Friday, February 20, 2009

Stock Market News

Stock Market News 

 

Distribution of dividends: insurance companies asked to recognize impairment as of December 31, 2008

Insurance companies have been asked to recognize the impairment in valuation of investment as of December 31st, 2008 for the purpose of distribution of dividend. In a circular issued by Insurance Division of the (SECP), insurance companies are allowed to value investment in Available-For-Sale (AFS) category at the purchase price and treat the impairment in valuation, at the end of the year, as temporary for finalization of accounts. However, the impairment has to be accounted @ 25% per quarter in 2009.  This may have a negative impact on the profit available for distribution by the insurance companies on account of significant fall in share prices during 2HY of CY'08.

 

Stocks reviewed in last three weeks

 After witnessing a sharp fall of 48 percent post lifting of the floor, Pakistani stocks have rallied in the last three weeks, up 22%, on the back of good corporate announcements and improved sentiment amongst local investors. As a result, in 2009 thus far, compared with MSCI Asian Emerging markets average decline of 3%, Pakistan market has posted a decline of 1% in the US dollar terms. Pakistan market currently trades at a discount of 43% on average Asian PE, far higher than historical average discount of 30%.  

 

Textile exports drop creating fear of big layoffs:

The data released by FBS revealed that the textile and clothing exports dipped by 3.79 per cent to $5.827 billion in 7MFY09 as against $6.056 billion over last year despite depreciation of rupee, which should have made Pakistan's textile and clothing products more competitive. Imports of textile machinery dropped by 41% indicating the fact that textile manufacturers are not making any investment to increase their competitiveness. However export of non-textile products soared by 24.5% which helped to offset some of the decline in the textile exports. Total non-textile exports stood at $5.062bn in the period against $4.066bn recorded in 7MFY08.

 

Oil import bill soars by 26 per cent

Total oil import bill went up to $6.436bn in 7MFY09 against $4.995bn in the same period last year. The surge can be accountable to decline in Rupee-dollar parity. Rupee depreciated by 30% since July 08 which will add up to the import bill as there is no letup in the quantity demand of oil imports.  A similar impact has been witnessed in the import bill of food items and agricultural products during the months under review. The food import bill is up by 20.52 per cent to $2.468 billion in July-Jan period this year against $2.048 billion over the last year. However significant decline was witnessed in some groups like transportation (decline of 41.72%) and telecom (decline of 47.7%)

 


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