April 5, 2006	Wednesday	Rabi-ul-Awwal 6, 1427

KARACHI, April 4: Pakistan’s stock market has recorded gains of 21 per cent in three months and four days of the current calendar year. On Tuesday, the KSE-100 index climbed 88 points to close at the highest ever index level of 11,573 points. One percentage point increase has come in the last couple of sessions, shedding which, the market has provided return of 20 per in the first quarter (Jan-March 2006) of the current year.

All of those glittering gains coming out of the Pakistan’s equity markets should not of course, spur immature investors to jump into stock trading, for if the returns are high, so are the risks. Most of the market thinks that the KSE index would be touching new peaks in the next few weeks and the equity analysts -— by virtue of their job — would keep writing out rave reviews, but let the investor not forget the March 2005 crisis when the market had plunged as swiftly as it had climbed. Are the circumstances/fundamentals different this time around? May be they are. But keeping the memories of the vagaries of stock trading alive should do investor good.

At greater risk are surely the punters and those who — giving in to greed — go into leveraged business, beyond their strength to bear the losses, if and when they accrue. Speculation is the spice of stock trading. But that is more of an art. Like a senior stock broker so aptly told some punters who came up to him with long drawn faces complaining of having suffered losses: “Roz, roz madam chaap karo gay to yehi hoga” (if you play heads or tails on a daily basis, this is what would happen!).

A glance at other international equity markets (summarised by Invest Cap) shows that the KSE was a close competitor to the Mumbai stock exchange, where BSE-30 gained 23 per cent year-to-date. Other markets, such as US, Hong Kong, Japan, Singapore and UK, all, provided no more than single digit returns to their investors.

A report prepared by JS Capital Markets and released on Tuesday, observed that Pakistan’s $55bn stock market that posted average annual gain of 68 per cent in the last four years, rose by 1,929 points equivalent to 20 per cent during 1Q2006. Great volatility was witnessed during the three months period but the index finally closed the quarter at 11,486 points, after hitting the high of 11,609 on Feb 23, 2006. An episode that went to cause some concern during the quarter was the sharp correction of 1,516 points (13 per cent) that the market took in just 12 trading sessions in February.

A sample of 47 listed companies representing 89 per cent of the KSE-100 Index showed that big banks, cement, E&P companies and the Sui twins were at the head of the bull-run during the quarter. As per the JSCML analysis, gas distribution companies SNGPL and SSGC topped the list as the best performing stocks for the quarter (Sui Northern gave return of 74 per cent and Sui Southern 54 per cent). That was believed to be due to government’s invitation to potential buyers for their privatization at the start of the year. Those two were followed by big banks such as MCB, UBL and NBP that gave its investors a substantial 62pc, 51pc and 42pc return, respectively. The cement sector, following an increase in cement prices and the start of the peak construction season, also came in the limelight in March 2006, as market leaders in the cement industry, Lucky and DG Khan Cement, posted 46pc and 42pc gains, respectively.

Among the energy sector stocks, Pakistan Oilfield stood among the market’s top 10 performers, giving its shareholders a 48pc return. Index heavyweights, such as OGDC and PPL provided gains of 34pc and 31pc. PTCL remained subdued during the period, under performing the index by 20pc. Other major losers for the quarter included companies from the IPPs, chemical and the telecom sectors.