The data released by SBP endorses the fact that money is flowing into the local stock markets from abroad. Though the foreign portfolio managers missed the bull-run of last three years (2002-2004) in which the market gained 72 percent annually, it looks like that they are now serious in relatively cheaper Pakistan equities.
Foreigners that started looking to Pakistan in early 1990s had a very bad experience in late 1990s when, after the nuclear blasts, economic indicators deteriorated and restriction was imposed on capital outflow, said Mohammad Sohail, director, research and brokering, at Jahangir Siddiqui Capital Markets Ltd.
Foreign funds' net inflow was $2,530 million from 1992-2000. Then local bourses saw net outflow of $156 million between 2001-04. However, due to sharp economic recovery and stable political environment, the market observed that FY05 was the first year of net capital inflows in local bourses when $154 million was invested in local equities.
Lately, the quantum of investment has increased relatively sharply. In the last two quarters (April-September 2005), a net inflow of $191 million has been seen, as per SBP numbers. In fact, during the last three months $145 million and in September a record $80 million net investment was made in equities by offshore investors.
Local stocks ended the month of September on a six-month high mark of 8226 points. During the third quarter (July-September) of calendar year 2005, the widely used KSE-100 Index gained 776 points, or 10.4 percent (10.3 percent in dollar terms). During 1Q2005 the Index boomed by 25 percent (25 percent dollar return) and then in 2Q2005 it took a downward correction of 4.1 percent (-4.5 percent in dollars).
Thus, in the first nine months of 2005, the market is already up 32.3 percent (31.7 percent in dollar terms) despite witnessing a sharp decline at the end of March 2005.
In this piece, attention will be paid to the performance of individual stocks in the outgoing quarter.
The improvement in share price last quarter was mainly on the back of higher availability of CFS that was enhanced from Rs 12 billion to Rs 25 billion, effective from August 22. Since then, that is, in last 6 weeks, the market has gained 636 points. That is almost 82 percent of the total quarterly gain came after the higher CFS limit allowed by the regulator.
Unfortunately, in Pakistan, the numbers of foreign portfolio investors in the stock market are released by SBP on monthly basis and that, too, after a gap of almost 3 weeks.
In neighbouring India, that has been in limelight for last few years as far as foreign investors are concerned, information is released on daily basis by SEBI (Securities and Exchange Board of India). Moreover, they also show the gross purchases, gross sales and net investments by foreigners on daily basis.
Indian equities attracted a net investment of $8.5 billion in calendar year 2004 and $8.2 billion in 10 months of 2005. It's time that such detailed information should also be released in Pakistan so as to reflect an accurate picture and to control over-speculation in the market.
The accompanying table shows the performance in percentage terms and relative to Index of 49 JS Universe companies. Glancing at the table one will observe that top-tier stocks, like OGDC, PTCL, PSO and PPL that accounted for 46 percent of the Index, did not perform well. It was the medium and relatively small cap companies that performed during 3Q2005.
Adamjee Insurance, the largest insurer in the country, with 30 percent market share in total premium, that is famous for its volatile price movement, remained on top with a handsome gain of 82 percent in just three months. Other stocks that remained on top are also non-traditional shares, with relatively nominal weightage in the benchmark Index. Thus, one can conclude that the performance of shares during 3Q2005 was far better than the 10.4 percent gain posted by Index.
===================================================
S. No Name of Company Return Performance
Relative to Index
---------------------------------------------------
1 Adamjee Insurance 82% 72%
2 Pakistan Int. Container 64% 54%
3 Muslim Comm. Bank 59% 49%
4 Pak Suzuki Motors 51% 41%
5 Indus Motors 48% 37%
6 Attock Refinery 47% 37%
7 Pioneer Cement 45% 34%
8 Fauji Fertiliser Bin Qasim 41% 31%
9 Bank of Punjab 41% 30%
10 Shell Pakistan 40% 30%
11 D.G. Khan Cement 39% 29%
12 Maple Leaf Cement 39% 28%
13 Pakistan Oilfields 37% 26%
14 National Bank of Pakistan 35% 24%
15 Union Bank 31% 21%
16 Azgard Nine 30% 20%
17 Fauji Cement 29% 19%
18 Bosicor Pakistan 29% 18%
19 PICIC Comm. Bank 28% 18%
20 KAPCO 28% 17%
21 Pakistan Reinsurance 28% 17%
22 Dewan Farooque Motors 27% 17%
23 Faysal Bank 27% 16%
24 Fauji Fertiliser Co 27% 16%
25 Chakwal Cement 25% 14%
26 Nishat Mills 24% 14%
27 I.C.I. Pakistan 24% 14%
28 Engro Chemical 23% 12%
29 Bank Al-Falah 21% 11%
30 Lucky Cement 15% 5%
31 Attock Cement 15% 5%
32 United Bank Ltd 15% 4%
33 National Refinery 14% 4%
34 Askari Commercial Bank 13% 3%
35 Hub Power Co 11% 1%
36 Oil & Gas Devp. Co 8% -2%
37 TRG Pakistan 8% -2%
38 Sui Northern Gas 5% -5%
39 General Tyre & Rubber Co 5% -5%
40 Sui Southern Gas 3% -7%
41 Pakistan State Oil 2% -8%
42 Telecard Limited 1% -9%
43 WorldCall Communications -1% -11%
44 Dewan Salman Fibre -6% -16%
45 P.T.C.L. -7% -17%
46 P.I.A. -7% -17%
47 Pakistan PTA -8% -18%
48 Pakistan Petroleum -9% -19%
49 Kohinoor Textile -12% -22%
===================================================