About the Karachi Stock Market Blog Daily updates on the Karachi Stock Market, with news, company dividends and KSE-100 index movements.The rollercoaster of a day trader's dream /nightmare riding the KSE-100 index. More than 750 posts and counting ...
The KSE-100 index shot up to make an intra-day high of 7,505 today. The market broke 7,500 for the first time since the 3rd week of April and the total volume of shares traded rose to 175.4 million. While there could be some weekend selling 2moro, there are enough catalysts to keep the market buoyant in the next few weeks, the monetary policy announcement, the begiining of the result season and the new leverage product coming soon, to name a few.
The Karachi Stock market started the first day of the new fiscal year closing up at 7,270. The market was boosted by the slash in the National Savings Schemes rates.
News : The Karachi Stock Exchange on Tuesday informed its members that the collection of Capital Value Tax (CVT) has been withdrawn only on purchase value of shares of listed companies with effect from July 1st, 2009 on the trade/transactions carried out on and after such date as per amendments made in Income Tax Ordinance, 2001 through the Finance Bill, 2009.However, collection of CVT will remain applicable on purchase of Modaraba certificates or any instruments of redeemable capital listed on the registered stock exchanges in Pakistan….On the other hand, the market participants were still confused regarding the collection of FED on brokerage imposed in the budget 2009-10….the new tax will have to be collected from the beginning of the new fiscal year ie July 1st, however, it is still not announced whether the tax would be collected on exchange level or through brokers… Aaj News
News : The International Monetary Fund (IMF), which is to quiz Pakistan’s economic managers, led by Advisor to Prime Minister on Finance, Shaukat Tarin, on July 3, 2009, in Istanbul, has sought detailed information on the amount used by the public fund (NIT)-SEF for interventions in the stock market, their impact, stocks holdings by foreigners of shares listed on the Karachi Stock Exchange (KSE), and status of reforms of broker financing (badla)… Aaj News
The Securities and Exchange Commission of Pakistan (SECP) has suspended the registration of five members of Karachi Stock Exchange (KSE) till the claims against them in the light of the investors’ complaints are ascertained and settled in accordance with law…Following the SECP decision, the Karachi Stock Exchange has also suspended the trading rights of the these five members with immediate effect and until further notice to protect the interests of the investors….The names of the KSE members whose trading rights and registration have been suspended are: Eastern Capital Limited; Prudential Securities Limited; ClikTrade Limited; MKA Securities (Private) Limited; and Capital One Equities Limited…Aaj News
On Friday, the KSE-100 index made an intra-day high of 7,217 and closed up at 7,163. The last two sessions have seen a significant rise in volume and foreign investment.
News : Massive foreign investment inflows took place in the stock market during the current week, which resulted in the highest level of net buying during the last 14 months…."The rising portfolio investment is not ‘motivated by market fundamentals,’ but is a deliberate move by the local big shots in the stock market to minimise their impairment losses as much as they can by June 30, 2009 when the current financial year closes," remarked a well-known analyst when asked for his comments on the encouraging trends in the stock market regarding portfolio investment….At a time, analysts said, when market fundamentals are not strong, the budget 2009-10 announced during the current month offered nothing to boost the stock market, but the rising interest of offshore investors in the local market is beyond comprehension…. Daily Times
The Karachi Stock Exchange is likely to propose to the SECP that the mark-up rate should be capped in the Margin Financing (MF) system and the financing facilities should be allowed in any other deliverable stocks, it is learnt. In its feedback to the Securities and Exchange Commission of Pakistan on the Consultative Group’s Concept Paper on Margin Financing, KSE is expected to propose that there should be 44 days lock-in-period for restricting financier to release the MF transactions, however, the financee may have the option to release such transactions as and when he requires,…Sources said KSE also favours that brokers as financiers should be allowed to finance other brokers of the same exchange for their respective clients and proprietary accounts and the mark-to-market losses should be managed by a central party or the system provider….The board’s meeting would be held in the first week of July 2009…. Aaj News
News : The senior stock brokers would formulate the mechanism of collecting Federal Excise Duty (FED), which the government proposed to impose on services provided by the stock brokers at the rate of 16 per cent from July 1st. This was the outcome of a meeting that took place between the Karachi Stock Exchange delegation and adviser to finance minister Shaukat Tarin and his team at Islamabad on Tuesday.FED is not a levy like other taxes imposed on share transaction, … KSE brokers would device the mechanism of collecting FED and send it to government, to which the advisor has agreed… The News
Pakistan’s capital market has not witnessed any IPO (initial public offering) in the first six months of 2009 as no company offered shares to public during this period. "This is the worst-ever situation from which Pakistan capital market is passing through. It can be judged from the fact that no company has offered shares to public since January 2009," analysts said.This has happened for the first time in the last decade of Karachi bourse that no IPO hit the market in the first half of the calendar year. "Despite higher lending rates, new companies were not able to raise funds through initial offerings at the local exchanges mainly due to unwarranted closure of the market for three-and-a-half months, continuous selling by foreigner investors and weak economic fundamentals forcing issuers to delay their offerings,… Aaj News
The board of directors of Askari Bank Tuesday authorised the signing of a memorandum of understanding, in terms of which Mybank could merge and amalgamate into Askari Bank…Banks are now required to raise their minimum paid-up capital (free of losses) to Rs 6 billion by December 31, 2009, Rs 7 billion by December 31, 2010, Rs 8 billion by December 31, 2011, Rs 9 billion by December 31, 2012 and Rs 10 billion by December 31, 2013…Askari Bank said it would be applying to the SBP for obtaining approval to commence due diligence of Mybank…Daily Times
News : The members of the board of directors of Karachi Stock Exchange (KSE) are scheduled to meet the Advisor to Prime Minister on Finance, Shaukat Tarin, on Tuesday in Islamabad to discuss various issues regarding imposition of federal excise duty (FED) on brokerage and its collection….It is learnt that the KSE board would propose collection of FED at the exchange level rather than through brokers. It is also expected that the board will propose to abolish the condition of provision of details of all investors as it would be very difficult for brokers to provide the details of their investors….Aaj News
News :The loss of ready board leverage is shrinking volumes and since the brokers’ livelihood depends to a great extent on the speculators and day traders, the slowdown in income stream is cause for concern. But the trouble is that 104 brokers had stood up in revolt against the age-old prevalent ‘badla’, CFS or more attractively named CFS Mk-II. They could not possibly step back and admit that it was a mistake to discard the bad ‘badla’, before introducing an investor-friendly and acceptable alternative…While stock brokers have sought comments and suggestions from the fraternity in regard to the proposed new product, a consultative committee formed by the Securities and Exchange Commission of Pakistan (SECP), under the chairmanship of Aftab Ahmed Diwan, the COO of Central Depository Company of Pakistan (CDC), has also feverishly worked to develop and distribute the contours of its version of a new product of ‘Margin Financing’ (MF)….On Friday, the SECP told stakeholders to submit comments by June 25th, on the first report on ‘Margin Financing’ released by the SECP’s consultative group on capital markets…. Dawn
News : Pakistan wracked by a war with Taliban insurgents and a record current-account deficit, is this year’s best bond investment, according to JP Morgan Chase & Co. indexes. Money managers say the stock market, the region’s cheapest, may be next…“We’re not seeing a major turnaround in the economy but as interest rates come off, that’s when you will see genuine interest coming back to stocks,” Nasim Beg who helps manage the equivalent of $160 million at Arif Habib Investments Ltd. in Karachi, said in an interview today. “So we expect good upside for stocks.”… Bloomberg
The Karachi Stock market got another bashing today and made a low of 6,855. Breaking 6,800 will lead to further downside and there are no real positive triggers on the horizon until the new leverage product comes into play & a cut in interest rates. It could be time to reach for the proverbial Vaseline jar….
News : The Oil Marketing Companies (OMCs) have announced increase in furnace oil price by Rs 4,000 per tonne, dealers said. The OMCs on Monday officially announced changes in furnace oil price and started supply of furnace oil on new rates with immediate effect, they added. According to dealers, the companies including Pakistan State Oil, Caltex and Shell have announced increase of Rs 4,000-4,341 per tonne in furnace oil price. With the current surge, furnace oil price has touched Rs 39,500-40,000 per tonne in the local market… Aaj News
The following is an article well worth reading written by the Director of Financial Services Tax with KPMG in Ireland…. "Capital gains tax (CGT) exemption on shares should be rationalised and dividend distributions by companies should be exempted. CGT exemption on shares should be available only where shares are disposed of after being held for one year. This exemption should be proportionately reduced and capital gains derived on sale of shares disposed of after being held for less than 3 months should be taxed at full rate.
The above will discourage people from investing for short term and will induce them to hold shares for longer term. Consequently, it will bring only the genuine investors to stock exchange and will filter out those who are there to make money overnight. This will bring the much needed stability to stock exchange index movements which will then reflect the true state of the country’s economy….The way our stock market works, it is certainly not a barometer of investment. In fact the stock market in Pakistan is nothing but a sophisticated casino of the West; the only difference is that income earned in a casino is subject to tax… Daily Times
In the first session after the Budget for 2009-10, the KSE-100 index got bashed and closed down by a hundred points.
News : Habib Bank Ltd., Pakistan’s second-biggest by assets, withdrew from bidding for shares of RBS Pakistan. “Habib Bank conducted the due diligence,” it said in a statement to the stock exchange today. “After careful consideration, Habib Bank decided not to participate in the bidding.” It didn’t give a reason. MCB Bank Ltd., the biggest by market value, JS Bank Ltd., a Pakistani lender, and Orascom International Investment Holdings are competing for the business. RBS Pakistan formerly belonged to ABN Amro Holding N.V….Source : Bloomberg
Doubts over the ‘timing and nature’ of the external financing that Pakistan is banking on to cover its fiscal deficit need to be removed before any review of its lowly soverign credit rating can take place, an analyst for Moody’s Investor Services said on Monday…."We recognise the improvement in terms of sovereign ratings but we need more reassurance of the timing and nature of the external financing," said Aninda Mitra, Moody’s sovereign analyst for Pakistan… Aaj News
The Karachi Electric Supply Company (KESC) will issue 4.081 billion right shares at Rs 3.5 per share to generate Rs 14.286 billion to partly finance equity component of new generation projects and capital requirements….The right shares will be offered to ordinary share holders at the rate 31 percent of their existing shareholding in the company...Aaj News
The new Budget for the Fiscal year 2009-10 announced yesterday has proved to be a non-event for the stock exchanges in Pakistan. While there are some benefits for the textile and cement sector (reduced FED on cement from Rs900 per metric ton to Rs700 per metric ton.), a 16 percent federal excise duty (FED) would be charged on fees charged by banks, stock brokers and insurance companies. More details will follow…
Pakistan will scrap a 0.02 percent capital value tax (CVT) on the purchase of shares while imposing a new tax on brokers’ commissions, a government adviser said on Sunday… Aaj News
The text of the Budget speech of Minister of State for Finance and Economic Affairs, Hina Rabbani Khar in the National Assembly here on Saturday: The Nation
News : The State Bank of Pakistan (SBP) is to rescue the Bank of Punjab (BoP) by providing Rs 10 billion as bridge financing, as the bank has been unable to comply with the regulatory Capital Adequacy Requirement (CAR) of 9 percent as on December 31, 2008….The BoP is presently facing a shortfall of about Rs 20 billion to comply with the regulatory terms and conditions. Sources said that the State Bank had extensive deliberations with Punjab government on this serious regulatory lapse, and the later agreed to inject Rs 10 billion to strengthen the capital requirements of the bank…Aaj News
The KSE-100 index shot up above 7k on the Consultative Group on capital markets report on margin financing. After many days of getting reamed, the index closed up 2.8% at 7,086. Oil closed above $70 for the first time this year.
News : The Consultative Group (CG) on capital markets has recommended that the introduction of ‘Margin Financing’ (MF) would cater to the financing needs of the brokerage houses and their clients. These recommendations were given by the CG in its first report on ‘Margin Financing’ submitted to the Securities and Exchange Commission of Pakistan (SECP)… Aaj News
The Karachi Stock market finally broke a 5 session downward spiral to close marginally up at 6,894. It made a high at 6,978, but could not sustain its gains. Foreign selling was at its heaviest for the week with over $8 million worth of shares sold today. It’s possible there could be some pullback next week.
Dividends : Bank of Punjab : EPS : -19.02
News : The Petroleum Ministry and the Oil and Gas Development Company Limited (OGDC) have developed a consensus on $ 3 per million British Thermal Unit (MMBTU) maximum wellhead gas price of Qadirpur gas field. The $ 3 per MMBTU wellhead gas price is calculated at $ 400 per ton high sulphur furnace oil (HSFO), a maximum limit for wellhead gas price discount of Qadirpur gas field.The Petroleum Ministry will move a summary to Economic Co-ordination Committee (ECC) of the Cabinet for formal approval. At present, wellhead gas price of other gas fields in Pakistan ranges between $ 2.4 and $ 4.6 per MMBTU. Following an increase in wellhead gas prices of other gas fields, OGDC had requested the Petroleum Ministry to enhance the wellhead gas price of Qadirpur gas field….Aaj News
The State Bank of Pakistan (SBP) has granted in principle approval to JS Bank Limited, in place of Jahangir Siddiqui and Company Limited, to bid for the acquisition of the entire shareholding of ABN Amro Bank NV in the Royal Bank of Scotland in Pakistan (RBS Pakistan)… In this regard, the directors of JS Bank held an emergency meeting to review the said acquisition opportunity, and concluded that this opportunity presents an excellent strategic fit with long-term growth objectives of JS Bank.To this end, the Board of Directors of the bank authorised the management to submit a binding bid to the Royal Bank of Scotland Group plc… Aaj News
The KSE-100 index has been getting fucked shapeless since last Friday and is down nearly 400 points on rumours of brokerage houses being taxed in the upcoming budget. The market has not closed at this index level since March 31st and could continue to get buggered further downwards. The absence of a ‘leverage ‘ product ( like badla ) is not helping matters either.
News : The Dow Jones Indexes, a leading global index provider and the Federation of Euro-Asian Stock Exchanges (FEAS) plan to launch the Dow Jones FEAS Indexes on Friday (June 05), which will include the Karachi Stock Exchange (KSE). According to information sent to KSE on Wednesday, this is the first time that indexes are created to measure the performance of companies across the Euro-Asian region. The three indexes that are being launched on June 05, are a composite, and two regional sub-indexes. The Dow Jones FEAS Indexes are designed to underlie index-linked investment products such as funds and structured products. The Dow Jones FEAS Composite Index currently includes component stocks of 10 of the 32 member states of the Federation of Euro-Asian Stock Exchanges.
The exchanges are:Abu Dhabi (UAE), Amman (Jordan), Bahrain (Kingdom of Bahrain), Belgrade (Serbia), Bulgaria (Bulgaria), Istanbul (Turkey), Karachi (Pakistan), Macedonia (Republic of Macedonia), Muscat (Oman), and Zagreb (Croatia)…Aaj News
The CGT issue seems to need further clarification ( see below ) as its appears to be buggering the market sentiment and the market takes a dump every time there is any mention of taxation in any news article.
News : The exemption of capital gains tax on stock exchanges would continue up to June 30, 2010, as per the provisions of the Income Tax Ordinance 2001. FBR officials told Business Recorder on Monday that the Federal Board of Revenue (FBR) would not touch this exemption in the coming budget under clause-110 of Part-I of the Second Schedule of the Income Tax Ordinance 2001…..Aaj News
The Competition Commission of Pakistan (CCP) on Monday ordered the Karachi Stock Exchange (KSE) to initiate a unified trading platform with Lahore and Islamabad bourses.“Refusal on the part of KSE cannot continue,” read the CCP order in KSE’s violation of Section 3 of the Competition Ordinance 2007…This shall eliminate the present distortion of competition, and ensure availability of and access to the best price of commonly listed securities to all investors in order to restore competition in the market. In the event of non-compliance, KSE will be liable to pay a penalty of Rs50 million at the end of the six-month grace period and thereafter an additional penalty of Rs250,000 per day if non-compliance continues… The News
News : Etisalat, the buyer of Pakistan Telecommunication Company (PTCL), has withheld $799.3 million until the Government of Pakistan (GoP) transfers properties in Sindh and Punjab in favour of PTCL,….PTCL was privatised through the sale of 26 percent shares for $2,598,960,000.00, to be paid in nine equal instalments, payable on a bi-annual basis. As per Share Purchase Agreement (SPA), GoP is required to provide clean titles of 100 percent of PTCL properties (3384 in number) by January 12, 2008. Payment of balance sum of $1.198 billion was contingent upon transferring titles to the properties in question….However, to date, a balance of 161 non-transferred properties (including 71 in Punjab and 45 in Sindh) remain outstanding and consequently the instalments ($133.218 million each), due on March 12, 2008 and September 12, 2008 have been withheld by the buyer. Etisalat has now paid a total of $1.799 billion and the balance of $799.3 million remains, which Etisalat intends to adjust against the value of non-transferred properties,… Aaj News
Suttabhai is travelling and posting might be sporadic for the next few days.
News : Fitch Ratings-Singapore, has downgraded Pakistan-based United Bank (UBL) individual rating to ‘D/E’ from ‘D’, and affirmed its support rating at ‘5′. Concurrently, the agency has also affirmed the ratings of the following three Pakistani banks. HABIB BANK LIMITED (HBL):Individual rating affirmed at ‘D/E’, Support affirmed at ‘5′; MCB Bank Limited (MCB): Individual rating affirmed at ‘D’, Support affirmed at ‘5′; and National Bank of Pakistan (NBP): Individual rating affirmed at ‘D’, Support affirmed at ‘5′….Aaj News
