LAHORE - Benchmark index gained 1.5 per cent on week on week basis to close at historic high at 25,257, however, average volumes declined by 16% to Rs.8.8 billion versus Rs10.5 billion of last week. The key highlights remained Pakistan’s quarterly GDP, which was recorded at 5% as against 2.9% in the same period last year, this also compared favorably against average 5yr GDP growth of 2.9%. In addition to that, Pakistan successfully got the GSP Plus status from EU, while Pakistan forex reserves (held by the State Bank) fell to 12 years low of $2.96b. Investors’ interest was mainly seen in PTC, FCCL, NML, NCL, BIPL and textile stocks. Going forward, Etisalat team visiting Pakistan on 18th Dec will keep investors interested in PTC. Moreover, IMF meeting is taking place on 19th Dec in which release of next tranche worth $550mn will be decided.
Experts said that the KSE 100-index breached the 25,000 mark during the week to close at an all time high of 25,257 with decent average volumes of 211mn shares, up 8.7%WoW. Positive news flow regarding (1) the possible provision of concessionary gas rate to Engro’s fertilizer business for its Enven plant; (2) the EU parliament voting in favor of Pakistan for granting GSP Plus status from January 2014; and (3) 1QFY14 GDP growth clocking in at 5% vs. 2.9% last year boosted investor sentiment at the local bourse. The above more than covered up for the negative news this week where forex reserves held by State Bank of Pakistan (SBP) slipped below the US$3bn mark during the week.
Experts said that expectations of 3G auction coupled with high international calls rates, telecom sector gained 75%, outperforming index by a big margin. This was followed by food producers which gained 69% in 2013YTD as consumerism grew. For our estimate, we have excluded Uni Lever’s (ULEVER) market cap from our 2012 year-end sample as the stock is no more listed now. Even with the inclusion of ULEVER, this sector’s performance stood at 64%.
Fuelled by rising sales prices and declining financial charges, cement sector continued its momentum and saw its market cap rising to Rs287b in 2013; up 67%. Textiles gained 57% on the back of better regional demand, firm prices and declining interest rates. This sector gained further as EU approved trade package for Pakistan, allowing some of country’s textile products duty-waiver on exports to EU. Both cements and textiles remained one of the best performing sectors for two years in a row.
Chemicals and electricity underperformed in 2013 with returns of 15% and 36%, respectively. Due to declining margins, chemicals showed lacklustre performance. Keeping investor interest high with its dividend yield play, the electricity sector recorded above-average performance in 1H2013 as yield spread against government-backed securities grew. This was further fuelled by circular-debt resolution which saw many power producers stepping up cash payouts. However, cumulative 100bps discount rate hike in the last two monetary policy decisions saw investors turn away from this sector to seek risk-free investments. Just to clarify that due to high dividend payout sector’s market cap lagged behind the market.
While the oil & gas sector showed decent uptick for 1H2013, price performance was mainly marred as E&Ps recorded lower full-year profits as a result of one-time adjustment required by the tax authorities, resulting in the sector posting 41% return.
2013 remained a mixed bag for commercial banks as discount rate took both up and downswings. With the central bank linking minimum rate on savings to repo rate, rising interest rates towards the end of 2013 did not add much to the sector’s likeness as its market cap grew 44% to Rs1,219b.