant SHV Energy KARACHI STAFF REPORT
Pak-Arab Refinery Limited (PARCO) has acquired SHV Energy Pakistan (Private) Limited, one of the country’s largest LPG marketing and distribution firms, The acquisition would take effect from the first of this month. The SHV Energy Pakistan was previously a 100 percent owned subsidiary of SHV Calor Asia B.V. (Netherlands) and is one of the largest LPG marketing and distribution companies in Pakistan. The company has been issued a license for storage, processing, filling and distribution of LPG by the Oil and Gas Regulatory Authority (“OGRA”). It has a nationwide network of distributors and customers and also has expertise in industrial applications of LPG. The PARCO is a joint venture between the Government of Pakistan and the Emirate of Abu Dhabi. PARCO, A fully integrated energy company is a key player in Pakistan’s oil supply and logistics and has become the strategic fuel supplier to the country with a broad portfolio of operational ventures in refining, transportation, storage and marketing of petroleum products. -
One step forward, two back for Greece on debt BRUSSELS AGENCIES
Every step Greece takes to shore up its finances seems to make it harder for Athens to make the numbers add up in the long-term, especially when it comes to its spiralling debt. Monday’s 2013 budget plan contained some positive news – for example, the expectation that Greece will have a primary budget surplus, before debt financing costs, for the first time since 2002 - as well as some more alarming forecasts. Chief among those was an acknowledgement that the economy will shrink again next year, by 3.8 percent, the sixth annual contraction in succession, and that the debt-to-GDP ratio will rise to 179.3 percent in 2013, a dauntingly high figure. The bottom line is that Greece is in a worse state now than even the most pessimistic forecast just six months ago. The relationship between growth and debt is the focus of the European Commission, the European Central Bank and the International Monetary Fund — the troika of inspectors currently in Athens poring over the government’s projections. In the coming 4-6 weeks, the troika will publish its latest report assessing whether Greece’s debt is sustainable in the longer-term, something many private sector economists have already concluded is not the case. In its last analysis published in March, the troika said Greece needed to get its debts down to 120 percent of GDP by 2020 for the situation to be manageable and concluded the goal was achievable under certain optimistic assumptions.
rate by 200bps, banks lending rate reduced by approx 40-50bpps only because banks increased floor rate. Assuming the same trend to continue, we might see lending rate falling by approx.10-12bps. Moreover, banks on the other hand will opt to shun expensive deposits to mitigate the impact of cut in discount rate and will increase their advances. In case of higher discount rate cut i.e. 100bps, banks 2013 earnings to dilute by 6- percent7. Thus, in that case, 2013 earnings will remain flat as we have also assumed fall in deposit rate and increase in lending. In fact few banks have aggressively started marketing consumer financing. On the flip side, 50-100 bps reduction in discount rate may lead to 2-3 percent improvement in earnings in short run. According to accounting rules in Pakistan any gain and losses on re-measurement for held for trading (HFT) is included in profit and loss account while the impact of reval-
uation in all other categories of investment is taken in profit and loss account when actually realized upon disposal. Thus, there is only a small portion of those gains will be reflected in Income Statement and major portion of that revaluation gain will go into the equity thereby increasing the book value of the banks and thus reducing PBV marginally. In arriving the revaluation gain, we have also assumed that banks will realize 20-25 percent of the investment portfolio in available for sale (AFS) and Held to Maturity (HTM) in short-term. Incorporating a 100bps cut, Pakistan banking sector is trading at one year forward PE of 5.9x and P/BV of 1.1x with average ROE of 17 percent. This is 35 percent and 38 percent discount than last 5 years average PE and PBV of 10.7x, 1.8x, respectively. “We believe that market has already priced in the impact of 50-100bps cut as banking stocks plunged by 8 percent in last 2 months while KSE 100 index is up 6 percent,” said Farhan.
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Business 02 KSE shows the door to brokerage house for repeated defaults KARACHI STAFF REPORT
The front regulators at Karachi Stock Exchange on Wednesday declared the Pearl Capital Management as defaulter which would be deemed as expelled from the Exchange with immediate effect. The disgraced firm is a corporate brokerage house and the holder of Trading Rights Entitlement Certificate (TREC), said the KSE on Wednesday. The firm has been declared as defaulter for its “repeated failure” to comply with the instructions of the Exchange to resolve the pending investors’ complaints and claims. “Accordingly, M/s Pearl Capital Management (Pvt) Ltd has ceased to be a TREC holder of this Exchange,” said the KSE. It said the broker’s declaration as a defaulter by the Exchange shall not affect the right of their creditors in any manner and the said corporate entity remains responsible for discharging all its financial obligations.
LSE gains 12.21 points LAHORE APP
Lahore Stock Exchange on Wednesday witnessed bullish trend by gaining 12.21 points as the LSE-25 Index opened with 4083.00 and closed at 4095.21 points. The market’s overall situation, however, did not correspond to an upward trend as it remained at 2.090 million shares to close against previous turnover of 3.348 million shares, showing a downward slide of 1.258 million shares. While, out of the total 96 active scrips, 28 moved up, 45 remained equal and 23 shed values. Attock Refinery Limited, Treet Corporation Limited, Pakistan Petroleum Limited were Major Gainer of the day byrecording increase in their per share value by Rs 7.04, Rs 3.70 and Rs 2.15 respectively. Engro Foods Limited, Dawood Hercules Corporation, and Muslim Commercial Bank Limited lost their per share value by Re 0.95, Re 0.80 and Re 0.68 respectively. The Volume Leader of the day included Silk Bank Limited(Saudi) with 395,000 shares, Bank Alfalah Limited with 209,000 shares and Dewan Cement Limited 173,500 shares.
US stocks flat, euro up as Spain bailout in focus AGENCIES
HE euro rose against the dollar on Tuesday on expectations that a request by Spain for a bailout is imminent, but U.S. stocks ended little changed on uncertainty of when Madrid will make its request and growing uneasiness over third-quarter earnings. European officials said on Monday that Spain is ready to make the request for a euro zone bailout as early as next weekend. On Tuesday, however, Spanish Prime Minister Mariano Rajoy said that a request for European aid was not imminent. A request for a bailout is viewed as positive for financial markets because it would trigger Spanish bond buying by the European Central Bank, which would lower the country’s borrowing costs. It would also remove another layer of uncertainty in the region’s three-year old debt crisis. “Spain being rescued would be good for risk assets and ultimately global growth, but while the benefits are largely priced in, we’re still getting conflicting signals that understandably have investors apprehensive,” said Brian Barish, president of Cambiar Investors LLC in Denver, who helps oversee $7 billion. “Until we get some kind of clarity, we should expect a lot of volatility and difficulty holding onto gains,” Barish said. The MSCI global stock index was little changed at 333.35. Wall Street stocks gave up early gains to fin-
Rafhan Maize Prod. Atlas Battery Ltd. Abbott Lab. Attock PetroleSPOT Atlas Honda Ltd
KARACHI Keeping up its weekly borrowing spree from the banking system, the cashstrapped government Wednesday borrowed over Rs 180 billion from the banks to cater its ever-burgeoning budgetary needs. Last week on Wednesday too had seen the government raising over Rs 37 billion from the risk-averse banks through selling Pakistan Investment Bonds (PIBs) of 3 to 20-year tenors. Wednesday saw the federal finance ministry raising over Rs 180.227 billion from the primary dealers through auc-
HIgH 10500.00 4646.26 756.00 1077.77 330.75
LoW 10000.00 4425.01 722.05 1001.00 329.00
CLoSE 10500.00 4646.26 756.00 1055.55 330.75
CHAngE 500.00 221.25 33.95 20.55 15.75
TUrnovEr 100 440 250 1,500 1,100
3899.00 243.95 206.89 525.65 135.00
3800.00 237.00 206.89 525.06 132.54
3705.00 237.00 198.00 516.00 131.00
3800.00 237.00 200.02 519.46 131.00
-99.00 -6.95 -6.87 -6.19 -4.00
280 500 41,000 15,200 2,500
14.24 59.02 15.70 19.82 6.34
13.54 57.15 15.20 19.41 6.05
13.99 58.85 15.47 19.76 6.19
0.56 1.35 0.06 0.20 0.13
13,354,000 4,571,500 4,323,500 4,229,000 3,771,500
Volume Leaders Jah.Sidd. Co. 13.43 Nishat Mills Limited 57.50 Askari Bank 15.41 P.T.C.L.A 19.56 Azgard Nine 6.06
Interbank Rates ish largely unchanged in a volatile session as a rally that took the S&P 500 to its highest in nearly five years stalled. The Dow Jones industrial average ended down 32.75 points, or 0.24 percent, to 13,482.36. The Standard & Poor’s 500 Index closed up 1.26 points, or 0.09 percent, to 1,445.75. The Nasdaq Composite Index gained 6.51 points, or 0.21 percent, to 3,120.04. The Dow was pressured by stocks closely tied to the pace of growth, including heavy machinery maker Caterpillar Inc and plane maker Boeing Co. A major headwind for the global economy has been falling demand from Europe, which has been drifting toward recession.
Govt sells T-bills to borrow over Rs180bn from banks STAFF REPORT
CoMPAny oPEn UniLever Pak 10000.00 Nestle Pakistan Ltd. 4425.01 Siemens Pakistan 722.05 Bata (Pak) Limited 1035.00 Shezan Inter. 315.00
Major Losers
NEW YORK
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Major Gainers
tioning the Market Treasury Bill of 3-, 6- and 12-month maturities. The central bank auctioned the Tbills setting the cut-off yield at 9.7291, 9.7583 and 937601 percent, respectively, for 3-, 6 and 12 months maturities. The primary dealers, consisting mostly the otherwise cash-strapped banks, responded well and offered a surplus amount of over Rs 562.697 billion to the government their prime focus being in the mid-term, 6-month, government papers against which bids of over Rs 230.376.040 billion worth were offered. The central bank, however, accepted bids of Rs 180.227 face value.
US Dollar UK Pound Japanese Yen Euro
95.1357 153.3683 1.2161 122.9820
Dollar East US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal Australian Dollar
BUy
SELL
94.50 121.51 151.48 1.1949 95.20 12.04 25.70 25.19 95.90
95.00 122.51 152.70 1.2043 96.46 12.20 25.88 25.33 98.12
ECC approves import of LNG, 200,000 MT of sugar export ISLAMABAD: The Economic Coordination Committee of the Cabinet approved import of LNG along with given framework as proposed by Ministry of Petroleum and Natural Resources. The ECC also discussed the summary for export of sugar presented by Ministry of Commerce. The ministry informed ECC that the country was in a position to export sugar as there was a surplus. After due deliberations, ECC allowed to export 200,000 MT of sugar against the proposal of 400,000 MT with a quota of 10,000 MT sugar for each sugar mill. ECC also constituted a committee comprising PM Adviser on Agriculture and Water Resources, Secretaries
of Commerce and Industries to work out the reasons for non-utilization of earlier approved export quota amounting 166,000 MT of sugar by sugar mills. The ECC also discussed a summary that proposed an import of 0.5 million tones of urea. After evaluating different aspects, ECC constituted a committee comprising deputy prime minister and Senior Minister for Industries, minister for Petroleum and Natural Resources, Planning Commission deputy chairman and secretary industries to work out further on subsidy mechanism, price fixation formula for fertilizer and gas availability to fertilizer plants, after consultation with fertilizer industries. STAFF REPORT
CORPORATE CORNER September marks record month and quarter for PMEX trading volumes KARACHI: October 03, 2012 - Pakistan Mercantile Exchange ended the first quarter of FY 2012-13 with a record trading volume of Rupees 385.58 Billion in terms of value. This represents an increase of 40.71 % on previous quarter. Over Rupees 150 Billion of traded volume was seen in September which is a monthly record, beating previous monthly high of
129 Billion Rupees set in August 2012Corresponding number of contracts traded in the quarter was 1,051,032 which is also a record. Number of active brokers reached a high of 67 and investor accounts were at record level of close to 8,000. Discussing the achievement, Mr. Amjad Khan, Acting Managing Director PMEX, added that “This record volume sets a high benchmark for the Exchange to continue performing in the coming months. It also gives us the assurance that an increasing number of Pakistani investors are placing their trust in PMEX as the only legal platform for Commodities Investing whilst adding commodities as an alternative asset class for their wealth portfolio diversification.”
Japan – Pakistan to showcase their products at 7th Expo Pakistan KARACHI: 3rd October, 2012 – Many major Japanese brands and companies will be further exploring business opportunities through participation and promotion at the 7th Expo Pakistan Exhibition, being held from 4th till 7th October, 2012 at the Expo Center in Karachi. An exclusive pavilion is being set-up at the Expo Center in Karachi, inspired by the “Japan External Trade Organization” (JETRO), which enjoys the cooperation of numerous prominent Japanese companies operating across various industrial and commercial sectors of Pakistan. Prominent sectors that have attracted Japanese investments and entrepreneurs include; Automobiles, Engineering, Consumer Items, etc. The key participants from Japan this year will be Hino, Honda, Suzuki and Toyota, displaying the latest models of their most popular cars, coasters and trucks in Pakistan.
Country Club on Monday, 1st October, 2012.
WISE Awards honor world’s best initiatives in innovative education DoHA: The World Innovation Summit for Education (WISE) announces six groundbreaking projects from around the world as Winners of the 2012 WISE Awards under the theme “Transforming Education”. Now in their fourth year, the WISE Awards identify, showcase and promote innovative educational projects from all sectors and regions of the world in order to inspire change in education. Winning projects, which are selected for their concrete, positive impact upon society, receive global visibility and a prize of $20,000 (U.S.).
Bata organizes anti-dengue walk
Lake City adds another jewel to crown
LAHORE: Mr.Imtiaz Faruque, HR Head at Pakistan Tobacco Company with the MBA students and faculty at The Lahore School of Economics.
KARACHI: The Lake City Holdings which is one of the largest real estate projects of Pakistan and a premier secured gated community is proud to announce that they have added a jewel to their crown by finalizing a deal with Technogym for their Lake City Golf and Country Club’s Health Club. A contract signing ceremony was held between the management of Lake City Holdings and Technogym at the Lake City Golf &
KARACHI: Bata Pakistan Ltd. organized a door to door campaign and dengue awareness walk under the umbrella of Bata Children’s Program at Batapur. The children went door to door and explained the precautionary measures to prevent dengue. They also distributed brochures containing written instructions amongst the residents.
Thursday, 4 October, 2012