KARACHI, Oct 15: After ruling unchanged for the last couple of weeks, weighted average rate under the Continuous Financing System (CFS) on the Karachi Stock Exchange last week rose by 400 basis points at 21.6 per cent from the previous 17.6 per cent.
According to an analyst at a leading brokerage and research house, it crossed the upper limit of 18 per cent after the transactions under the CFS in DG Khan Cement and Sui Northern Gas were carried out on spot basis.
But on the other hand, investment under the CFS remained capped at Rs25 billion as no investors tried to go beyond that limit, but on the other hand average rate fell to 24.4 per cent from the previous peak level of 28.1 per cent, showing a decline of 370 basis points, but investment stood unchanged at Rs2.3 billion, he added.
According to analysts, an open interest in stock futures showed a fresh increase despite the fact that investment remained capped at Rs25 billion. The interesting feature was that spread on futures, which soared to 34.72 per cent, up 11.48 per cent from the previous figure during the week ensured higher returns on investment to the investors.
“The abnormal rise in spreads in stock futures is reminiscent of March rally followed by the market crash,” they said, adding that the increase in bank exposure limits to 30 per cent from the previous 20 per cent by the central bank was expected to further increase the open market interest as well as liquidity.
