STOCK MARKET NEWS

Pakistan Stock Market in the News   Economy and Oil   The WB mission, which visited Pakistan last month, had sought commitment from the government not to accumulate the PDC on petroleum products even if the oil prices in the global market shot up in future; thus passing the full impact on the consumers. The agreement has been inked between the two parties. Due to the subsidies provided by the government on POL and energy products has resulted in inter circular debt which has gone above Rs300 billion by the end of Nov'08. By eliminating the PDCs to the consumers the cash flow problems that the OMCs are experiencing will be removed completely in future.   Trade deficit jumps to $10.727 billion   The country's trade deficit has jumped to US$10.72 billion in 7mths'09, with 3.5% increase against US$10.35 billion of the corresponding period of last year. Exports registered growth of 8.02%, while imports grew by 5.77%. 83.5% of exports were from cement, chemicals and rice, whereas 95% of imports were on account of petroleum, fertilizer and wheat. Trade deficit was at US$1.16 billion in January 2009 against US$2.064 billion in January of last year. Surge in trade deficit on Y-o-Y basis was mainly due to costly imports of oil, fertilizer, wheat and other essentials and decline in textile sector's dyeing exports. Severe shortages of gas and power and rupee devaluation were other major reason for low exports by textile and other major industries. The shrinking imports and exports due to the global economic scenario will ultimately result in the reduction in value of trade deficits resulting in to favorable balance of payments.   Inflation eases to 20.52pc Inflation continued its downward trend on account of significant easing of food inflation and stability in oil prices. Headline inflation as measured by CPI was down by 42 bps from the previous month. Y-o-Y CPI eased at 20.52% down from 23.34% witnessed during Dec 2008. Core inflation however remained sticky and witnessed Y-o-Y growth of 18.9%. Average inflation for the Jul 08-Jan 09 period was recorded at 23.85%. Govt. estimates average headline inflation to stand at 20% for FY09.      Consensus on available for sale (AFS) impairment losses   During the meeting of ICAP with various stakeholders, a consensus was reached on the issue of impairment losses incurred in available for sale securities (AFS). Accordingly any impairment loses on AFS investments under IAS-39 should not be routed through profit and loss account, and instead, be taken to equity directly. This bodes well for companies with huge investment portfolios particularly in equity market which had been battered in CY08. KSE 100 index fell by a staggering 58.3% more because of the extraordinary conditions which prevailed in the market. The move will particularly favor banking and insurance scripts which have significant exposure in stock market.   If you have any query or question please contact our research analysts: Muhammad Ijaz  stockmarketpk@gmail.com

"MCB - Earnings expectation"

"MCB - Earnings expectation CY’09"

"MCB" Bank will declare its full year results on 10th Feb, 2009. The bank is expected to post PAT of Rs. 15.027 billion (EPS of Rs. 23.92) down by 1.56% from the previous year. In 4QCY08 the bank is expected to post PAT of Rs.3.40 billion (EPS of Rs. 5.42) resulting in a Y-o-Y decline of 15.3%. We expect the bank to announce final cash dividend of Rs.3 per share taking the full year payout to Rs.12 per share. The company is likely to announce bonus issue (20-25%) as well; as it has to increase it’s paid up capital to Rs. 10 billion by 2010. The current paid up capital of the company stands at Rs. 6.282 billion.

Fauji Cement Production Enhancement.

According to the company, FCCL is set to build the largest cement manufacturing plant in the country with a capacity to produce 7,200 tons of clinker per day. The Company had entered into contract with a world renowned cement plant manufacturing firm Polysius AG ( Germany ) to supply state of the art plant and machinery to produce 7200 tons per day of clinker. Additional production of cement by FCCL will help stabilize the cement prices in the local market

Banks shift to invest in T-bills

Banks shift to invest in T-bills

In the auction yesterday, SBP was able to sell treasury bills worth Rs70.543 billion while the target was set for Rs70 billion which means the SBP succeeded in attracting banks’ investment. The Banks, however, were still investing for short-term paper of three-month tenure. They bought three-month t-bills for Rs66.337 billion while the rest was invested for six months. No bid was offered for 12 months. Banks are investing in lower maturity instruments so that they can reinvest in case of further policy rate hike by the Central Bank. The shift in banks investment to T-bills which are offering attractive cut-off yield of 13.85% p/a (3 months) will help the government to meet its budgetary requirement from the banking system rather than the inflationary borrowing which it makes from the Central Bank. However shift in banking strategy to invest in government securities or other security papers will result in lower private sector credit flow.

Oil producers pull lever for huge output cut

Oil producers pull lever for huge output cut


OPEC, supplier of more than 40% of the world’s oil, agreed to cut production quotas by a larger- than-expected 9% from current output quota of 27.3 million barrels a day to revive prices as a global recession reduces demand for crude. Opec and non-Opec oil exporters took action on Wednesday that could remove up to 2.6 million barrels of oil from the market in a bold bid to boost prices and producers' incomes. Crude oil fell as low as US$39.88 a barrel in New York , the lowest since July 2004, on skepticism OPEC will adhere to its new agreement and after a government report showed rising U.S. crude stockpiles. Russia , the biggest oil exporter outside of OPEC, has also pledged to curb exports too, as it did a decade ago when oil sank toward $10 a barrel. Despite the cut in oil production the crude oil prices could not be revived thus sending a signal of economic slow down in major oil importing countries.

Pakistan to be dropped from MSCI emerging markets index this month:

Pakistan to be dropped from MSCI emerging markets index this month:


According to the MSCI this is due to the floor mechanism which had resulted in total closure of Pakistani equity market. The MSCI international equity indices are constructed and managed with an objective of being fully liquid from the perspective of international institutional investors. However the statement issued says that if the floor mechanism is removed and in due course the index resumes its normal trading pattern then it may be allowed to be traded again. Removal from MSCI in addition to the downward rating by moody’s and S&P is another blow to the confidence of the already worried investors.

Stock exchanges to remove floor on 15th

Stock exchanges to remove floor on 15th
The longest ever closure of the stock market in the world is finally set to open on Monday, the 15th of December 2008 after 100 days of freezing the KSE-100 index at 9,144 point level. The move came after the failure of the apex regulator to offer any sort of support fund for providing a soft landing to the market. The immediate impact of the removing of floor will be significant selling pressures in the some of the key stocks bringing significant reduction in their prices. The key concern here is however the investment of around Rs. 11 billion in the ‘badla’ system but those brokers which were vociferous campaigners for the ‘floor’ to be in place have decided to swallow the bitter pill as it has bring more damage to the market. The imposition of the floor has led to the removal of MSCI Pakistan Index from the MSCI Barra.