Murder and mayhem at Karachi continues unabated. And if it is not a slew of random killings of mostly the innocent, it is the day of mourning under the aegis of a major political player in Pakistan’s by far the largest industrial and mercantile megapolis that keeps everything including the markets closed. Not the kind of scenario that would inspire confidence in investors, both indigenous and foreign, to channel their investments into the stock market.
Choked of fresh investment, with impatient sellers trying to cut their losses and speculators entering and exiting in quick order, it is not a surprise that the KSE has seen a bit of a tumble, losing nearly 1,600 points in about a month’s time.
The recession maybe looming and new investment shy of entering the bourses in sizable measure, yet markets all over the world – that is all the major indexes in the US, Europe and the Asia Pacific – have recovered, not wholly but quite substantively. That though is not the case in our nick of the woods, though there have been some odd bright days, some silver lining, scattered amid the palpable gloom.
Amongst the Average Joe Investor, there is angst. At the cost of being repetitive one has to say that this was around the time that he expected return on his investment. And most companies whose directors have met and announced the payouts, have been stingy and given dividend and bonus that was far less than the norm. In a market that was already not bullish, this has wrought further depression.
At the top of it, with prices falling and the times uncertain, the Average Joe wonders whether to jump ship and sell, even if it means making a loss or staying put and go through the torment of further pruning in the prices, reducing the net value of his holdings.
Since this writer is going through similar sentiments, and has been there before too (this an inevitable hazard, such being this business), the Average Joe would also face the age-old conundrum: sell or hold?
In situations like this, one would indeed do well to hold on tight to the cardinal principle: never sell in a downbeat market. This though is easier said than done, but holding one’s nerve is only required when times are difficult!
For those Average Joes who are despondent, Mr Ali Malik, the supremo at First National Equities, has a word that might provide some cheer. With sheer lack of confidence all-pervading, Mr Malik is confident that this ‘knee-jerk reaction phase’ would pass. When one asked him by when, he responded: “in three to four weeks, on the outside. And those who hold would always be better off”.
And howsoever bad the situation, there is always an upside too: good buys, at rates most attractive are now available. For those with spare cash, or those who had sold in time, this is the time to get back and buy again – at bargain prices.
Here again, Mr Malik’s advice is solid and time-tested: “only go for very good balance sheet shares”. And there is another gem from him. Instead of investment-intensive high-end shares, go for low-priced ones. There a number of them available. Some like Nishat Mills at around Rs43 still higher than one’s reckoning, for about Rs36 this should be a good buy. Then, with the fertiliser doing so well as a sector, Fauji Fertiliser Bin Qasim is a good shot. Habib Sugar, one had mentioned this September-closing rarity previously in this space too, at Rs24 is another. Both are likely to give well over 20 per cent return on investment.
Amongst the banks, there is always Bank Al-Habib, under Rs27 now, but most likely to add another dozen rupees in value by December. There are some others too, but always take advice from your broker and weigh it yourself before putting your money where your mouth is. On a personal note, one had mentioned selling off one’s Millat Tractors shares last week, at Rs487 apiece, expecting that it would go down to around Rs400, before bouncing back. It did go to that level, and it has made a quick, almost overnight comeback after the blues that persisted over four days of being locked at the lowest. But I did not buy back, leaving it for some other time.
Again you may or may not take your cue from this, but instead I went over to Fauji Fertiliser Bin Qasim and Bank Al-Habib. By my assessment both are likely to yield upward of 20 per cent come January 2012.
The writer is Sports and Magazines Editor, Pakistan Today
