KSE sees only three IPOs in 2009
Monday, 14 December 2009
KARACHI, Dec 13 (Business Recrder): Karachi stock market, for the first time after seven years, saw only three initial public offerings (IPOs) in the calendar year 2009 amid depressing values and investor risk aversion after one of the worst financial crisis.
"Despite higher lending rates, firms did not come to the local bourses due to liquidity crunch and lack of interest by the investors who lost tons of money in the previous year," analysts said.
However, after no offerings in the first half of 2009, a few companies mainly power firms in an effort to fill the electricity shortages preferred to tap the local equity market, thereby giving some hope of further offerings in the upcoming year, they added.
Muhammad Sohail, leading analyst and CEO of Topline Securities said although two IPOs were able to get more than the required amount, small investors' involvement was not seen. Only 20,000 investors participated in these three IPOs compared to an investor base of approximately 250,000 in Pakistan, based on CDC sub accounts.
Nishat Power and Ghani Gases were oversubscribed thanks to huge applications while Nishat Chunian Power was not subscribed fully.
As compared to this depressing situation of 2009, there were 10 public offerings in 2008 led by financial sector firms with companies raising Rs 7.4 billion. Interestingly, in 2008, 9 of 10 offerings were made before the imposition of the price floor rule. Instead of moving forward, Pakistan stock market, unfortunately, is not growing since IPOs is one of the major barometers of the market development.
"Despite higher lending rates, firms did not come to the local bourses due to liquidity crunch and lack of interest by the investors who lost tons of money in the previous year," analysts said.
However, after no offerings in the first half of 2009, a few companies mainly power firms in an effort to fill the electricity shortages preferred to tap the local equity market, thereby giving some hope of further offerings in the upcoming year, they added.
Muhammad Sohail, leading analyst and CEO of Topline Securities said although two IPOs were able to get more than the required amount, small investors' involvement was not seen. Only 20,000 investors participated in these three IPOs compared to an investor base of approximately 250,000 in Pakistan, based on CDC sub accounts.
Nishat Power and Ghani Gases were oversubscribed thanks to huge applications while Nishat Chunian Power was not subscribed fully.
As compared to this depressing situation of 2009, there were 10 public offerings in 2008 led by financial sector firms with companies raising Rs 7.4 billion. Interestingly, in 2008, 9 of 10 offerings were made before the imposition of the price floor rule. Instead of moving forward, Pakistan stock market, unfortunately, is not growing since IPOs is one of the major barometers of the market development.