November 7, 2003	Friday	Ramazan 11, 1424

KARACHI, Nov 6: Stocks on Thursday suffered fresh decline as investors took profit at the available margins in the absence of strong support from the institutional traders and fresh positive announcements from the corporate front.

The underlying sentiment in part was also affected adversely owing apparently to a negative investor reaction to the draft regulations for broker margin financing issued by the State Bank of Pakistan on Wednesday to replace the existing badla trading system.

Most of the price changes were fractional and reflected both lack of support and selling from the leading market operators.

The KSE 100-share index suffered a fresh fall of 23.37 points at 3,732.30 as compared to 3,755.67 a day earlier, reflecting the weakness of PTCL and PSO, two leading base shares.

Leading brokerage houses and stock analysts most of the time remained busy in analyzing the immediate negative fallout of the margin financing rules on the share business and how the investors engaged in the badla system will react to them.

But there was a consensus among them that system of margin financing will be pretty difficult for them to operate for various reasons but it will certainly affect the daily trading.

Some others, however, claim the badla system may continue but outside the KSE premises in different forms as typical Pakistani thinking has more than one outlets to beat any official system to set things right.

“The bala system has, in the past, often been used as a tool for market manipulation as brokers and investors were also badla financiers,” analysts said. “Margin financing is expected to end the speculative tendency in the share business to protect the interest of the small investors.”

Although the new regulations will be effective in due course after having comments on them from brokerage houses and the financial institutions, the conditions laid down in the rules are pretty difficult to meet most of the brokerage houses, says a leading broker.

Under the proposed rules, banks will extend margin financing to those brokerage houses which are registered as limited companies and duly credit rated by an approved credit rating agency.

What is more important is that a minimum margin of 30 per cent of the current value of the approved shares will be kept by the banks as a security, he says.

PSO received fresh battering and evoked a lot of sympathetic selling in other pivotals, but some of the second-liners came in for active short-covering at the lower levels and allowed the market to avert a major fall.

Minus signs again dominated the list, major losers being Atlas Honda, Bhanero Textiles, Clover Pakistan, Unilever Pakistan and Nestle MilkPak, which suffered decline ranging form Rs4 to Rs14.50, followed by PSO, HinoPak Motors, Glaxo-SKF, BOC Pakistan, Century Papers, Pakistan Paper Products, which fell by Rs2.55 to Rs6.15, largest decline being in National Refinery.

Some of the leading shares, notably Pakistan Resource Co, General Tyre, Star Textiles, Cherat Cement, Bosicor Pakistan and Al-Abid Silk were, however, an exceptions, rose by Rs1.30 to Rs6.

Trading volume fell to 125m shares from the previous 79m shares as losers maintained a strong lead over the gainers at 154 to 73, with 39 shares holding on to the last levels.

Hub-Power topped the list of most actives, up 15 paisa at Rs33.85 on 22m shares followed by PTCL easy 45 paisa at Rs31.65 on 21m shares, FFC-Jordan Fertilizer, up 60 paisa at Rs17.50 on 15m shares, PSO, sharply lower by Rs2.55 at Rs242.50 on 15m shares and D.G. Khan Cement, easy 55 paisa at Rs36.85 on 14m shares.

Other actives were led by Bosicor Pakistan, higher by Rs1.10 on 5m shares, Fauji Cement, up 75 paisa on 3m shares, Pakistan Oilfields, higher by 95 paisa also on 3m shares and Maple Leaf Cement, off 60 paisa on 2.784m shares.

FORWARD COUNTER: PSO remained under pressure and led the list of actives, off Rs2.60 at Rs242.50 on 12m shares followed by PTCL, lower by 70 paisa at Rs31.60 on 11m shares, Hub-Power, up 15 paisa at Rs33.90 on 9m shares, FFC-Jordan Fertilizer, up 45 paisa at Rs17.45 on 4m shares and ICI Pakistan, firm by 15 paisa at Rs71.75 on 0.552m shares.

DEFAULTER COMPANIES: Standard Investment Bank again came in for modest support at the previous rate of Rs5.90 and accounted for 0.156m shares. Others lacked normal trading interest and finished mixed amid modest turnover.