KSE outperforms regional markets, posts 41% growth

KARACHI: Karachi capital market continuing its momentum in fiscal year 2013-14 (FY14) outperformed the region by posting 41 percent yearly growth on back of better corporate earnings, interest of offshore investors, improved economic situation and roll out of the privitisation plan by the government of Pakistan, analysts said on Tuesday.
The Karachi Stock Exchange continued its dream run in FY14 where the benchmark KSE-100 index notched up a stellar 41.2 percent return for the year, comfortably outperforming regional average return of 9 percent. 
India posted 31 percent, Taiwan 17 percent, Hon Kong 11 percent, Japan 11 percent, Korea 7 percent, Malaysia 6 percent, The Philippines 6 percent and China posted 3 percent yearly growth respectively. 
According to the JS Research’s analyst the ‘democracy dividend’ post May 2013 general elections, significant improvement on the Balance of Payments (BoP) front and roll out of the privitisation plan by the government were key drivers behind market performance in FY14.  Key drivers of FY15 market performance are likely to be pace and delivery of the government’s privatisation programme and outcome of the military operations in Northern Waziristan.
According to the research analyst of WE Research a historic fiscal year came to an end at the KSE as on back of better corporate earnings, interest of offshore investors and improved economic situation of the country where Gross Domestic Product (GDP) growth reaches 4.1 percent, the benchmark KSE-100 index managed to post a significant rise of 41.2 percent Year on Year (YoY) in FY14 to close the year at 29,653 points. 
We anticipate FY15 would also be a good year for KSE primarily with the support expected 12 percent rise in corporate earnings, increased portfolio investment, better economic situation and likely improvement in the security situation followed by Zarb-e-Azab operation by Pakistan Army. However, any unfortunate event from Dr Tahir-ul-Qadri could hurt the activities of the local bourse”.
However fragile security situation in the country and uncertain politician situation at the end of the year did affected the activities at the bourse, said the analyst.
The market capitalisation of KSE reached Rs 7.02 trillion ($71 billion) at the end of the year which is up by 36.2 percent from Rs 5.15 trillion ($51 billion) at the end of FY13.
As per the data released by the National Clearing Company of Pakistan Limited (NCCPL), offshore investors did a net buying worth $261.8 million in FY14.
Though the foreign buying was less in FY14 when compared to a net buying of $552.6 million in FY13 but it had a major positive impact on the performance of KSE.
Banking sector was the best performer during the year positing a return of 59 percent primarily due to better earnings on back of higher net interest income, surge in non-interest income and lower provisions. 
Allied Bank posted a highest return of 101 percent followed by Faysal Bank and Bank Al-Habib that posted a return of 72 percent and 65.4 percent respectively in FY14. 
Insurance sector posted a return of 54 percent in FY14 owing to increased investment portfolio and underwriting result

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