KARACHI: Six public offerings at the Karachi stocks market during the current calendar year raised Rs116 billion, more than 60 percent the level of funds raised during the previous year, as debuted companies seek fresh funds for expansion amid better macroeconomic fundamentals.
The nine public offerings had raised Rs73 billion in 2014.
“Though the number of offerings in 2015 was six compared with nine in 2014, yet the size of raised funds was huge,” said Mohammad Suhail of Topline Securities.
“The substantial growth was despite the fact that KSE 100-share Index was up only 2.2 percent YTD (year to date). Moreover, the offered size was contrary to the negative market sentiments during the year.”
Habib Bank Limited raised the highest amount of Rs102.3 billion through secondary offerings in 2015. Amreli Steel, TCS, Al-Shaheer Corporation, Dolmen City Real Estate Investment Trust and Mughal Iron & Steel Industries offered shares in 2015.
There were three mergers during the year: KASB Bank into BankIslami Pakistan, Libas Textile Limited and Ghani Global Glass Limited and Fazal Textile Mills Limited with Gadoon Textile Mills Limited. “Market outlook is relatively good and we see more IPOs (initial public offerings) going forward,” Sohail said.
He added that there were no reports of any significant merger or acquisition.
The local stock market was in the doldrums throughout the year. There was a little progress on the key structural reforms related to broadening of tax base, electricity generation and distribution and privatisation and/or restructuring of loss-making state-owned enterprises.
However, falls in prices of global commodities, notably crude oil and base metals, helped the imports-dependent economy.
Dr Amjad Waheed, chief executive officer at NAFA Funds said the Karachi Stock Exchange, dominated by banks and energy stocks, witnessed a slowdown in profitability growth due to an earnings drag created by lower oil prices and interest rates despite improving prospects of broader economy.
“Foreign investors have been selling in the emerging markets on fears of a sharp economic slowdown led by China, rising pressures on the currencies amid an expected interest rates hike by the US Federal Reserve and heavy redemptions by oil-based sovereign wealth funds,” Dr Waheed said.
Foreign investors pulled out $287 million from Pakistani stock markets in 2015 to date.
Analysts expect foreign selling to gradually subside as investors realised improving growth prospects of the domestic economy in low commodity prices environment, Pakistan re-entered widely tracked MSCI EM Index in Mid-2016 and corporate earnings resumed their double digit growth as impact of commodity price and interest rate decline dissipated.
“We strongly feel that oil prices are bottoming out in view of decent demand growth and an expected supply cut by a sharp decline in rig count of the US shale producers and budget cuts by conventional oil producers,” Dr Waheed said.
