In late Oct this year, we learned that Temasek had invested US$147 million (12 billion rupee) in Pakistan NIB bank via rights issue (Reuters), making it the largest investor with 63.15%.
Now the share price has dropped by 12%, which means the paper loss is US$17 million in just one-and-half month.
Pakistan’s Stocks Mostly Untraded as Regulator Eases Limit
By Khalid Qayum and Farhan Sharif
Dec. 15 (Bloomberg) -- Pakistan stocks were mostly untraded as the removal of some trading curbs failed to persuade investors to reenter a market shuttered for almost four months following the ouster of the president and a slump in global equities.
Almost three-quarters of stocks on the Karachi 100 Index didn’t trade after the regulator ended restrictions preventing the measure from falling below its level of Aug. 27, shielding investors from a record plunge in equities. The regulator kept a rule preventing the gauge from falling more than 5 percent.
The benchmark index lost 370, or 4 percent, to a two-year low of 8,817.10 at the close. The MSCI World Index has fallen 33 percent since Aug. 27, while the rupee dropped 21 percent this year, set for its biggest annual decline in more than two decades.
“Investor confidence in Pakistan must be at its bottom; certainly, the fundamentals on the macro side are quite bad,” said V. Anantha-Nageswaran, chief investment officer for Asia Pacific at Bank Julius Baer (Singapore) Ltd., which manages $350 billion in assets worldwide. “Prices have dropped elsewhere, so have to catch with the rest of the global markets.”
The index may extend losses because of remaining trading limit, brokerages said, with Citigroup Inc. forecasting a slump of as much as 50 percent.
‘Quite Inflated’
NIB, the bank partly owned by Singapore’s sovereign investor Temasek Holdings Pte, fell 1 rupee, or 12 percent, to 7.45 rupees, the biggest drop since Jan. 31, 2003. Unilever Pakistan Ltd., the nation’s largest producer of consumer products, fell 117 rupees, or 5 percent, to 2,223. Pakistan International Airlines Corp. dropped 1 rupee, or 24 percent, to 3.20, the most in at least 12 years.
Former President Pervez Musharraf resigned on Aug. 18 to avoid facing impeachment charges following a six-month standoff that had distracted the government from reviving an economy growing at the slowest pace since 2003.
“The prices which are currently at the exchange are quite inflated, so it is right that these would come down,” said Atif Malik, JS Global Capital’s head of international equity sales. “Commodity prices have come down sharply and a lot of turbulence in the world as well. Plus Pakistan market macro conditions have also deteriorated.”
Pakistan will be removed from the MSCI Emerging Markets Index this month because of the restrictions on selling stock, MSCI Inc. said last week. The deletion will take effect at the close of trading on Dec. 31. The regulator announced the lifting of trading curbs on Dec. 11. Investors are also holding back on purchases, traders said.
‘No Buyers’
“There are too many sellers and no buyers at the moment,” said Shuja Rizvi, director broking at Capital One Equities Ltd. in Karachi. “No trading has taken place because we don’t see any buyers.”
The exchange said late yesterday it would lift the trading limit even as a high court ordered a delay. The Securities & Exchange Commission said Dec. 13 it would “challenge” the court order. Officials at the exchange and regulator couldn’t be reached for a comment today.
A judge at the Sindh High Court ordered the delay until at least tomorrow, Business Plus news channel said on Dec. 13. The court order didn’t stop the exchange from lifting trading limits, the Geo television channel said today, instead allowing brokers to roll over continuous funding system, or purchasing shares through borrowed funds.
Stone-Throwing Investors
The curbs were imposed a month after investors threw stones and smashed windows at Karachi’s stock exchange to protest the worst losing streak in at least 18 years.
The Karachi 100 Index is valued at 9.5 times reported earnings, compared with the MSCI Emerging Markets Index’s 8.5 times.
The Karachi 100’s gains diminished this year -- after rising 11-fold when Pakistan’s economy expanded at least 4.7 percent a year between the end of 2001 and 2007 -- as the global credit freeze sent the rupee to a record low, the balance of payments deficit expanded to its widest level ever and inflation rose to a 30-year high.
The benchmark index has declined 37 percent this year, on course to complete its worst annual performance in 10 years. The emerging markets index has lost 55 percent.
“We take a long-term position and some things we need to hold for two to three years. I like to have the option of getting rid of it the day I want to,” said Marshall Mays, director of Emerging Alpha Asset Management Ltd. in Hong Kong. “You pay a huge penalty by investing in a market like Pakistan because of that.”
To contact the reporters on this story: Khalid Qayum in Islamabad at [email protected]; Farhan Sharif in Karachi at [email protected]
Last Updated: December 15, 2008 06:32 EST
Now the share price has dropped by 12%, which means the paper loss is US$17 million in just one-and-half month.
Pakistan’s Stocks Mostly Untraded as Regulator Eases Limit
By Khalid Qayum and Farhan Sharif
Dec. 15 (Bloomberg) -- Pakistan stocks were mostly untraded as the removal of some trading curbs failed to persuade investors to reenter a market shuttered for almost four months following the ouster of the president and a slump in global equities.
Almost three-quarters of stocks on the Karachi 100 Index didn’t trade after the regulator ended restrictions preventing the measure from falling below its level of Aug. 27, shielding investors from a record plunge in equities. The regulator kept a rule preventing the gauge from falling more than 5 percent.
The benchmark index lost 370, or 4 percent, to a two-year low of 8,817.10 at the close. The MSCI World Index has fallen 33 percent since Aug. 27, while the rupee dropped 21 percent this year, set for its biggest annual decline in more than two decades.
“Investor confidence in Pakistan must be at its bottom; certainly, the fundamentals on the macro side are quite bad,” said V. Anantha-Nageswaran, chief investment officer for Asia Pacific at Bank Julius Baer (Singapore) Ltd., which manages $350 billion in assets worldwide. “Prices have dropped elsewhere, so have to catch with the rest of the global markets.”
The index may extend losses because of remaining trading limit, brokerages said, with Citigroup Inc. forecasting a slump of as much as 50 percent.
‘Quite Inflated’
NIB, the bank partly owned by Singapore’s sovereign investor Temasek Holdings Pte, fell 1 rupee, or 12 percent, to 7.45 rupees, the biggest drop since Jan. 31, 2003. Unilever Pakistan Ltd., the nation’s largest producer of consumer products, fell 117 rupees, or 5 percent, to 2,223. Pakistan International Airlines Corp. dropped 1 rupee, or 24 percent, to 3.20, the most in at least 12 years.
Former President Pervez Musharraf resigned on Aug. 18 to avoid facing impeachment charges following a six-month standoff that had distracted the government from reviving an economy growing at the slowest pace since 2003.
“The prices which are currently at the exchange are quite inflated, so it is right that these would come down,” said Atif Malik, JS Global Capital’s head of international equity sales. “Commodity prices have come down sharply and a lot of turbulence in the world as well. Plus Pakistan market macro conditions have also deteriorated.”
Pakistan will be removed from the MSCI Emerging Markets Index this month because of the restrictions on selling stock, MSCI Inc. said last week. The deletion will take effect at the close of trading on Dec. 31. The regulator announced the lifting of trading curbs on Dec. 11. Investors are also holding back on purchases, traders said.
‘No Buyers’
“There are too many sellers and no buyers at the moment,” said Shuja Rizvi, director broking at Capital One Equities Ltd. in Karachi. “No trading has taken place because we don’t see any buyers.”
The exchange said late yesterday it would lift the trading limit even as a high court ordered a delay. The Securities & Exchange Commission said Dec. 13 it would “challenge” the court order. Officials at the exchange and regulator couldn’t be reached for a comment today.
A judge at the Sindh High Court ordered the delay until at least tomorrow, Business Plus news channel said on Dec. 13. The court order didn’t stop the exchange from lifting trading limits, the Geo television channel said today, instead allowing brokers to roll over continuous funding system, or purchasing shares through borrowed funds.
Stone-Throwing Investors
The curbs were imposed a month after investors threw stones and smashed windows at Karachi’s stock exchange to protest the worst losing streak in at least 18 years.
The Karachi 100 Index is valued at 9.5 times reported earnings, compared with the MSCI Emerging Markets Index’s 8.5 times.
The Karachi 100’s gains diminished this year -- after rising 11-fold when Pakistan’s economy expanded at least 4.7 percent a year between the end of 2001 and 2007 -- as the global credit freeze sent the rupee to a record low, the balance of payments deficit expanded to its widest level ever and inflation rose to a 30-year high.
The benchmark index has declined 37 percent this year, on course to complete its worst annual performance in 10 years. The emerging markets index has lost 55 percent.
“We take a long-term position and some things we need to hold for two to three years. I like to have the option of getting rid of it the day I want to,” said Marshall Mays, director of Emerging Alpha Asset Management Ltd. in Hong Kong. “You pay a huge penalty by investing in a market like Pakistan because of that.”
To contact the reporters on this story: Khalid Qayum in Islamabad at [email protected]; Farhan Sharif in Karachi at [email protected]
Last Updated: December 15, 2008 06:32 EST
