The KSE-100 in 2011 YTD is down 5.4 per cent, underperforming by a gross 9-27 per cent against most other asset classes ranging from commodities to foreign exchange to debt markets. The lack of investor interest is reflective from average daily volumes falling to their lowest since 1998, along with a notable decline in money raised from the capital markets. The initial public offerings (IPOs) in 2011 were limited to only four scrips, valuing a gross of Rs1.4b (down 58 per cent YoY). The public’s response to these too remained dull, being subscribed by only 0.75x. Nevertheless, the KSE has outperformed the international equity markets in 2011. The MSCI World, MSCI EM and MSCI FM indices are down by 8.2 per cent, 17.2 per cent and 20.6 per cent, respectively in 2011 YTD.
KSE beats regional equities but lags other assets
While outperforming international equity markets by an average 10 per cent, the KSE-100 lagged behind most other asset classes (Gold, US$, NSS, T-bills, PIB etc) by a notable 9 – 27 per cent. Despite cheap valuations, investor remained sidelined largely owing to falling popularity of the incumbent government amid dissonance with major international allies and local political parties; concerns over another global A total of only four offerings have been floated in 2011 as opposed to six last year. These offerings included International Steels, Pakgen Power, Engro Foods and TPL Direct Insurance, raising a cumulative sum of Rs1.4b (versus 3.3b last year – down 58 per cent). Historically, 2005 had been the best year, witnessing a total of 17 IPOs. In terms of value, the offerings were subscribed by 0.75x (0.9x last year). Moreover, investors general lack of interest was also reflected in number of applications filed (12k) against the required number (203k), resulting in total subscription of 0.06x. In these terms, Engro Foods received the highest response (0.16x), while International Steel received the lowest (0.02x). STAFF REPORT
