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ISLAMABAD, June 11: Market capitalization of Karachi Stock Exchange increased during the first 10 months of 2003-04 by 92.4 per cent to Rs1,436 billion (as on April 30, 2004) as the KSE 100-share index rose by a steep 59.6 per cent to 5,430.4 points from 3,402.5 as on June 30, 2003.
Together with Lahore and Islamabad Stock Exchanges, the KSE during the first nine months of 2003-04, mobilized Rs169 billion as compared to Rs39.4 billion in the whole of previous fiscal year, according to the figures in the Economic Survey for 2003-04.
The total turnover of shares in the three bourses in July-March of 2003-04, was 100.8 billion compared to 56.9 billion in the same period last year, showing an increase of 77.2 per cent.
The survey slurs over the fact that the biased policy of reducing the rates of return on savings schemes availed of by common citizens and the presumptive tax on incomes that are not liable to income tax left drove many people to invest their savings in the highly risky stock market.
Instead, it attributes the "unprecedented growth in market activity" to pro-growth macroeconomic policies, stable exchange rate, reforms initiated by the Securities and Exchange Commission etc.
The "unprecedented boom" in the stock market was brought primarily by speculative trading in the shares of only 10 top scrips, as affirmed by the survey. Their share in total market turnover increased significantly from 67.2pc in October 2003 to 71.1pc in December 2003.
One of the most significant factors was the establishment of SEC under an amended securities and exchange law enacted by the Parliament in 1997. Apart from a range of reforms already put in place by it, it now plans to demutualize and integrate the stock exchanges and phase out the badla system.
SECTORS: All the 12 major trading groups on the KSE (cotton and other textiles, pharmaceuticals, engineering etc.,) witnessed during the July-March 2003-04, record growth in their share indices, ranging from 15.7pc (sugar & allied) to 65.2pc (cement).
During the calendar year 2003, total profit before taxation of these groups amounted to Rs136.8 billion as compared to their before tax profit of Rs90.9 billion in 2002. Banking and other financial institutions recorded the highest pre-tax profit of Rs37.1bn in 2003 as compared to Rs20.5bn in 2002.
Other sectors which reaped higher pre-tax profits during 2003 were: fuel and energy (Rs20.5 billion), chemical & pharmaceuticals (Rs10 billion), auto and allied (Rs9.2 billion) and cotton and textiles (Rs6.8 billion).
In December 2003, a total 701 companies were listed on the KSE. As compared to 429 companies in 2002, 431 were profit-making in 2003, while the number of loss making companies declined from 195 to 170.
The after-tax profit of 10 top blue chip companies with highest turnover of shares shot up to Rs55.1 billion during July-March, 2003-04. Of this Rs43.8 billion (79.4pc) went to PTCL and OGDCL alone.
The Lahore and Islamabad Stock Exchanges also showed a record performance during 2003-04. The turnover of shares on LSE during July-March, 2003-04 was 34.5 billion compared to 19.5 billion in the same period of previous year.
Total paid-up capital with the LSE increased from Rs280.1 billion in June 2003 to Rs347.6 billion in March 2004. The market capitalization of LSE increased from Rs751.2 billion to Rs1,345.6 billion in first nine months of 2003-04.
Ten new companies were listed with LSE during that period. While the turnover shares on ISE declined from 1.30 billion to 1.11 billion in July-March, six new companies were listed. Nevertheless, the survey remarks, ISE has developed into a "vibrant, efficient and stable market".
TFCs: The same period saw listing of TFCs by 8 companies on the 3 bourses. Besides, 8 companies with a paid-up capital of Rs49.44 billion, nine companies with a capital of Rs51.3 billion and 5 companies with a capital of Rs47.47 billion were listed on KSE, LSE and ISE, respectively.
MUTUAL FUNDS: At the end of December 2003, there were 37 closed-end mutual fund companies with paid-up capital of Rs6.8 billion. As regards closed-end mutual funds, 34 companies (out of 37) announced dividends during 2003, 36 were profit making whereas no company incurred any losses.
