Feb 09 - 15, 2009

The equity market in Pakistan is still facing uncertain situation due to host of issues including economic meltdown, political instability, external security threats, internal law & order situation, high interest rate, liquidity crunch, high exchange rate, current account deficit and trade deficit.

Market people are of the view that the current load shedding in the country has left devastating impacts on the country's economy as it rendered hundreds and thousands of people jobless, besides causing negative vibes on overall country's economic situation, which also impacted the equity market.

Despite ever lowest levels of scrip, brokers and small investors are showing reluctance in picking up shares of their choice. In fact, they are staying away from the market because they had already suffered huge losses. However, some brokers are of the view that the market is passing through critical phase and if the country's economic and political situation moves into right direction, the market may come out of present phase in August or September this year.

Moreover, National Assembly Standing Committee on Finance and Revenue in its meeting approved the Stock Exchanges (Corporatisation, Demutualization and Integration) Bill 2008.

A senior member of the Lahore Stock Exchange (LSE) told PAGE that the Bill would facilitate the Corporatisation, Demutualization and Integration of Stock Exchanges in the country. The representatives of all three Stock Exchanges and small investors supported the government for its early enactment so as to ensure transparency.

They said that Pakistan would come at par with the rest of developed world in the investment sector. With the demutualization, ownership and the trading rights will be segregated and the governance will improve as the malpractice will be minimized. The Stock Exchanges will become Public Limited Companies by shares instead of Public Limited Companies by guarantee. The existing members cannot keep more than 40 percent of the shares while the remaining 60 percent shares will be sold to the general public and investors, he added.

Moreover, market people said that share prices of Pakistani cement companies have come down by up to 90 percent with the consumption of the commodity in the local market showing a negative growth of nearly 16 percent during the last six months compared to the same period last year.

They were of the view that enhanced cost of bank borrowing, high taxation, shortage of electricity and gas are badly affecting the cement industry.