KARACHI, Jan 10: The more-trusted KSE-100 share index is not the right representative of the 641 companies listed on the exchange. Only one stock--the energy sector bellwether, Oil & Gas Development Company (OGDC), can turn the market topsy turvy. With 25 per cent weight in the index and 82 per cent of the free-float in the hands of foreign investors, the direction of the entire market is at the mercy of Franklin Templeton Investments, which is understood to hold the biggest stake of 400 million of the 648 million free float of the energy giant—almost 80 per cent of all shares held by overseas investors.

Dr Joseph Mark Mobius oversees more than 40 emerging market mutual funds, including the Asia Growth Fund that carries OGDC on its books.

If the elderly investment guru (Mobius turned 74 last summer) changes his mind on the energy sector prospects in Asia, which he firmly holds to be exceedingly bright and instead seek an exit, the move would have devastating impact on the KSE.

OGDC stock price has scarcely looked down since it began climb in early 2007, the price of the 10-rupee share now rules at Rs178. That is at least Rs40 higher than the “fair price” tagged by most analysts at the start of 2010.

On Monday, the KSE-100 index pulled back 82.34 points. With OGDC down by Rs2.71, as many as 68 points to the decline were contributed by the share alone. How one mighty stock can overwhelm the rest of the market is clearly demonstrated by the OGDC performance in the outgoing year.

Farhan Mahmood, analyst at brokerage Topline Securities, tracks the energy sector. He observes that due to the huge size and limited float with the local investors, it is relatively easy to push the heavy-weight one way or the other.

“In the 2010 KSE gains of 28 per cent, as much as 12 per cent were added by the OGDC,” says Farhan. The stock continues to cast its spell well into 2011, since 167 points of the 367 points rise in the first six trading sessions are the blessings of the heavyweight energy stock.

Largely corned, OGDC has dropped to 16th place among the most tradable stocks at the KSE with average daily volume of only Rs119 million ($1.4million) during the first six trading sessions of the new year. Out of total $3 billion worth Pakistan equity held by foreigners, 33 per cent was estimated by Topline to be invested in OGDC. The market capitalisation of OGDC on Monday amounted to $9 billion, which made up as much as quarter of aggregate market value of 641 listed companies at Rs3.3 trillion or $89 billion.

Many traders defend the rise of OGDC as a choice scrip due to its healthy yield, larger free-float and above all state-controlled majority holding. But all of it is as long as going is good. Since Beginning of 2010, OGDC has contributed approximately 1300 points to the staggering 3000 points rise in KSE-100 Index, which currently is staggering at the dizzy height of 12,307 points. Is it the time to fear and read the mind of Dr. Mark Mobius? In case the foreigners decided to wander away into other markets, the local bourse should spiral downwards to a steep drop. This time nonetheless, the government has the means to plug the hole and calm the market: It has simply to float another five per cent from its majority stake into the market.

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