KSE ranks third in world, 1st in Asia among top markets in 2014

KARACHI: Pakistan stock remained one of the best performing markets in the world for the third consecutive year 2014 mainly led by foreign interest. Karachi Stock Exchange (KSE) gained better volumes while it was expected it would gain further in 2015, analyst said. According to Bloomberg, Pakistan ranked third in 2014. And for the third consecutive year was among top 10 markets in the world as shown in the accompanied table. Moreover, in Asian frontier markets (as categorised by MSCI), Pakistan ranked 1 outpacing Sri Lanka, Vietnam and Bangladesh by a big margin.

Top line Securities’ analyst Muhammad Tahir Saeed attributed this upsurge mainly to government’s secondary market offerings, energy sector reforms and declining yield on government papers helped the bull-run in 2014. Total return benchmark KSE-100 Index gained 6,870 points in 2014 thereby generating a handsome return of 27 percent primarily due to 4 percent appreciation of Pakistani-rupee against dollar, gain in $-term remained 31 percent. Price-only (without dividend) KSE-100 Index was up 18 percent ($ 22 percent) in 2014. Gains from equities in 2014 were in line with last 10-year average yearly gain of 26 percent and 20-year 21 percent from Pakistan market. Average daily volumes declined slightly to 209 million shares during 2014 as compared to 222 million shares in 2013. However, in value terms, they stood at Rs 9.4 billion ($93 million) as against Rs 7.6 billion ($75 million) in 2013 on improving prices and big share offerings in 2014. This is in-line with last 10-year average daily volume of 212 million shares, however, much lower in value of Rs 15 billion or $198 million. In single stock futures, average volume rose 6 percent to 24 million shares a day while value increased by 18 percent to Rs 2.2 billion ($22 million) better than 2013 average of 22 million or Rs 1.9 billion ($18 million). Besides improving macros, major impetus to the market in 2014 came from higher foreign inflows. Foreign investors, that hold $6.1 billion worth of Pakistan shares, which is 33 percent of free-float (9 percent of market capital), remained net buyers in 2014. During the outgoing 2014, foreigners bought $2.4 billion and sold $2.0 billion, resulting in net inflow of $386 million.

The outgoing 2014 will be remembered in Pakistan capital market history for mega public offerings led by sale of shares by government of Pakistan. Total offerings for 2014 reached 9 compared toy 3 in 2013. This number is good compared to last 5-year average annual offerings of around 3 per year but is still less than 30 offerings a year in 1990s. 2014 will be historic in terms of money raised through these offerings. After a gap of 7 years, Rs 73 billion was raised through offerings in 2014, thanks to booming market, ample liquidity in the hands of investors and risk-taking appetite. This compares favourably with meager Rs 4 billion raised in 2013, said the analyst. In 2015, we believe improving macros and better visibility of Pakistan amongst foreign investors is likely to result in market re-rating.

Source: Daily Times Pakistan


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