The last full trading week of the year 2002 that ended on Friday, December 27 was perhaps the most momentous in the history of the Karachi Stock Exchange.
On Friday, the KSE index of 100 shares edged past the highest level of 2661.31 points set on March 22, 1994, by just a fraction, but still setting the new highest ever level of 2661.38 points. On Thursday, the bourse made the first breakthrough in the previous all-time records by logging the highest-ever turnover of 618 million shares, and the largest-ever trading volume in any single scrip. That was the Hub Power Company which saw a turnover of 258 million shares; the IPP stock believed to be lifted by a local brokerage house, the Global Securities, for foreign clients in the UK and the UAE. The volume of shares traded on Thursday at 618 million shares was almost four times the average daily turnover of 153 million shares for all of 2002.
But by Friday, even that was history and as the bulls raged on, the volume on the last trading day hit the new highest mark of 632 million shares.
Congratulatory messages emerged from Advisor to the Prime Minister on Finance Shaukat Aziz, the Chairman of the Securities and Exchange Commission of Pakistan, Khalid Mirza and the KSE Managing Director, Moin M.Fudda, each complementing the other and themselves for their role in the rally.
Several stock analysts, including Iffat Zehra Mankani, Head of Research at the IP Securities believe that there still is an upside potential and the market could continue to head north all through the month of January on the back of fresh crop of corporate results that are due. These include full-year results from the banks and the fertilizers sector, as well as the interim figures from the Hub Power Company.
Most people agree that the booming stock market, which has begun from the first day of 2002, is basically a liquidity-driven rally which has been greatly supported by the de-dollarization and the huge remittances from abroad.
“Just with one stroke but with precision, the central bank has provided the needed depth to the shaky market after a two per cent cut in the interest rates of Pakistan Investment Bonds”, analysts said. With the dollar having lost its charm as a safe haven, gold prices soaring to the new peak levels, cut in profits on investment in the saving schemes, investors had no option but to revert to the share business and the consequent boom conditions.
“Money may go where it is safe and could appreciate”, analysts said “but the current buying euphoria tells a different story as the share business is more risky than any other mode of investment”. While bulls quite decisively dominated the bears for all of the past week, there still were several analysts who cautioned about the overall stock level of prices, which they thought had become overvalued. But most market players believe that barring the unforeseen circumstances such as the interest rates rise; the political upheaval or the repercussion of war in Iraq, the stock market was set to cross the 3000-level in the first few months of the new year.
The PTCL and Hubco — the two most actively traded scrips on the KSE which together constitute 40 per cent of the market, are still giving out an average yield of 12 per cent. Both the stocks pressed ahead during the week, making strong gains on incessantly higher volumes, which indicated that there was less of speculative and more of the genuine buying. The only fly in the ointment was the badla rates which had shot up to over 20 per cent on Friday; the market was evidently asking for more cash from the institutions who were at the head of the current stock market rally. Significant number of retail investors had also entered the rings.
Selective stocks on almost all sectors came in for active trading during the week, but those with good yields and strong growth prospects were the ones to take the cake. Energy stocks were in demand; mutual funds showed improvement; banks’ shares rose and even some of the cement shares were in demand.
The Unilever, Wyeth, Sui Northern, the FFC Jordan and the Nestle sported gains. Other major gainers were led by the Premier Sugar, the Honda Atlas Cars, the Pak-Suzuki Motors, the Rafhan Maize, the BOC Pakistan, the Dawood Cotton and the Engro Chemical, which posted gains ranging from Rs2 to 6.05. The Engro, however, came in for some profit taking in the last session of the week.
Losses looked more of correction in the stocks that had posted higher than their fair values. Thus, the investors unloaded some of the portfolio in the ICI, the D.G. Khan; the National Bank at the current levels. Other fractional losers included the EFU Life and the General Insurance, the Fazal Textiles, the Gadoon Textiles, the Sarhad Cigarette, the Tri-Pack Films, the Century Paper, the Cherat Paper and the Pakistan Oilfields.