An air of optimism prevailed on the Karachi Stock Exchange during the preceding week, as the buying euphoria created by corporate announcements from some mega companies, notably the Pakistan State Oil, the Shell Pakistan, and some others did not allow investors to sit on the sidelines and they had to opt for extensive buying at the current lower levels.

The volume figure soared to a year’s peak level of 334 million shares in a single session, signalling that the current bull-run is not speculative but is guided by the positive background news from the financial sector.

Forward counter also hummed with the activity where both the Hub-Power and the PSO not only set new records both in terms of single-session gains and turnover, but also evoked strong sympathetic support on other speculative issues including the PTCL, the Sui Northern Gas and the Engro Chemical, which though late, ran into selling.

Above the market expectations final dividend plus bonus shares by the oil giant, the Pakistan State Oil Company towards the fag- end of the last week, altogether, changed the investor-perception about the future share business outlook and they flooded the market with massive buystops. The KSE 100-share index breached through the psychological barrier of 1,900 points at 1,925.75 points, adding Rs20 billion to the market capitalization.

Just on the heels of handsome payouts by the leading MNCs, notably the Lever Brothers and the Shell Pakistan, and the predictions of an identical final by the Hub-Power next month, the PSO came out with an enhanced final of 80 per cent, plus bonus shares at the rate of 20 per cent, intensifying the current bull-run. It has already paid two interims totalling 50 per cent on massive after the tax profit of Rs32 billion.

What seems to have caused a speculative run on its share was the announcement of bonus issue after a couple of years as the analysts were not expecting it. Bonus shares always prove a double-edged weapon for both the shareholders and the management in a broader market parlance.

The dividend-driven rally was so strong that it did not allow the bears to tilt the balance in their favour, despite several abortive bids. An interim dividend of 116 per cent by the Lever Brothers Pakistan and predictions of an identical announcements by some other leading companies, including the Shell Pakistan at 140 per cent final, making the total to 180 per cent with the 40 per cent interim continue to inspire the fresh short-covering by all.

“Market talk of a stock dividend by the oil giant, the PSO and its early sell-off seems to have allowed the brokers to forget, at least for the near-term, about the demands of the SECP, which seeks to bring them in the ambit of fresh rules”, says an analyst, “a large volume, good gains in most of the leading shares signal that the brokerage houses were divided on new transparency rules”.

Most leading stock analysts predict that the near-term outlook appears bullish despite the fears of a showdown between the top hierarchy of the KSE and the SECP high-ups in coming weeks, as the bait of capital gains, will not allow the investors to sit on the sidelines.

“September could well be an eventful month for share business as most of the mega issues, including the Hub-Power will announce their final dividend, which could take the market to new highs”, they added. The company has already paid an interim of 40 per cent.

An interim dividend at the rate of 116 per cent by the Lever Brothers Pakistan, seems to have signalled that the other MNCs may follow it allowing the bulls to push the index to a new peak level before the national elections.

The management of the Hub-Power, which has already paid an interim at the rate of 40 per cent a couple of months back could give a pleasant surprise to its shareholders next month when its board meets.

The market is expected to remain in a buoyant mood until the national elections in October, as the dividend-driven speculative support and bargain-hunting will not allow the investors to watch price flare-up sitting on the sidelines.

“The market may not have ruled out the possibility of a negative impact of the last week’s SECP reform agenda, and the fears of a tussle, immediate bullish factors including the rumours of higher earnings forced the brokers to have some rethinking on the official overtures”, says a leading stock analyst.

The optimism on the amicable settlement of the new SECP demands seem to have generated by the last week’s meeting between the chief of the apex regulatory body and the KSE delegation led by its chairman. The reports of positive developments in Monday’s meeting between the two further aided the sentiment.

Plus signs dominated the list, major gainers being the Bannu Woollen, the Lakson Tobacco, the PSO, the Clariant Pakistan, Bata Pakistan, the Lever Brothers and the Treet Corporation, the largest gainer being in the Wyeth Pakistan, the Shell Pakistan, the Pakistan Oilfields, Millat Tractors, Dawood Hercules, the ICP SEMF, which resumed its upward drive after the last week’s recessionary cycle. The ICI Pakistan, the Pak Reinsurance Company, the Engro Chemical, Honda Atlas and many others also rose.

Losers were led by the Orix Leasing, the Abbott Lab, the Security Papers and, the SK&F, the Siemens Pakistan, the Kohinoor Weaving, the Exide Pakistan, the Packages, the Berger Paints, the Pakistan Tobacco, and some others.

Trading volume swelled to over billion-share mark after several months, having fallen to a meagre total of 163 million shares a week earlier.

Massive activities in the Hub-Power after the mid-week, notably after the Shell and the PSO dividend was the week’s highlight as bulk of the total turnover went to its credit.

Other actives were led by the PTCL, the PSO, the Engro Chemical, the ICI Pakistan, the Sui Northern Gas, the Fauji Fertiliser, the National Bank, the MCB, the ICI SEMF, the D.G.Khan Cement, the FFC-Jordan Fertiliser, Dewan Salman, Adamjee Insurance and several others.—Muhammad Aslam