LAHORE - Investors interest at the local bourse this week was stirred by both company specific and macro events, including thawing of Pak-US relations and US disbursing $1.18 billion to Pakistan; July 2012 CPI clocking in at a below expected 9.6 per cent; and a consortium led by Lucky Cement acquiring 75.81 per cent stake in ICI Pakistan at $152.5 million.
Consequently, the KSE-100 Index gained 150 points to close at 14,676 level, up 1.0 per cent WoW. Increase in market activity can be vindicated by 47.6 per cent WoW rise in volumes to 83 million shares. Foreign interest was intact as foreigners were net buyers of $3.0 million.
The US released $1.18 billion of CSF payments to Pakistan this week, after the signing of a MoU between the two countries for regulating Nato supplies to Afghanistan. The MoU will be effective till December 31, 2015.
As per Pakistan Bureau of Statistics, July 2012 CPI clocked in at 9.6 per cent as against 11.3 per cent in June 2012. Softer inflation was due to lower gas and petroleum product prices. The figure was below consensus estimates and was the first single digit inflation reading since December 2011. Resultantly, financial markets are now anticipating a 50-100bp cut in the policy rate in the upcoming monetary policy on August 10, 2012.
Very different reactions at the KSE to the 2 parties in the Lucky / ICI deal. With deal price at a 30 per cent premium to ICI’s market price when the news broke and tender offer on the cards, ICI’s stock price reaction was euphoric, outperforming the market by 7.7 per cent during the week. Conversely, LUCK’s stock underperformed the market by 2.6 per cent on expectations that the company may lower its payout to fund the acquisition deal.