5
Monday, October 18, 2010
General Motors says IPO pricing not set yet
Asian stocks gain for 7th wk on economic outlook
Weekly Review
KSE greens last wk as bulls eye earnings
KSE-100 Index Opening Closing Change % Change Turnover (mn)
10,260.48 10,431.84 171.36 1.67 450.02
LSE-25 Index Opening Closing Change % Change Turnover (mn)
3,192.48 3,244.41 51.93 1.63 19.48
ISE-10 Index Opening Closing Change % Change Turnover (mn)
2,610.22 2,668.49 58.27 2.23 0.93
Nawaz Ali KARACHI: During the last week, expectations of strong corporate results, higher international oil prices, and continued foreign interest kept the bulls in action at the Karachi Stock Exchange (KSE) --even political tensions couldn’t hold them back. The benchmark KSE 100Index increased by 171 points (1.67 per cent) to close at 10,431 points, KSE 30-Index rose by 165 points (1.66 per cent) to close at 10,094 points and KSE All Share Index grew by 116 points (1.62 per cent) to close at 7,267 points. Index touched a highest level of 10,476 points and a lowest of 10,243 points during the week. Saeed Khalid, analyst at Invest Cap said that the reason behind the return was the investors resetting their positions ahead of the upcoming
Major Gainers
Symbol RMPL SIEM MTL DREL BHAT
Close
Change
1,370.00 1,189.99 480.90 734.00 189.00
60.75 39.99 37.08 34.01 26.65
Major Losers
Symbol
Close
Change
WYETH 830.06 FZTM 320.00 FEROZ 87.94 NESTLE 1,941.00 LAKST 353.68
-79.94 -33.16 -21.06 -20.62 -17.87
Top 5 Volume Leaders
Symbol
Close Vol (mn)
LOTPTA JSCL BAFL NML DGKC
9.62 9.30 8.85 50.86 25.70
50.54 19.87 19.78 17.13 15.71
Active Issues Plus Minus Unchanged
239 174 19
Sector Updates FERTILISER 000 tonnes
AUTOMOBILE ASSEMBLER PAK SUZUKI MOTOR Units Production (July 09 to June 10) 71,998 Sales (July 09 to June 10) 73,993 Production (July 10) 7,509 Sales (July 10) 4,503
INDUS MOTOR CO Production (July 09 to June 10) 50,557 Sales (July 09 to June 10) 50,823 Production (July 10) 5,162 Sales (July 10) 4,999
HONDA ATLAS CAR Production (July 09 to June 10) 13,500 Sales (July 09 to June 10) 14,120 Production (July 10) 1,560 Sales (July 10) 1,272
DEWAN FAROOQ MOTORS Production (July 09 to June 10)1,218 Sales (July 09 to June 10) 1,371 Production (July 10) 41 Sales (July 10) 40
BANKING SECTOR Scheduled bank (Rs in mn) Deposit (August 20,10) 4,595,176 Advances (August 20,10) 3,304,533 Investments (August 20,10) 1,788,671 Spread (July 2010) 7.51%
OIL MARKETING CO (000 tons) MS (Jul 09 to June 10) MS (July 10) Kerosene (Jul 09 to June 10) Kerosene (July 10) JP (Jul 09 to June 10) JP (July 10) HSD (Jul 09 to June 10) HSD (July 10) LDO (Jul 09 to June 10) LDO (July 10) Fuel Oil (Jul 09 to June 10) Fuel Oil (July 10) Others (Jul 09 to June 10) Others (July 10)
PRICES (Ex-Refinery) MS (1 Sep 10) MS (1 Aug 10) MS % Chg Kerosene (1 Sep 10) Kerosene (1 Aug 10) Kerosene % Chg JP-1 (1 Sep 10) JP-1 (1 Aug 10) JP-1 % Chg HSD (1 Sep 10) HSD (1 Aug 10) HSD % Chg LDO (1 Sep 10) LDO (1 Aug 10) LDO % Chg Fuel Oil (1 Sep 10) Fuel Oil (1 Aug 10)
Result Preview NEW YORK: Actor Tony Sirico visits The New York Stock Exchange.-Reuters
Urea Offtake (Jan to July 10) 3,565 Urea Offtake (July 10) 580 Urea Price (Rs/50 kg) 879 DAP Offtake (Jan to July 09) 374 DAP Offtake (July 10) 49 DAP Price (Rs/50 kg) 2,626
1,933 188 164 15 1,377 129 7,435 664 75 7 9,259 869 13 1
Rs 40.85 41.22 -0.90% 47.14 46.55 1.27% 47.37 46.78 1.26% 50.61 49.63 1.97% 46.37 45.29 2.38% 39,932 39,723
quarterly corporate results season. Moreover, the most important issue during the week was the NRO case which kept market in the check. Although the activity was little sluggish during the week but the investors somehow managed to raise better volumes in the market by the end of the last couple of trading sessions, he added. The week started on a bullish note on Monday where due to buying on expectations of good corporate results index closed the session 62 points up in a rally led mainly by the banking sector. But some profit taking ejected 30 points from the index the next day as investors preferred to square their positions ahead of recommencement of hearings on National Reconciliation Ordinance (NRO) by the Supreme Court on Oct 13. See # 5 Page 11
Wall Street weekly outlook
Foreclosure debacle to test stocks’ rally NEW YORK: US banks will be in the limelight this week as several household names report earnings and investors worry a forced halt to foreclosure proceedings could hit the sector and end the recent rally. Bank shares fell sharply on Friday on very high volume, continuing a slide from the previous day. Although recovering some of their losses, Bank of America shares hit their lowest in over a year, while the KBW bank index fell 2.4 per cent. Shares of Bank of America, the nation's largest mortgage lender, have fallen 9 per cent during the week. Over 595.9 million shares of the company's stock traded on Friday, the most since April 2009 and over four times the 50-day moving average. Investors worry banks did not follow proper due diligence when foreclosing on homes whose owners were not making mortgage payments, which could result in costly litigation, fines and additional mortgage repurchases. Kevin Caron, market strategist at Stifel, Nicolaus & Co in Florham Park, New Jersey, said that situation could also weigh on the housing market if the uncertainty discouraged buyers from entering into contracts on properties under foreclosure. "That speculative investor on the margin may choose to not to engage in that activity, which means there's the potential that you could have some weakness in demand, particularly in the lower-end speculative range of the housing market," he said. Investors will pepper bank executives with questions when those companies present earnings reports this week. Banks reporting results include Wells Fargo, Bank of America, and Citigroup Inc, three of the largest mortgage lenders in the nation. The broad S&P financial sector is expected to show earnings of $27.7 billion in the third quarter, a 71 per cent increase over a year earlier, although third-quarter revenue growth is seen falling 6
per cent to $252.9 billion. However, earnings estimates have been cut on some banks. Financials with the biggest reductions in earnings estimates for the quarter in the latest week are Goldman Sachs, PNC Financial, and Citigroup, according to John Butters, director of US earnings at Thomson Reuters. The financial sector has been a conundrum in the latest market rally since the start of September. The KBW index has gained only 4 per cent at a time when the broader S&P 500 has rallied nearly 12 per cent. David Giroux, who runs T. Rowe Price's $9.4 billion Capital Appreciation Fund, said expectations that deflation would weigh on bank earnings in the near term was pressuring the sector. He said banks were now attractively valued and the sector is the fund's largest, making up nearly 15 per cent of assets. "Most of the large banks are asset sensitive, which means that as rates rise, their profits should rise," he said. "So if you're a big believer in deflation, which the market has become a big believer in ... financials do poorly." Giroux said a second round of stimulus from the Federal Reserve was unnecessary as inflation was already present in the system. Hopes the Fed will pump billions into the economy has helped drive stocks higher recently. The Fed will release its Beige Book during the week and that will provide another insight into the central bank's thinking on the economy. On Friday, Fed Chairman Ben Bernanke hinted more monetary stimulus was on the way. A number of other big US companies from a range of industries will also present their scorecards this week, giving investors more clues about the economy's health. They include Apple Inc, Caterpillar Inc and Johnson & Johnson. Early indications from this earnings season have been mixed. Google Inc blew past analysts' expectations on Friday,
driving its stock up 11.2 per cent, while lower-than- expected revenue at General Electric, often seen as a proxy for the economy, pushed its shares down 5.1 per cent. Signs in the options market suggest more volatility this week as the recent trend of a continuous slide in the volatility index seems to be coming to an end. "There is more call buying on the VIX now than put selling, which suggests that traders see a spike in VIX in the near term," said Randy Frederick, director of trading and derivatives at the Schwab Center for Financial Research in Austin, Texas. The Chicago Board Options Exchange Volatility Index, or VIX VIX.N, closed on Friday at 19.03, down 4.3 per cent, after rising above 21 during the day. The market has continued to move higher since the S&P 500 broke a resistance level at around 1,130 in the middle of September. Some chartists are now looking at an upside target of 1,228.74, the 61.8 per cent Fibonacci retracement from the 2007 high. This week may also see a socalled "golden cross" in the S&P 500 if the 50-day moving average rises above the 200-day -- a bullish sign for some traders. The 14-day moving average moved above the 50-day and the 200-day averages in September. Industrial production data will kick off the week, followed by Tuesday's report on September housing starts. A weak housing number could rattle investors at a time when they're already anxious about the housing sector. Housing starts are seen slipping to an annualised rate of 580,000 units, according to economists polled by Reuters. Elsewhere on the economic front, the Philly Fed index is among early indicators of October regional business activity leading up to the national surveys on manufacturing and services from the Institute for Supply Management at the end of the month. -Reuters
ABL 9MCY10 PAT seen at Rs5.58bn Amir Abidi KARACHI: The board meeting of Allied Bank Ltd (ABL) scheduled today (Monday October 18, 2010) will announce financial results of first 9 months of this year which ended on Sept 2010. At TFD, we expect ABL to post a PAT to the tune of Rs5.58 billion during 9MCY10 as compared to Rs5.01 billion during the same period last year showing growth of 11.4 per cent on year-on-year (YoY) basis. This translates into an EPS of Rs7.14 for the period against Rs6.41 posted in the same period last year. We do not predict any payout with the results as ABL has
already paid cash dividend with its half yearly results for the year 2010. The growth of 11.4 per cent in bottom line will be backed by healthy increase in NIMs that would give rise to 17.5 per cent YoY increase in net interest income to Rs16.01 billion compared to Rs13.62 billion last year mainly due to consequent improvement in CASA ratio. Furthermore, decrease in provisions by 9.7 per cent to Rs3.01 billion would further boost profitability. Non interest income is likely to decline by 18.1 per cent to Rs3.85 billion against Rs4.98 billion due to lower fee income and capital gain comparing previous year same period.
Gulf stocks mkt
SABIC helps lift Saudi index DUBAI: Heavyweight Saudi Basic Industries Corp (SABIC) lifted the index TASI slightly, and could determine the direction of activity on the bourse this week as trading remains muted ahead of other major earnings. SABIC rose 0.9 per cent, helping the benchmark rise 0.1 per cent to 6,235 points, but trading has been sideways throughout the session. "We're expecting SABIC announcement (of third quarter results) before Wednesday, this could have a significant reflection on the index," said Musa Haddad, head trader in the asset management group at NBAD. "Banking sector results came in below expectations and this gave momentum to the downside." SABIC was expected to announce earnings after the market closes on Sunday. Dubai's index DFM ended lower on profit-taking but managed to reverse some of the session's losses as trading remained muted ahead of third quarter-earnings. Construction giant Arabtec lost1.8 per cent, having hit a near-five month high last week. "The market is seeing some profit-taking on the downside, and it was due for a short-term correction," says Musa Haddad, head trader in the asset management group at NBAD. The benchmark slipped 0.1 per cent to 1,744 points. Trading on other Gulf Arab bourses was also muted. Abu Dhabi's index ADI rose 0.2 per cent to 2,763 points, Kuwait's measure KWSE gained 0.3 per cent and ended at 7,034 points and Bahrain's bourse BAX inched up 0.09 per cent to 1,461 points. -Reuters
Dhiyan
TAKE CUE FROM POLITICALS Salman Naqvi, Head of Sales Aba Ali Habib Securities Performance of the market depends upon the current political situation. However, technically speaking, the market is strong as the future contracts are oversold therefore we can expect a good show as soon as the situation improves in the political corridors. Investors are advised to readjust there stances according to what developments the political front has to offer which, if it moves towards reconciliation would be the cue to invest in oil & gas, power, (selective) bank, cement, and fertiliers stocks at dips. Market might open positive today.
Zia Shaafi, Senior equity dealer & Technical analyst Pearl Securities Technically, market should witness a correction at the psychological level of 10,500 points. Investors are therefore advised to offload major part of their holdings while the new ones better adopt 'wait & see' strategy till smoke clears on the political front. As far as triggers are concerned, good corporate results, launch of Margin Trading System (MTS), settlement of political issues, and better law and order situation would spur the market to go bullish. Market would be in pressure today.