At the bourses this part of the year is normally a happy hour: the volumes are good, the share prices are spiked up as everybody is keen to buy or switch and take advantage through the payouts. No such thing this time round. The usual optimism is conspicuously missing, and the volumes mostly waver between low and lower.
The market is occasionally up, as it was on Wednesday and the day before but the fervour is just not there. After lounging around 26 million for the better part of the day, around the close there was a boost of sorts and the volume was jacked up by another 20 million. But even that was way sub-par, not comparable to the good old days when the sun shone some months back and much hay was made by everyone. But that was before gloom set in and persisted, despite the odd good news or two that is mostly trumped by a rank bad happening in quick order.
To sum up, the recession in the international economy and the adverse law and order situation at Karachi have mostly been the factors quoted. But even when international markets have looked up, as they have in the last few days, their incremental effect on our bourses has been minimal.
This could be attributed to our buyers being so apprehensive that few would venture their capital even now when the board meetings of the companies are by and by taking place. And, as if the mood has caught on, the companies with a track record of generous dividends and good bonuses too seem to be cautious and stingy on the payouts. This past week this added to the misery of investors big and small when two companies with such stellar performance in the last three years happened to be miserly to the stakeholders, further shaking the confidence of everyone, but especially the non-speculating Average Joe like this writer. Why? But first things first, I would revert to this later.
The aforementioned companies that announced their annual results in the last few days were Pakistan Petroleum Limited and Millat Tractors Limited. The payouts by both these top-notch entities were way below par by their own normal standards. The former handed out Rs2 per share as dividend and only 10 per cent as bonus, while the latter just 150 per cent dividend (that is, Rs15/- apiece) and no bonus shares.
The norm for both these companies was previously higher – pretty decent and satisfying for the investors. And only last year Pakistan Petroleum not just paid higher dividend than this, but also the percentage of bonus shares was double from the current, 20 per cent to be precise.
Similarly, Millat Tractors had announced dividend of 650 per cent, topping it up by 25 per cent bonus shares last year. This time round it announced none by way of bonus shares, and around 500 per cent less as dividend.
After this deviation while Pakistan Petroleum bounced back from the little fall to more or less its par price of Rs200-plus each, the Millat Tractors stock went into a nosedive of sorts. Positioned at well above Rs600, and likely to go even higher, only a few weeks ago, the MTL had seen some erosion already. But after Tuesday’s announcement, for two successive days it hit the lower deck – right at the little pre-opening session on Wednesday.
Such a dent was most dismaying for the average, non-speculating Joe for he comes to the market and stays here interested in the half-yearly and annual payouts. And when he sees his money earning him next to nothing, and to top it off, the investment losing value and this fast, his being down in the dumps is only to be expected. One was not surprised that there were so many sellers with buyers almost non-existent in a normally buoyant scrip such as the MTL.
Would things look up in short order, stay the way they are or become worse in the days and weeks to come? To the consternation of the Average Joe, most experts that this writer spoke to were non-committal.
Mr Ali Malik of First National Equities though said that the MTL might recover – and sooner rather than later. “The MTL is in the throes of coping with the newly imposed taxation and sales are low. But with a bumper cotton crop, resulting in abundance of spare cash with the farmers, the sale of tractors and other agricultural implements is going to see a surge. That would mean a quick revival of the MTL and other such companies”.
You may or may not take your cue from this, but this writer offloaded the MTL part from his portfolio first thing Wednesday, at Rs487 a pop. It was a tough decision but I thought it was better to get out when one was ahead. I would probably buy back before its bounce-back from the trough, maybe around Rs400 apiece – if it gets that low, which I have a gut feeling it would.
The writer is Sports and Magazines Editor, Pakistan Today