KSE maintains itself at 12,000 points

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KARACHI – The Karachi Stock Exchange (KSE) sustained the 12,000 points level on Friday after losing nine points. The KSE benchmark index fell to 11,979 points, but buying in certain shares pushed the index to above 12,000 points. At closing, the index settled at 12,022 points on Friday, the last trading day of the calendar year 2010.
The volume of trading amounted to 109 million shares, valuing Rs 5.79 billion. Activity at the local bourse remained range bound at around 12,000 points. The benchmark index posted hefty gains of 28.1 percent during 2010 with a sharp recovery in foreign inflows that clocked in at $522 million.
However, daily trading volumes fell to nine-year low of 120 million shares in 2010. The main highlight of the Pakistan equities market remained the withdrawal of exemption on capital gains tax, while persistent inflationary pressures made economic recovery more difficult.
The KSE-100 index closed at a level of 12,022 as capitalisation shrunk by .07 percent on the last day of the year. Analysts reiterated that local benchmark index may witness new peaks in the upcoming year while minor hiccups as global recovery drive commodity prices affect the domestic economy. Analysts said the week ended on a hopeful note for the New Year, with the market crossing the 12,000 barrier for the first time since July 3, 2008 with IMF agreeing to a nine month extension in its SBA program and a much awaited Coalition Support Fund (CSF) payment of $633 million being reimbursed.
The signing of the share purchase agreement between Bestway Holding and Abu Dhabi Group (ADG) was a much touted development. FFC was a notable gainer on speculation, earning abnormal gains following the urea price rise. Overall, the market gained 164 points on week on week basis to close at 12,022 points, with average daily volumes of 116 million shares. Further, the KSE-100 Index has gained 28 percent in 2010 and is up 24 percent since July 1, 2010. Analysts opined that the IMF’s approval of the extension in the stand-by arrangement programme allowed the government more time to meet the organisation’s conditions, providing a breather in the face of a currently tense political situation. The release of $633 million under the CSF this week was good news for forex reserves, which stood at $16.4 billion (as of 24 December).
Bestway Holding signed an agreement to purchase ADG’s 20 percent stake in UBL at Rs 80 per share, which upon regulatory approval, will raise ADG’s total stake to 51 percent. Initially, this triggered buying interest in UBL, but when UBL clarified that Bestway will not have to make a tender offer, with it being a change in shareholding within the consortium. Despite the government stepping in to question the fertiliser price hike, FFC continued rallying as it made out as the biggest beneficiary. Foreign investors were leading buyers ($12.2 million), bringing net investment for 2010 to $526 million from $24 million in 2009.