KSE seeks brokerage houses data

The Karachi Stock Exchange (KSE) has urged its members to submit trading data of their brokerage houses for the period January to July 2006, by March 9, said a notification issued here on Tuesday.

The KSE made the announcement on the directives of the SECP. The KSE also asked its members to provide details of their clients along with trading data.

In response, the KSE members rejected the notification, saying the KSE held all the day-to-day data that it demanded from them.

Foreign institutions hide clients identity

Zafar Moti Chief Executive Officer of Zafar Moti Capital Securities in an interview with The News said that foreign institutions have refused to provide Universal Identification Numbers (UINs) of their clients which is a huge discrimination between Pakistani clients and foreign clients.

This attitude should be changed and same treatment should be given to all, Zafar said.

He said it is obligatory for us to provide the complete information of our clients it should be compulsory for the foreign institutions to provide the details of their clients. Zafar minced no words in saying that authorities always are interested in facilitating the foreign investors interests but local investors interests are not catered to.

Banks propose changes in prudential regulations

Banks want to impose 30 percent margin on listed companies share financing. Besides this banks want their exposure in share markets to be protected by imposing eight new safeguards.

Sources of banking industry said on Monday that keeping best international practices in view the banks have drafted five major changes in prudential regulations meant for share markets of the country.

Sources said the proposed regulation number R-41 reads: Exposure against the shares of listed companies shall be subject to minimum margin of 30 per cent of their current market value.

Analysts suggest caution as KSE touches 9-month high

The outgoing week (February 06-09) is the seventh in sequence of closing the Karachi bourse on positive note. However, the process of much awaited technical correction was initiated on weekend.

KSE 100-Index moved ahead by another 255.01 points on week-on-week basis and closed above nine-month high record at 11,844.65 points despite of the bearish resistance it faced during week.

To calculate the future movement of the benchmark, it is worth mentioning here that 100-Index breached through 12,000 points on aggressive buying on Friday, but market failed to sustain this level. Corrections reversed the earlier gains after touching 12,047.72 points peak level this week.

What Happens When Beasts Roam the Earthen Markets

Needless to say, a stock market is a very interesting playground; things change quite quickly and decisively. A few days ago we saw a bearish trend in the market and now the trend has changed to bullish. These were the levels and prices where everyone was selling and leaving the market; now, everyone’s back on the wagon again, everyone wants to buy and make money.

Last week the bullish trend continued. The Index crossed 11,000 points once again. There was an overall increase in 464 points in KSE-100 index. Though it was the last week of January trading, buying was strong in that it did not affect the pursuant bullish trend. On Wednesday and Thursday, the Index increased by 150 and 175 points respectively.

Recovery After Crash

After the index breaking the 9,900 level last month, started to rise gradually. When such a crash comes there is a level where short sellers start profit taking, so there is a slight change in the trend. Secondly the prices came on the lower level that they attracted the individuals to buy shares. As the future contracts for December were over and new month started so a fresh buying in Jan contracts was obvious. Another factor in my opinion which played the most vital role in supporting the index was the news that Prime Minister has postponed the decision to levy capital gain tax for next year. This made the institutions to come to the market for fresh purchasing. We saw that the index gained about 250 points in two days.

Commentary on December 2006 Stock Crash

In the past two years we have seen some tremendous highs and lows in the stock market. Yet again we witness a major decline in the index. It all started in mid-December 2006, the causes being:

• Oil and Gas Development Corporation (OGDC) listing and undervalued sale of Global Deposit Receipts (GDRs);
• Selling in the banking sector due to acquisitions, and;
• Primarily, suspension of Callmate (CTTL) shares’ trading and the six times its pad up capital stuck in the continuous finance (CFS) and Badla market.

SBP suggests complete removal of badla financing

State Bank of Pakistan on Wednesday suggested to policy makers that badla financing in share markets be completely “removed with better risk management tools”.

It further said, “few (stock) brokers can still manoeuvre the market.”

Releasing its annual review of performance of financial markets-2006, the central bank said the March 2005 crisis hints towards market manipulation.

Though number of investors has grown tremendously over the years few big brokers can still manoeuvre the market.

The SBP said another factor instilling instability in equity markets is the presence of badla or CFS financing which it said, “Supports speculative activities without proper exposure.”

KSE Notice: Implementation of Risk Management System (RMS)

KSE Managemenet has issued a notice for implementation of Risk Management system (RMS). It lists the changes identified in RMS as approved by the KSE Board of Directors and SECP.

New risk management measures

The stock market went down last week, but not due to changes in the margins regime that seems to have taken the back seat. This article is about the new risk management measures, which are likely to haunt the market after some time if not in the immediate future.