June 6, 2003	Friday	Rabi-us-Sani 5, 1424

KARACHI, June 5: Pakistan’s stock market remained buoyant during the outgoing fiscal year 2002-03 and the KSE-100 index witnessed a phenomenal growth in the first ten and a half months to May 16, 2003, to 3003.4 points, from 1770.1 points in June last year. This represented an increase of 69.7 per cent during the period under review, compared to a rise of 33 per cent in the same period last year, stated the Economic Survey 2002-03.

“The milestone was achieved because of the government’s macroeconomic policies, strengthened macroeconomic indicators and the confidence of both local and foreign investors on the country’s economic policy and on the KSE,” the survey claimed. During the period under review, the aggregate market capitalization of the KSE also surged 62.5 per cent to Rs662.5 billion, from Rs407.6 billion. In terms of US dollars, the market capitalization increased by 73 per cent, rising from $6.63 billion to $11.47 billion during the current fiscal year till May 16, 2003 (the cut-off date for the Survey).

The Survey pointed out that yet another indicator of impressive performance of the KSE was an extraordinary surge in monthly turnover of shares to 4 billion during July-April of 2002-03, from 2.4 billion in 2001-02. The Economic Survey stated that during July-May 12, 2002-03, the KSE had also remained “the best performing market among the leading stock markets in the world.” Except for Pakistan and Sri Lanka, all other markets of Asia Pacific Region had registered significant losses during the period under review.

The Survey listed “number of factors”, that spurred the rise in share prices: (1) investment friendly policies being pursued by the government for revival of the national economy and restoring the confidence of investors; (ii)substantial improvements in economic fundamentals; (iii) relatively cheap market valuation and the declining returns on alternative investments; (iv) huge forex reserves, rescheduling/ write-off of debts by some big donor countries, especially the US; (v) huge build-up of rupee liquidity driven in large by continuing forex inflows into Pakistan, that pulled down interest rates; (vi) strong presence of energy stocks in the market as energy sector enjoys about 30 per cent weight in the KSE-100 share index and serves as one of the key drivers of the market (vii) expectations of early privatization of some state enterprises and banks; (viii) policies on privatization, liberalization and deregulation had encouraged private investments having a profound effect on the activity of the stock market and (ix) increased interest of foreign investors in the stock market.

“The upward movement has also been accelerated because of a democratically elected pro-reform government firmly in place since mid-December 2002. Moreover an emerging stable and improved bilateral relations between Pakistan and India has created a renewed bullish fervour in the month of May 2003,” said the Survey. It listed measures taken by the Securities & Exchange Commission of Pakistan (SECP) and the bourses for restoring investor confidence in the capital markets.

The Survey pointed out that all the 12 major trading groups on the KSE (cotton and other textiles, pharmaceuticals & chemicals, engineering, auto & allied, cables and electric goods, sugar and allied, paper and board, cement, fuel and energy, transport and communication, banks and other financial institutions, and miscellaneous) had recorded positive growth in their share indices, ranging from 1.7 per cent to 79.8 per cent (auto & allied).

The Survey mentioned that during the calendar year 2002, total profit before taxation of all 12 trading groups stood at Rs90.9 billion, as compared to their before taxation profit of Rs62.6 billion in 2001. In 2001, three groups (engineering, sugar & allied and cement) had recorded pretaxation losses, while during 2002, only one group (sugar & allied) had incurred a pre-taxation loss of Rs0.5 billion.

The Economic Survey acknowledged that the business on KSE was primarily influenced by some selected big companies including Hub Power, PTCL, PSO, etc. During the first three quarters of the current fiscal year, combined turnover of shares of seven big companies (Hub Power, PTCL, PSO, Sui Northern, FFC Jordan and National Bank) was 6.78 billion, which constituted 18.7 per cent of the total turnover of shares on KSE, said the Survey, and added that those seven companies had earned profit after taxation of Rs34.5 billion in the current fiscal year up to March 2003 as compared to their after taxation profit of Rs29.6 billion in the same period last year.

Total funds mobilized during July-March 2002-03 in the two stock exchanges (KSE and LSE) stood at Rs24.8 billion, as compared to Rs17.7 billion in the same period last year, the Survey said, adding that total turnover of shares in the three stock exchanges during first three-quarters of the current fiscal year was 56.9 billion, compared to 34.5 billion in the same period last year, recording an increase of 64.9 per cent.

The Survey observed that during the period under review, 17 companies had offered Term Finance Certificates (TFCs) to the public in aggregate sum of Rs9.831 billion, whereas one company with paid-up capital of Rs1.377 billion and 2 companies with paid up capital of Rs0.100 billion were listed on the KSE and LSE, respectively.