At the Pakistani bourses, this last fortnight the bull-run remained steadfast. And as a consequence, the figures looked most promising. In three sessions of trading this week alone, the KSE has surged by, give or take a few, around 600 points – a whopping 300-plus on Wednesday alone.
After bouts of depression that followed the most recent steep fall, this consistent rise in value indeed makes it a happy time for the Average Joe investor, surprised though he and other market watchers may be for it comes when floods are devastating vast swathes in Sindh while the Punjab is wracked with the deluge of another kind, that of the dengue epidemic.
But Mr Ali Malik – the supremo at First National Equities, perhaps Pakistan’s largest brokerage house with 14 offices across the country – is not surprised at all. Mr Malik subscribes to the view that with inflation going down, and the federal government’s accent now growth-orientation instead of reining in the deficit (disassociating from the IMF and its stringent policy diktat a firm indicator of that), the interest rate is likely to come down in the coming days. In that scenario, investing in the stock market all of a sudden looks far rosier.
Another factor driving the market up could be the grapevine, that says that the KSE may give all its registered brokers free exposure for the first Rs50 million. According to a source, already the prospect of this huge relaxation to brokerage houses, which in turn facilitates the investors, has made an immediate impact.
Though most of the market, indeed more than two thirds of it, has remained in the green zone these last few days, the one surprise packet was National Bank of Pakistan: it has gained Rs8-10 in the last one week, though its earning per share is one full rupee shy of last year’s Rs5.80. This is amazing capital gain, especially because the low-end price was in the mid-Rs30s, inflating now to Rs47. Speculative buying? You bet.
Personally, after staying out of the market for something like two weeks, one was really looking at the portfolio with the intent to trade. Having been disappointed with Attock Petroleum Limited for not giving bonus shares and just 300 per cent dividend as its annual payout, I decided to sell when ahead of the game. By the time one could do it on Tuesday, the market had closed. So first thing Wednesday morning, I got rid of it at an even better price Rs391.50 apiece. Since in terms of value the APL scrip falls in the upper mid-tier, with the cash available I bought in to three low-tier companies: one a September-closing one that has been discussed in this space before and two other yearend-closing ones in the fertiliser and banking sectors.
Habib Sugar Mills one bought at Rs27.50 a pop. What made it a lucrative buy was its last year’s high price (Rs36.50) and the mid-December payout time (meaning: cash tied for under three months). If it gets close to or surpasses its last year’s high again, which is quite likely, it will give one a clear 30-35 per cent capital gain.
You may choose to take a cue from this or you may not (but if you do, only commit yourself after making your own most thorough research, for it is your money and you should not be cavalier with it at somebody else’s word – howsoever reliable you may think it is). The other buys that one ventured into were Fauji Fertiliser Bin Qasim. One had bought a chunk of FFBQ a month or so before too, at Rs47 each. It has already appreciated to above Rs55, but fertiliser being a very profitable sector, there still is quite a bit of juice in it, for those in the know believe that it could hit the Rs60-65 band.
Similarly Bank Al-Habib, last year’s high around Rs40, seemed to be another 30-35 per cent capital gain potential. One has good experience with Bank Al-Habib too, for it is well-managed and hence a very consistent paymaster in terms of dividend/bonus shares.
This was the sum total of one’s strengthening of the portfolio. And though there were some good options available and cash lying unused with the broker as well, since I felt good and contented, I left the rest for another time. Maybe there would be something more to report on this count next week.
The writer is Sports and Magazines Editor,
Pakistan Today
