If it is not one thing, it is another. This last week, starting previous Wednesday, has not been a particularly cheerful one at the bourses. No real bloodbath but turmoil certainly. And at the root of it was the situation in Karachi. When Karachi bleeds, or is politically shaken, the KSE – no gainsaying that it may still be a modest place even by the region’s standards but it is Pakistan’s oldest and largest bourse – cannot remain unaffected.
And last week it was both. First there was the continued killing spree that made it the bloodiest period there in a long while. And, then the latest, and more menacing in a series of political spats between the MQM and the PPP further queered the pitch.
The politics, even at its most jingoistic and boisterous, by itself is not enough to hit the bourses hard. But when the entire mega city is at a standstill, the markets cannot retain their locomotion. Dependent on trade that is cash-intensive, in a complete closedown when people are scared even to get out on the street, when banks are not accessible, staying open was a challenge in itself. In that milieu, loss of around 400 points in five working days was not much. Once there was a semblance of return to normalcy, the market immediately bounced back yesterday (Wednesday), regaining upwards of 100 points till an hour before close – before closing at 73.54.
Despite the market on a downturn, most forecasts and recommendations regarding the companies in this column have either maintained an upward trajectory (like Millat Tractors Limited, having touched briefly the Rs625-630 zone, currently at Rs618 ahead of its last year’s high), held their own (Thal Limited) or were down but only marginally (Attock Petroleum).
This reaffirms the promise they hold – and closer to the board of directors meetings, they are all likely to be better placed than they were around this time last year. So, stay tuned and abreast of not just the trends but also when the board of directors meetings of the scrips that you own are taking place. This is essential as around this time the rates are at their highest.
And though a good announcement – the one matching the calculated projections or better – can still push the particular company’s stock higher by Spot (a week’s time, actually five working days, before book closing/payout when all deals have to be settled upfront) and even right up to payout, some canny customers prefer to eliminate the element of risk and sellout on the eve of the board of directors’ meeting. This way they book profit through capital gain.
The still more clued-in, fast on the draw having avoided the prospect of a whammy, in the happy circumstance of better than expected results which may yield greater gains, often buy back – of course, at a slight margin – the next day. Others that choose to remain content with whatever profit they’ve made, move on to the December-closing shares.
For those not really adept at the ropes, the advisable thing would be to remain in touch with their brokerage house or look into the newspaper business pages to stay aware of not just the announcements but exactly when the board of directors meetings are to be held. So, interact with your broker in these interesting times, for not so doing could cost you.
Last week also saw the initial public offering of Engro Foods, at a premium rate of Rs25. Amongst the Pakistani business houses, Engro is a pretty decent, front-running one. Though its flagship, Engro Corporation Limited, has recently been dented and has fallen from well over Rs200 apiece to around Rs160, it is not due to flawed management but choking of essential supplies (read: natural gas).
Still the grapevine has it that despite some investment banks being enthusiastic about the offering and the goodwill of the company, the public response was at best reasonable. Why? Perhaps the current political and security situation may have something to do with it, but only partially. While most analysts agreed that the Engro Foods maybe a good long term investment, the company’s immediate promise of a scant dividend kept the investors away.
Remember, the basic premise that was discussed in this: three-year history of dividend and bonus shares being an absolute must. That criteria seemed to have been at work in this particular new offering.
The writer is Sports and Magazine Editor,
Pakistan Today