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Weekly review: KSE-100 gains 350 points as banking sector rallies
[March 30, 2014]

Weekly review: KSE-100 gains 350 points as banking sector rallies

(Express Tribune (Pakistan) Via Acquire Media NewsEdge) An eventful week at the stock market came to a close with the benchmark KSE-100 index climbing 350 points (1.3%) after a strong rally was witnessed in the banking sector.

v The index's gains came despite a bad start to the week as the banking sector rallied following the Pakistan Investment Bonds (PIBs) auction and information about the country's macroeconomic position continued to flow in throughout the week. The index ended the week at 27,116 points.

The market opened on a negative note, continuing the trend witnessed in the final session of the previous week, as investors offloaded their position in the Oil and Gas Development Company and MCB Bank on rumours of foreign selling.

The rumours stemmed from news that the global investment fund, Franklin Templeton, would be liquidating its fund which owns millions of OGDCL and MCB shares. Fearing the worst, investors sold shares in both companies until a clearer picture emerged.

The rumours proved to be false as Franklin Templeton intends to liquidate a much smaller fund which owns 173,000 OGDC shares and 266,000 MCB shares, and not the larger fun which owns the big chunk of Franklin Templeton's investment in the companies.

The situation turned around completely following the PIBs auction which was held during the week. The government intended to raise only Rs60 billion in the auction, but ended up selling Rs530 billion worth of PIBs to raise money for financing.

What was more interesting was that 55% of the raised amount comprised of PIBs with a three-year maturity period and yield exceeding 12%, reflecting that commercial banks now held debt yielding more than 12%, as compared to the smaller tenor T-bill debt held earlier yielding around 10%.

The auction triggered a rally in the banking sector, with the entire sector witnessing an uptick in their share prices. Allied Bank Limited and United Bank Limited led the way with a weekly gain of 14.9% and 12.7% respectively.

The country's macroeconomic position continued to aid the index's growth as the International Monetary Fund released a tranche of $555 million following a review. It also emerged that the World Bank will lend the country $1.7 billion to assist development projects, after a meeting on the matter in May.

The country's finance minister will also embark on roadshows in Dubai, London and New York to market the $500 million Eurobond issue which the government will undertake to further shore up foreign exchange reserves.

Despite the positivity, average daily trading volumes took a dip and were down by 18.5% at 154 million shares traded per day. Average daily values were also down by 10.3% and stood at Rs7.52 billion traded per day. The market capitalisation of the KSE stood at Rs6.57 trillion at the end of the week.

Winners of the week Rafhan Maize Rafhan Maize Products Company produces corn oil, industrial starches, liquid glucose, dextrin, gluten meals, and other corn related products. The company also produces a wide range of co-products such as gluten feeds, meals, and hydrol.

Pakistan Tobacco Company Pakistan Tobacco Company Limited manufactures and sells cigarettes.

Allied Bank Allied Bank Limited is a full service bank with a focus on retail banking. The bank offers a wide range of financial products and services, including deposit accounts, foreign currency accounts, demand finance, and online banking services.

Losers of the week Sui Northern Gas Pipelines Sui Northern Gas Pipelines purchases, purifies, transmits, distributes, and supplies natural gas, in addition to marketing Liquefied Petroleum Gas.

TRG Pakistan TRG Pakistan operates as an information technology company. It provides business support and software services to companies. It manages call centres and offices in Pakistan and elsewhere throughout the world.

Sui Southern Gas Company Sui Southern Gas Company explores and develops oil and natural gas properties in Pakistan.

Published in The Express Tribune, March 30th, 2014.

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