KARACHI STOCK MARKET NEWS

The KSE-100 index finally closed above 8k and made its highest close since Dec.17th 08. The Karachi Stock market got a good hoist from the IMF news and the volume of shares traded increased to 155.5 million.

Dividends : MCB Bank has earned profit before tax of Rs 11.7 billion during the first half of the calendar year 2009. With 10 percent growth in profit Bank has announced cash dividend of Rs 2.5 per share…During the first half of the calendar year 2009, the Bank’s profit before tax closed at Rs 11.7Billion registering a significant growth of 10 percent over the reported profit before tax of corresponding period last year. Profit after tax closed at Rs 7.76 Billion translating into an EPS of Rs 11.22…. Aaj News

News : The Securities and Exchange Commission of Pakistan has approved the Draft of Margin Financing (MF).After reviewing the draft, the apex regulator…sent it back to the stock exchanges incorporating the comments of the stakeholders and asked the bourses to prepare the regulations governing MF, so that the product could be introduced as early as possible….According to sources, the important feature of the new system is that it eliminates the ‘systemic risk’, as the new system limits extended funding in one scrip, besides the system (clearing and settlement) is not responsible for the default of financee…. Daily Times

Pakistan’s largest bank, MCB Bank, will pay around $90 million to acquire the local operations of the Royal Bank of Scotland, a source with direct knowledge of the deal said on Monday…"We will pay around 7.5 billion rupees ($90.4 million) for RBS Pakistan," said the source, who declined to be identified as the deal has not yet been signed. "The share purchase agreement is likely to be signed in a day or two, maybe even tomorrow, in Dubai," he said. The price would be 0.76 times RBS Pakistan’s book value of 9.888 billion rupees, as of March 31st. "In terms of pricing, MCB seems to have struck a great deal and the bank may even book a gain on amalgamation of RBS into MCB," said Asif Qureshi, director at brokers Invisor Securities…Aaj News

Market Low : 7,872.23  High : 8,097.34

Market Close : 8,082.06 — 209.83 points up

The KSE-100 index made an intra-day high of 7,896 and closed up at 7,834. The market should break 7,900 and hold to go through 8k with some correction along the way. Perhaps the ‘’badla'’ issue will be sorted out before the result season ends, giving the market a much needed boost to sustain its daily gains.

Dividends : Lucky Cement has announced on Wednesday its fiscal year 2009 (FY09) results. It has booked profits of Rs4.6 billion, earning per share (EPS) of Rs14.21 versus Rs2.7 billion (diluted EPS of Rs8.28) in FY08 showed a handsome growth of 72 per cent. The company has announced a final cash dividend of 40%…. The News

News : The Securities and Exchange Commission of Pakistan (SECP) has imposed a fine of Rs2 million on United Bank (UBL) for failing to comply with the provisions of Listing Regulations of the Karachi Stock Exchange (KSE)…..The SECP had served a show-cause notice to the UBL on March 12 for allegedly placing financial results for the period ending December 31, 2008 on its website before dissemination of financial results to the KSE while the board meeting was still in progress….The News

Market Low : 7,796.22  High : 7,896.19

Market Close : 7,834.69 — 38.47 points up

News : Stock brokers are about to convince authorities to re-launch the same leverage product (after rectifying it) on the Karachi bourse, which they had banned in April this year. They had identified the product as the main cause of 2008 historic crisis. The product was called the Continuous Funding System Mark-II (CFS MK-II). And this time the authorities (KSE & SECP) are naming it Margin Financing (MF)….One of the major differences between the internationally practiced MF and the local MF is the involvement of brokers in between financers (lenders) and financees (borrowers),… In conventional MF, the banks are the only eligible financing party to many potential stocks investors and there is no middle man role available (e.g. stockbrokers) in between the two.
    While in the proposed MF, brokers would bridge between financers and financees. In this system, unlike the conventional MF, any financially sound individual or institution can be the financer. They may include the stockbrokers themselves, banks (conventional & non-conventional), mutual fund(s) managing companies, leasing companies, mudaraba companies and etc, subject to the approval of Securities & Exchange Commission of Pakistan (SECP).
    But the major hurdle in launching the world wide practiced MF product here in Pakistan is that banks are reluctant to directly finance stocks investors, one of the senior professionals told with the condition of anonymity.In conventional MF, the total risk is owned by banks and if borrower (client) loses the lender too. But to remain safe from losing in a bear market, banks collect deposit of a certain percentage on the total amount of financing from the share purchaser e.g. 30 per cent (called margins), he explains and adds, margins are maintained upto the banks’ demand as per changes taking place in the share price.
The equal chances of losing financed money are also there in the local MF (Badla financing or CFS MK-II), but in this system the risk is owned by the middlemen i.e. broker and/or product manager like National Clearing Company of Pakistan (NCCPL) and/or KSE, he added….
Arif Habib, another former chairman-KSE, is of the view that the availability of modified CFS MK-II (e.g. CFS MK-III) is must in market to avoid downsizing at brokerage houses, which cannot continue to sustain with thin turnover in a cash strapped market these days.Habib is believed to be leading brokers seeking the resumption of CFS MK-II like product in the market after incorporating so many meaningful changes to make the product viable…. The News

Market Low : 7,679.21  High : 7,771.87

Market Close : 7,716.99 — 3.94 points down 

The KSE-100 index has finally closed above 7,800, its highest close since April 21st.

News : The Securities and Exchange Commission of Pakistan (SECP) on Wednesday approved 18 securities for trading in the deliverable futures contract market (DFCM),…The commission, while granting approval, advised the Karachi Stock Exchange (KSE) to carry out a comprehensive review of DFCM and submit a report to the SECP three months after the launch of the August 2009 contract….This roadmap includes the re-launch of deliverable futures contract market (DFCM), availability of margin financing and introduction of index-based market halts/trading halts by widening circuit breakers.

…securities that qualify for trading in the DFCM are as follows:   Oil and Gas Development Company, MCB Bank, Fauji Fertilizer Company, Pakistan Petroleum, Hub Power Company, Pakistan State Oil, Pakistan Oilfields, National Bank, United Bank, Engro Chemical, DG Khan Cement Company, Pakistan Telecommunication Company, Bank Alfalah, Fauji Fertilizer Bin Qasim, Lucky Cement, Nishat Mills, Adamjee Insurance and Azgard Nine…The News

Market Low : 7,779.21  High : 7,872

Market Close : 7,802.81 — 20.58 points up

The Karachi Stock market shot up today making a high of 7,716. The market was buoyant ahead of the KSE meeting 2moro, expecting an early release of the new leverage product and a list of 10 deliverable future scrips that might come into play by the end of the month. The ten scrips are :  ENGRO / FFC / HUBCO / MCB / NBP / OGDC / POL / PPL / PSO / UBL.

News : The board of directors of Karachi Stock Exchange (KSE) in its meeting scheduled for Tuesday, July 14 is likely to approve re-launching of deliverable futures in 10 scrips,…"It is expected that the deliverable futures product could be re-launched by the end of this month," sources said. However, it is subject to the approval of SECP… Aaj News

The State Bank of Pakistan will announce the monetary policy on July 25th, 2009 and analysts say that there will be a further cut in interest rate as the inflation is constantly on the decline. "The central bank would issue the Monetary Policy Statement (MPS) for the July-September quarter on 25th of this month," said Syed Wasimuddin, chief spokesman of the SBP…Analysts expect a further cut in the interest rate as positive impacts of tight monetary policy have already been witnessed on the economy with the CPI inflation declining to 13.1 percent in June….At present, the CPI inflation has further reduced by some 6 percent during the last quarter (April-June) to 13.13 percent by June-end from 19.1 percent in March this year.Therefore, economists and analysts are confident that the SBP would announce a massive cut in the interest rate in upcoming monetary policy. "The SBP would continue its previous stance and we are expecting 100-150 basis points cut in interest rate," said Muzamil Aslam an economist at JS Global… Aaj News

Market Low : 7,502.66 High : 7,716.41

Market Close : 7,684.65 — 181.99 points up

The KSE-100 index stayed positive all day and towards the close shot up to a high of 7,558. The market was boosted on rumours that withholding tax (WHT) would be abolished, which emanated  during Tarin’s meeting at the Karachi Stock Exchange today. ( see below )

News : The Advisor to Prime Minister on Finance, Shaukat Tarin, has announced to abolish withholding tax applicable on the sale of shares. Briefing the media after his meeting with members of Karachi Stock Exchange (KSE) here on Monday he also announced that he would advise the Federal Board of Revenue (FBR) to convert the tax being paid under ‘Presumptive Tax Regime’ (PTR) to be made adjustable (as compared to minimum) with final tax liability of members. He also announced that the newly imposed federal excise duty (FED) would be collected directly from members, as prescribed by the FBR. However, the audit process would be made transparent and hassle-free. He said that FED would be collected from members on self-assessment basis. However, around 2.5 percent members from all three stock exchanges would be selected, on random basis, for audit,… Aaj News

The Karachi Stock Exchange (KSE) has reduced the marketable lot size to one share, effective from July 21, 2009. According to the KSE on Monday, the decision has been taken on the recommendation of the Development, Technology and Trading Affairs Committee and the board of directors to facilitate the market participants. However, this decision will not be applicable for orders entered during the pre-open session. As a consequence of the decision, the “odd lot market” will not operate as a separate market also effective from July 21, 2009... Source : The News

Market Low : 7,471.28  High : 7,558.42

Market Close : 7,538.49 – 67.21 points up

Dividends : Exide Pakistan : 50% Cash EPS : 21.87

Board Meeting : PTCL - 2moro.

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

Market Low : 7,163.04 High : 7,237.93

Market Close : 7,206.17 – 43.13 points up

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

Market Low : 7,128.83  High : 7,217.97

Market Close : 7,163.04 – 34.21 points up.

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

Market Low : 6,996.77  High : 7,085.20 

Market Close : 7,023.48 – 33.78 points down.

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

Market Low : 7,039.73  High : 7,133.53

Market Close : 7,057.26 – 17.53 points up.