Merrill Lynch bullish on Pakistan

“Sell Indonesia, buy Pakistan”, the international financial services firm, Merrill Lynch (ML) recommends Pakistan, Sri Lanka, Vietnam and Mongolia as ‘new frontiers’ in their latest regional investment strategy report released on Thursday (Feb 15).

Among the four countries, Spencer White, the strategist who prepared the report says: “Pakistan remains one of our highest conviction overweight recommendations”. He reasons that the on-going economic reforms remains a core priority and that it should sustain high economic growth and lead to further financial stability, something which ML “feels the market has under-appreciated”. Best exposure to Pakistan has been recommended on rural expansion focus companies, which ML identifies as Adamjee Insurance; MCB; United Bank and Fauji Fertiliser Bin Qasim.

The (Passed) Winds of Change – Part 2

Again, here’s my take on the news. I think the three more important ones, that directly pertain, hence affect, the Karachi stock exchange, are:

1. The release that Prime Minister Shaukat Aziz is to postpone the decision to levy Capital Gain Tax for the next year.
2. The Sindh Government’s decision to discontinue stamp duty on electronic transfer of shares. [This proposal was in the last budget (June 2006). The duty was Rs. 0.01 per share.]
3. The opposition and disfavor of the Public Accounts Committee toward the privatization of Pakistan State Oil (PSO).

The (Passed) Winds of Change: Part 1

The reports by the agencies below that came around mid-December have been issued pertaining to our present economic condition and a look into the future. SBP primarily touted foreign investments for last half year, drooling from the prospects of privatizations in the couple of years to come. And, as usual, there was some news directing the path of KSE. Let’s have a brief look on the reports first.

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.

MCB Bank plans $150m GDR

MCB Bank Ltd, Pakistan’s second-largest listed bank, said on Thursday it was preparing a global depository receipt (GDR) sale in London worth up to $150 million.

MCB, which ranks behind National Bank of Pakistan on the Karachi Stock Exchange (KSE) with a market capitalisation of about $1.9 billion, will start pre-marketing the offer later this month.

That timetable could beat to the market a potentially larger London issue by Oil and Gas Development Company Ltd (OGDCL), which plans to list between 10 and 15 per cent of the $9 billion oil firm as a GDR by the end of the year.