Pakistan stock market fund has 9 billion rupees in cash
Wednesday, 9 September 2009
KARACHI, Sept. 8 (Bloomberg): Pakistan's biggest money manager said it has 9 billion rupees ($108 million) of cash left in a state-backed fund to support the nation's equity markets as it rebounds from last year's slump.
"I will invest from this fund when the values are attractive," Tariq Iqbal Khan, chairman of the state-owned National Investment Trust, which manages the fund, said in a phone interview in Karachi. "The banking and oil industry companies will perform well."
The benchmark Karachi Stock Exchange 100 Index has gained 52 per cent this year as investors became net purchasers and increased International Monetary Fund support prompted Standard & Poor's to raise the nation's credit rating.
The government on Jan. 2 started the 20 billion rupee State Enterprise Fund to revive stocks after the index slumped 58 per cent last year, the first decline in seven years that made it Asia's cheapest market.
"The improvement in the credit rating has also had a positive effect and has attracted foreign investors back," Khan, who manages the equivalent of $1.02 billion in equities, said late yesterday. "The doom and gloom scenario is over."
Pakistan's long-term sovereign debt rating was raised to B- from CCC+ on Aug. 24 by Standard & Poor's, which cited the increase in the nation's loan package from the International Monetary Fund to $11.2 billion last month from $7.6 billion approved in November.
Overseas investors bought a net $95 million of Pakistani stocks in August, compared with net sales of $46 million a year ago. They sold $1.05 billion of Pakistani stocks in the fiscal year ended June 30, according to data on Web site of the National Clearing Co. of Pakistan.
The IMF approved a bailout to help South Asia's second- biggest economy from defaulting on its debt after foreign reserves held by the central bank plunged 75 per cent to $3.45 billion, the current account deficit widened to a record and the rupee sank 22 per cent in 2008. The foreign reserves increased to $10.8 billion on Aug. 29, according to the central bank.
The benchmark index fell 1 per cent to 8,844.84 at 12:41 a.m. local time. Shares in the KSE100 are trading at 8.7 times estimated earnings, less than half the 17.9 multiple for equities on MSCI's Asia Pacific excluding Japan Index.
"There is a possibility foreign investors will see there is a gap between regional markets and the KSE," Khan said. "Given the level of global oil prices currently, the oil companies are likely to post good profits. The banks have performed well despite the provisioning of non-performing loans. Once that provisioning is over, they will also show profits."
Oil & Gas Development Co., the country's largest energy explorer, today fell 0.4 per cent to 112.20 rupees, paring this year's surge to 125 per cent. The company on Aug. 13 posted a 25 per cent increase in full-year profit after the dollar's appreciation against the local currency boosted the value of sales.
MCB Bank Ltd., the No. 1 lender by market value, declined 1.2 per cent to 203.49 rupees, reducing its gain this year to 78 per cent. MCB on Aug. 10 said second-quarter profit rose 1.6 per cent after it set aside additional funds to cover bad debt, neutralizing the effect of higher revenue.
"I strongly feel the market is running well," Khan said. "People are interested as the values are good and the corporate profitability will improve."
"I will invest from this fund when the values are attractive," Tariq Iqbal Khan, chairman of the state-owned National Investment Trust, which manages the fund, said in a phone interview in Karachi. "The banking and oil industry companies will perform well."
The benchmark Karachi Stock Exchange 100 Index has gained 52 per cent this year as investors became net purchasers and increased International Monetary Fund support prompted Standard & Poor's to raise the nation's credit rating.
The government on Jan. 2 started the 20 billion rupee State Enterprise Fund to revive stocks after the index slumped 58 per cent last year, the first decline in seven years that made it Asia's cheapest market.
"The improvement in the credit rating has also had a positive effect and has attracted foreign investors back," Khan, who manages the equivalent of $1.02 billion in equities, said late yesterday. "The doom and gloom scenario is over."
Pakistan's long-term sovereign debt rating was raised to B- from CCC+ on Aug. 24 by Standard & Poor's, which cited the increase in the nation's loan package from the International Monetary Fund to $11.2 billion last month from $7.6 billion approved in November.
Overseas investors bought a net $95 million of Pakistani stocks in August, compared with net sales of $46 million a year ago. They sold $1.05 billion of Pakistani stocks in the fiscal year ended June 30, according to data on Web site of the National Clearing Co. of Pakistan.
The IMF approved a bailout to help South Asia's second- biggest economy from defaulting on its debt after foreign reserves held by the central bank plunged 75 per cent to $3.45 billion, the current account deficit widened to a record and the rupee sank 22 per cent in 2008. The foreign reserves increased to $10.8 billion on Aug. 29, according to the central bank.
The benchmark index fell 1 per cent to 8,844.84 at 12:41 a.m. local time. Shares in the KSE100 are trading at 8.7 times estimated earnings, less than half the 17.9 multiple for equities on MSCI's Asia Pacific excluding Japan Index.
"There is a possibility foreign investors will see there is a gap between regional markets and the KSE," Khan said. "Given the level of global oil prices currently, the oil companies are likely to post good profits. The banks have performed well despite the provisioning of non-performing loans. Once that provisioning is over, they will also show profits."
Oil & Gas Development Co., the country's largest energy explorer, today fell 0.4 per cent to 112.20 rupees, paring this year's surge to 125 per cent. The company on Aug. 13 posted a 25 per cent increase in full-year profit after the dollar's appreciation against the local currency boosted the value of sales.
MCB Bank Ltd., the No. 1 lender by market value, declined 1.2 per cent to 203.49 rupees, reducing its gain this year to 78 per cent. MCB on Aug. 10 said second-quarter profit rose 1.6 per cent after it set aside additional funds to cover bad debt, neutralizing the effect of higher revenue.
"I strongly feel the market is running well," Khan said. "People are interested as the values are good and the corporate profitability will improve."