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| June 20, 2005 | Monday | Jumadi-ul-Awwal 12, 1426 |
PTCL privatization drives market sentiment
The KSE 100-share managed to finish with an extended gain of 53.44 points but well below the week’s best level of 7,536 points. Strong bear-pressure on the PTCL-related news did not allow the index to stay above the widely billed crucial level for onward march.
Bulk of the activity remained confined to half a dozen oil giants who failed in assuming the role of trendsetters in the absence of a follow-up support and quick profit-selling.
Earlier, the stocks sank and rose in line with the negative and positive news of privatization of the state-owned Pakistan Telecommunication Corporation Limited despite announcement of the new bidding date.
The government managed to divide the central unions after winning over some factions of the main body. Others vowed to continue the strike against the selling of a national strategic asset.
Analysts said that the privatization needs an ideal atmosphere to net in foreign investment and a fair deal. To press the sale of a mega unit amid commotions and opposition by the workers was not an ideal option.
In the developing scenario, the government should think twice before making it a point of prestige, they said adding that as the PTCL was a national asset it should be treated, accordingly.
Meanwhile, three foreign companies including Etisalat of the UAE deposited $40 million each, to acquire the controlling shares of the entity.
The undercurrent on the developing scenario on the PTCL standoff may well be taken from the fact that the KSE 100-share at one stage hit the week’s highest level at 7,536 points and the lowest 7,304.47 before, finishing modestly higher at 7,398.73, up 53.44 points over the week.
Announcement of the fresh bidding date was greeted by investors as it boosted the trading but then came in reports of strike by the Union followed by talks and a package, plus job security.
However, as investors were in two minds about the smooth sell-off of the PTCL they played on both sides of the market without taking fresh positions even on leading oil counters where prices showed highly erratic movements.
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But there was a free-for-all after that as a combination of factors worried investors who did not take long positions on any of the counter till the time there were positive signs of smooth sailing on the privatization front.
The privatization deadline could be crucial as it may have both positive and negative impact on the government’s future programme, including the mega issues such as the PSO.
Those who had contemplated smooth sailing themselves indulged in speculative trading. But, those who could peep through the post-sell-off scenario played safe awaiting further developments of strike as was reflected by a steep fall in volume.
Initially, there was a general optimism among the brokers and investors that the government meant business and was inclined to go with its privatization policy irrespective of the resistance. There could be two opinions about the sale proceeds in the prevailing scenario as bidders will think twice before stepping in.
The government, however, seems in no mood to be outwitted by the strike but intends to go through the deal within the given date as the six short-listed bidders were still in line.
The government had to come out with a fresh selling date after the Union rejected all its offers.
The question being debated among analysts was that whether or not the PTCL sale could get a fair price in the prevailing commotion and rigid positions taken by the contenders, said a leading broker.
As far investors were concerned they were not inclined to take the negative view as was reflected by a fresh sharp rise in its share value. It was quoted around Rs72, although the situation was still fraught with high financial risks, he said.
There may be many a slips between the lip and the cup if the situation aggravated, analysts feared. The sell-off under the prevailing conditions may affect the price.
Apart from the PTCL, the market advance was led by the leading oil shares under the lead of Pakistan Petroleum, the PSO and some others amid light trading.
FORWARD COUNTER: Barring the PTCL and the National Bank which ended lower, other leading shares rose under the lead of the OGDC, Pakistan Petroleum, the PSO, and some others on other counters, leading among them being the Bank of Punjab, the United Bank, and the Fauji Fertiliser Bin Qasim.—Muhammad Aslam.
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