KARACHI, March 31: The Pakistan equity market posted stellar gains of 2,414 points of 21 per cent in the first quarter (January-March) of the current calendar year.

It represented the best first quarter performance in six long years, bringing cheer to the market and fortunes to the investors in stocks.

The paper value of corporate Pakistan increased by 19 per cent to Rs3.59 trillion as the market value of all shares listed on the Karachi Stock Exchange (market capitalisation) rose to $39 billion by the end of March.

The market float based KSE-30 index climbed by 19 per cent and the Morgan Stanley Composite Index (MSCI) added 17 per cent. During the quarter, the Pakistan market outperformed regional peers with the MSCI Asian Emerging Markets (EM) rising by 12 per cent and MSCI Frontier Markets (FM) Asian higher by 18 per cent.

Amongst the Asian FM markets as defined by MSCI, the country’s bourse stood the second best performing market after Vietnam.

Average daily trading volume at the Pakistan main bourse increased to 14 quarters’ high at 196 million shares and three quarters highest in terms of value at Rs4.7 billion.

Mohammad Sohail, CEO at brokerage Topline Securities observed that the rejuvenated interest particularly of retail investors added depth to the market, represented by the boost in volume. He stated that the market posed startlingly bright performance, regardless of the challenging security environment, prevalent energy crisis and structural weakness that bears on the economy.

The major impetus to market primarily came from the finance minister’s acceptance of apex regulator — SECP’s capital gains tax revamp proposals of Jan 21, 2012. The event resulted in return of investors to the market, particularly the retail individuals who were sidelined after imposition of Capital Gains Tax (CGT) and its cumbersome calculation methodology. Moreover, dividend payouts by listed companies also stood out to be better than expected which helped market to recover. And finally, the foreign fund managers (as of 29 March) turned net buyers after a gap of three quarters, with net portfolio inflow at $25 million during the quarter.

Bullish week

Market resumed the bull-run during the week with the KSE-100 index adding 488 points or 3.68 per cent over the earlier week, to close at 13,762 points. That was the highest level since May 2008.

Daily volumes averaged at a high of 368 million shares a day compared to 249 million shares in the earlier week. Investors’ interest remained skewed towards the low priced scrips while total traded value increased by 49 per cent to stand at $84 million at the end of the week. “The implementation of reformed CGT regime brought life to the market”, analysts said.

KASB Securities and Economics Research report stated that investors ignored several headwinds such as delayed implementation of revised CGT, domestic political unrest, and foreign portfolio outflow of $7.7 million during the week.

Sector-specific events saw inter-corporate debt rearing its head again and misfortunes of Engro Corp re-surfaced following disconnection in gas supply from Friday.

Major gainers during the week were Faysal Bank, Askari Bank, Pace (Pak) Ltd, Byco Petroleum and TRG Pakistan, while big losers included Colgate Palmolive, Pakistan Reinsurance, Engro Polymer, Bata Pakistan and Pak. International Container Terminal Ltd.