KARACHI: Equity offerings of Rs116.8 billion took place in 2015, which is 60% higher than the value of shares listed on the Karachi Stock Exchange (KSE) in the preceding year.
The offered amount touched a record-high point in 2015 mainly because of a massive (secondary) issue by Habib Bank Limited (HBL). At the strike price of Rs168 per share, the HBL offering alone fetched Rs102.3 billion.
In total, year 2015 witnessed six offerings as opposed to nine offerings made in the preceding year.
In addition to the HBL’s secondary offering, shares of Synthetic Products Enterprises (at a premium of Rs20 per share), Mughal Iron and Steel Industries (at a premium of Rs24 per share), Dolmen City REIT (at a premium of Rs1 per unit), Al Shaheer Corporation (at a premium of Rs85 per share) and Amreli Steels (at a premium of Rs41 per share) were listed on the KSE in 2015.
According to Topline Securities, five out of six offerings were oversubscribed in spite of relatively weak sentiments that prevailed during most of 2015.
“The substantial growth in the offered amount comes despite the fact that the KSE-100 index is up only 2.2% year-to-date. Moreover, the offer size is contrary to the general perception of the market seen during the year where negative sentiments prevailed,” it said in a report.
The stock market performed poorly after two heavyweight sectors – banking and oil and gas – posted unimpressive results in recent months. A worldwide slump in oil prices turned investors away, thus pulling the KSE oil and gas index down by 34.5% year-to-date.
Similarly, continuous monetary easing by the State Bank of Pakistan brought down interest rates and resulted in decade-low banking spreads. As a consequence, investors pulled out of banking stocks, which brought the KSE bank index down 14.8% year-to-date, Topline Securities said.
Listings in 2015 were groundbreaking in many respects. For example, Dolmen City REIT is the first real estate investment trust scheme that has been listed in Pakistan. Similarly, Al Shaheer Corporation constituted a ‘meat IPO’, another first in Pakistan, Topline Securities said.
Two listings in the steel sector also symbolised a revival of the construction industry, as their combined offer size stood at Rs4.6 billion.
“We expect 2016 to be another eventful year for the Pakistan equity market, as many offerings are expected. The size, however, may not exceed the amount that was seen in 2015,” it said.