Bulls at the Karachi share market celebrated the holding of peaceful general election by further strengthening their grip on the market after all the pre-poll uncertainties and apprehensions subsided. Investors took sigh of relief as no major incident of election related violence was reported in the country.
Analysts say they are positive about the next, probably coalition, government but the element of uncertainty about the working relationship of new government with the president Pervaiz Musharaf will haunt them.
Post-poll rally indicated that the investors were bullish about the future of country’s capital market. During the first trading session on next day of election KSE 100 index registered a hefty gains of around 3%. Analysts predicted that the bench mark KSE 100 index would cross 15,000 crucial level before the formation of next government.
The bullish trend is continued for the past couple of weeks because of corporate results season in the backdrop of dividend linked buying and the bench mark KSE 100 succeeded again in breaching its 14,000 points level.
Oil and gas, banking and power blue chips announced their full year and half yearly results that showed healthy growth which prompted buying despite the prevailing uncertainties about the outcome of general elections.
Oil marketing giant  Pakistan State Oil announced to have achieved historic milestone with gaining all time high profit before tax of Rs 8.2 billion and profit after tax of Rs 5.5 billion in the first half of current fiscal year due to inventory gains. The company said that the achievement was due to 13 percent higher sales volume. PSO also declared second interim cash dividend of Rs 6 per share for the financial year ending June 30, 2008. The dividend announced is in addition to first interim dividend of Rs 5 per share already declared. PSO's profit soared to Rs 5.487 billion in the six-month to December 31, 2007. The company's earning per share increased to Rs 32.00 in the period under review against Rs 6.62 per share in the same period a year back. The company would pay Rs 1.9 billion to its shareholders in the account of cash dividend. The companies profitability increased due to the rising oil in the international market.
Power sector’s important player Kot Adu power company also announced 32.5 per cent interim dividend and reported net profit of Rs 2.61 billion and earning per share of Rs 2.97 for the first half of the current fiscal year.
Textile players nishat mills announced its first half yearly net profit of rs 622.50 mln and eps of pkr 3.90
The another prominent payouts came from the banking sector and that was of MCB Bank which declared a robust growth of 15 per cent to Rs 21.31 billion and 26 per cent growth in the banks’ profit after tax to Rs15.27 billion. Market players termed MCBs’ result the best among results announced by important banks. The bank declared highest EPS of Rs 24.30. MCB said that its net interest income increased by 13 per cent to Rs 23.92 billion in 2007 while non-interest income 20 per cent higher to to Rs 6 billion. The bank also announced cash dividend of Rs 5 per share along with its full year results in addition to Rs7.5 per share interim cash dividend already paid.
Besides good result announcements by the banking sector some important development at the international front also encouraged the bulls to strengthened their grip at the share market. Many foreign brokerage houses issued positive reports on Pakistan.
Credit Suisse in its report painted a rosy picture of economy particularly of stock market that boosted the confidence of investors . CS said that corporate sector is poised to show an 18% jump in earnings for FY08 and an equities market trading at a 25% discount to regional peers. The market is 40% off historical highs as investors have discounted a higher level of political risk. SC says index could yield 22% for the year on the back of strong corporate earnings growth and a 4% dividend yield at current prices.
Besides, Chairman KSE, Shaukat Tareen hinted at acquisition of a bank in Pakistan by Barclays Bank, the second largest global bank by assets size with regulatory capital of $68.138 billion. State Bank of Pakistan had granted license in mid December to the bank to start operation in Pakistan with paid up capital of $100 million, making it seventh foreign bank to initiate operations in the country. The bank is expected to launch its services in the current year.
Pakistan has conducted general elections peacefully resulting two main opposition parties Pakistan Muslim League N and Pakistan People Party have emerged as major winners. Whoever makes government will inherit number of challenges from the caretaker set up major being continuity of reforms, supply of power to the industries, crisis of wheat, ghee and other commodities. Market players expect that growth of capital market will continue on the back of strong fundamentals.