fortune today_dec'10 - a perfect end to a good year for kse_3rd january_2011

8/7/2019 Fortune Today_Dec'10 - A perfect end to a good year for KSE_3rd January_2011

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Fortune Securities Limited |Equity Researc

FortuneSecuritiesLtd

Market

AhsanZia

Phone:+922135309101;Ext:141Email:[email protected]

KSE 100 index continued to spiral its way up duringDec10, gaining9% MoM, to

mark a perfect end to a good year for Pakistan equities, where the 100 index

gained28%duringCY10,despitealullatthebourseforthefirstthreequartersof

theyear.Average volumes duringDec10 remainedhealthy,at98mn shares (KSE

100volumes),up1%MoM,whileforeign investorinterestjumpedbyawhopping

87% MoM to USD 73mn during the month. The market also breached the

12,000ptsbarriertowardstheendofthemonth,forthefirsttimesince3rdJuly08,

astheindexnowstandsata30monthhigh.

Investorsentimentdisplayed immenseresilience toa50bpsdiscountratehikeat

the end of Nov10, which was by and large, priced in. With expectations of the

SBPs belt tightening stance to be nearing its climax, the market rather reacted

positivelypostthediscountratehikeaswitnessedinanenormous227%pickupin

volumesposttheDRhike.

Keysectors'performanceduringDec'10

50% 40% 30% 20% 10% 0% 10% 20% 30% 40%

Electronic &ElectricalEquipment

Industrialmetals &Mining

Chemicals

Banks

FoodProducers

GeneralIndustrials

Oil&Gas

Personal Goods

Electricity

Automobile and Parts

Constr.&Materials

LifeInsurance

Gas Water&Multiutilities

Tobacco

FinancialServices

Source:KSE

Sectorspecificdevelopmentsremainedcentraltoperformance

Fertilizersectorremainedunderinvestorradar,withpublicationofOct10offtake

numberscreatinginterest,specificallyinFFBL.Meanwhile,aureapricehikeofPKR

190/bag also drove a rally in fertilizer stocks, specifically FFC (biggest beneficiary

fromthepriceraise)andEngro(expectedtoundertakeCoDinmidJan11).

Banking sector also witnessed healthy activity with bonus and dividend payout

expectations ahead of the annual financial closing. Particularly, UBL gained from

news of ADGs consideration of divesting its strategic stake of 30% in the stock.

WithBestwayHolding,announcingapurchaseofafurther20%stakeinUBL,taking

itstotalstaketo51%,itwaslaterclarifiedthatatenderofferwouldnothavetobe

madefromBestway,asitwasmerelyachangeofshareholdingwithinthegroup.

FortuneTodayDec10 AperfectendtoagoodyearforKSE

Date:3rdJanuary,2


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Fortune Securities Limi ted |Equity Resea

Energy sector continued to be a usual favourite for foreign fund inflows, as

internationaloilpricescrossedUSD90/barrelduringthemonth.Morespecifically,

BPs divestiture of most of its assets to UEG for USD 775mn, which left deal

valuations atapremium to prevailing market multiples, invited investor interest.

Although OGRAs decision of not passing on an the impact of an upsurge in

international oil prices and instead, channeling the international oil price hiketowards reducing PDL and dealer margins, affected OMCs and refineries

negatively.However,MoFsassuranceofaPKR35bnpayment toPSO toease its

financialburdenfromthecirculardebtissue,ignitedinterestinthescrip.

Despite rejection of EUs call at the WTO summit for duty free concessions for

specificexportproductsfromPakistan,beingadampenerfortextilemajors,rising

cotton prices in the international and local prices, sparked a buying spree in the

sector.Meanwhile,autosectorremainedalaggardasGoPextendedtheagelimit

forusedcarimportsto5years,affectinglocalautomakersnegatively.

Political noise and foreign aid/trade agreements guided investor

sentiment

PoliticalnoisereemergedwithJUIleavingthecoalition,whilefrictionbetweenthe

rulingparty,PPPandkeyally,MQMcouldbeheardthroughoutthemonth.

On the other hand, Chinese PMs visit to the country remained key to exciting

investorsentimentasatotalof17agreementsweresignedbetweenthestrategic

partners, including a joint venture worth USD 15bn and four MoUs. Adding to

positivenewsflowwasIMFsconsenttoa9monthextensioninitsSBAprogram,

whichprovidedamuchneededbreathertothegovernmentamidstrisingpolitical

noise fromcoalition partners as well as the opposition over key reforms needed

under the IMFsSBAprogram.Meanwhile,thereleaseof themuchawaited USD

633mnundertheCoalitionSupportFund,triggeredmanysighsofrelief.

Economicscenariodepictedamixedbagofpositivesandnegatives

Surfacing of weak macroeconomic data had its fair share during the month, as

Nov10CPIinflationclockedinat15.48%,an18monthhigh,drivenlargelybyfood

and energy inflation. Although core inflation, sticking within single digits (9.5%),

provided comfort, trade deficit for Nov10 widened to USD 1.6bn, while foreign

investmentincheddown7%YoYtoUSD143mn.

A few positives also lightened the ambience and raised hopes of better days to

comewiththeNewYearahead.RemittancedataforNov10helpedliftthemood,

asthesameroseby8%MoMtoUSD927mn,whilespurringthe5MFY11figureby

16%YoYtoUSD4.4bn,hencelendingstabilitytothecountrysforexreserves,amid

ballooningoilimportcostsandawideningtradedeficit.

Outlook

WithDec10marketperformancesettingaperfectmomentumaheadoftheNew

Year, resolution of the current political standstill will remain key, as the ruling

coalition has lost its major support with key ally, MQM having switched to the

opposition benches. Meanwhile, with a new SECP chairman in office,

developments on the leverage product front could provide the much needed

liquiditytolocalparticipants,whohavebeennetsellersthroughouttheyear.

KSE100

10,000

11,000

12,000

13,000

1Nov10

8Nov10

15Nov10

22Nov10

29Nov10

6Dec10

13Dec10

20Dec10

27Dec10

Points

KSE100 volumes

10

70

130

190

1Nov10

8Nov10

15Nov10

22Nov10

29Nov10

6Dec10

13Dec10

20Dec10

27Dec10

(mnshares)

FII

(5)

5

10

15

20

1Nov

10

16

Nov10

1Dec

10

16

Dec10

Dec10

(USDmn)

Source:NCCPL,KSE


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fortune today_dec'10 - a perfect end to a good year for kse_3rd january_2011

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