After yielding double-digit returns three years in a row (average 42% in local currency, 36.5% in USD during 2012-14), the performance of the KSE-100 index remained lackluster in 2015 as the benchmark index inched up by only 2.1% (-1.8% in USD). However, in relative terms, the KSE-100 index continued to outperform not only its MSCI category benchmark i.e. Frontier Market Index, by 19.3% YoY, but the MSCI EM and MSCI DM Indices as well by 19.1% and 4.8%, respectively during 2015.
Despite positive macro tailwinds, performance of the benchmark index remained subdued, primarily due to i) negative performance of the E&P sector on account of slide in global crude oil prices and ii) banking sector remained under pressure in the wake of decline in interest rates and increase in roll-over risk amid maturity of high yielding PIB in 2016, leading overall sector plummeting by 9.2%.
Despite the lackluster performance of the KSE-100 Index in 2015 your Company earned RS.335 million in net income. During the year, Cyan’s equity portfolio outperformed the KSE-100 index by a staggering 23.55% (25.68% Vs 2.13%). This outperformance was primarily achieved by adopting a radical change in the investment strategy whereby the company maintained its exposure towards the power sector mainly HUBCO and divested from E&P and Banking Sector in the early start of the year towards Engineering and Technology & Communication sector.
During the year the Company adopted an aggressive stance on the public equities and maintained its exposure at 88% (average), whereas 12% was vested towards mutual funds and Government Securities. The equity portfolio was re-aligned to have a balance between high growth and high yield investments and to this effect sizeable investments were made in Engineering, Technology & Communication and Cable & Electrical Goods.
In closing, I would like to take this opportunity to thank all our Shareholders and the Board of Directors for their immense support. The Company’s accomplishments and present standing could not have been possible without the commitment and efforts of our employees who deserve full compliment. I am confident that the team will continue to grow and constantly deliver on expectations of all stakeholders. Together, our future is exceedingly bright. Let us continue to unearth our potential and use it for our success.
Sulaiman S. Mehdi
Chief Executive Officer
Karachi: February 22, 2016