Financing through CFS counter rose last week, which indicated improvement in confidence of investors following some improvement in share prices. The last weekend of the fiscal year FY06, on June 30, saw Rs 18.9 billion being financed through the KSE CFS market.
This represented a slight increase of Rs 1.9 billion against Rs 17.0 billion financed through CFS on previous Friday, June 23. The weighted average CFS rate remained 13.7 percent on Friday. This represented a 20 bps decline over 13.9 percent rate seen on previous Friday. The interbank money market also remained relatively liquid throughout last week, and there was absolutely no pressure on CFS rates from that end, either. June 30 was the last day for the June stock futures contracts at KSE, where an outstanding open interest was at Rs 5.7 billion on Friday. This showed that positions of around Rs 5.1 billion remained outstanding in the June stock futures contracts, which would be settled on July 5.
The stock futures spread in the June contract was meaningless, as it was the last day of the contract. However, investors saw an average spread of around 10.95 percent in the July stock futures contracts. FY06 was not only a very volatile year for the equity market, but was also a tumultuous one for the stock futures and CFS markets at KSE.
"We thought it would be apt to recap the ups and downs of the CFS and stock futures markets for FY06 since they are the two most common official leveraging tools utilised by investors and speculators in the Pakistani stock market.
"During FY06, we saw the KSE CFS weighted average rate touching a high of 27.4 percent, and a low of 10.5 percent. The average CFS rate for the year FY06 stood at 16.2 percent versus 13.4 percent seen in FY05. As far as KSE CFS investment is concerned, the highest level seen during FY06 was Rs 27.2 billion, while a low of Rs 10.7 billion was witnessed. The average outstanding investment in KSE CFS stood at Rs 21.9 billion for FY06, versus the level of Rs 27.3 billion seen during FY05."
As far as the stock futures market is concerned, the KSE stock futures spread saw a high of 39.2 percent during FY06, against a low of -4.7 percent. The average stock futures spread at KSE stood at 14.0 percent during FY06. The open interest in KSE stock futures saw a high of Rs27.2 billion during FY06 (figure seems high probably because following rollover weeks two sets of contracts are outstanding for 3 days). The lowest KSE futures open interest was witnessed as Rs 7.3 billion during FY06.