KARACHI STOCK EXCHANGE IN 2008
S.M. ABBAS ZAIDI,
Research Analyst, PAGE
Sep 29 - Oct 12, 2008
Karachi Stock Exchange (KSE) is the biggest and most liquid exchange and has been declared as the Best Performing Stock Market of the World for the year 2002. On July 31, 2008, 653 companies were listed with the market capitalization of Rs. 3,301.908 billion (US $ 46.258 billion) having listed capital of Rs. 713.077 billion (US $ 9.990 billion). KSE has been rated as one of the Best Performing Markets of the world. However, Karachi stock exchange in the year 2008 has been badly affected because of many reasons. The year started by the instability of the political and economic environment which has a severely affected the performance of Karachi stock exchange.
NO. OF LISTED COMPANIES
LISTED CAPITAL (RS. IN MILLION)
MARKET CAPITALIZATION (RS. IN MILLION)
CURRENT YEAR PERFORMANCE OF KSE
KSE 100 INDEX
During this year the Karachi stock exchange started from 13,666.43 points and went up to more than 14,000 points in Jan. This trend continued to rise till May but during that month the KSE went down sharply from 14, 956.82 points to close at 12,130.51 points. The performance of major sectors was positive during elections, as everyone was expecting political stability after the elections. But the performance of major sectors collapsed because of uncertain environment, political instability and high inflation due to which the foreign investment saw a sharp decline, which had a major affect on the performance of the Karachi stock exchange. Thus, KSE continues to suffer badly and has lost more than 5,000 points in less than five months. Currently, the Pakistani stocks are witnessing the lowest trading volumes this year. The KSE board imposed a floor on the benchmark index on Aug. 28 to stop falling below 9,144 points. Dealers do not expect it to be removed before Oct. 6. The Karachi Stock Exchange (KSE) benchmark 100-share index ended a marginal 0.10 percent, or 8.76 points, lower at 9,190.75. Volume was 1.27 million shares traded. The previous lowest volume was 1.9 million shares. Dealers and investors are also worried about the economic outlook with the rupee hitting a record low of 78.55 this week, inflation at more than 25 percent and dwindling foreign reserves. Foreign currency reserves were down to $8.91 billion in the week that ended on Sept. 13. It is assumed that $8.91 billion is not even enough to cover two months of imports. Moody's Investor Services downgraded the outlook for Pakistani debt to negative and highlighted the foreign exchange market's doubts over when funds would arrive to bolster dangerously low currency.
MAJOR SECTORS IN KARACHI STOCK EXCHANGE (2008)
SUGAR & ALLIED
MUTUAL FUND CLOSED ENDED
KSE during the first quarter of 2008 was the best performing stock market according to Morgan Stanley Composite Index (MSCI). A few months ago the KSE saw its index of leading shares reach the highest point in its history after a six-year rally. Unfortunately, Karachi Stock Market plunged massively by 4,500 points in little over two months due to host of reasons, mainly to political upheavals and worsening economic scenario of the country. After losing 1,286 points or 10 percent during the last week, stock market began the week with another heavy loss when its benchmark KSE-100 index lost 493 points, wiping out billions of rupees from the market. The shares in Pakistani companies have crumbled, losing one-third of their value since April, as investors have fled a country mauled by political upheaval and a violent insurgency. The rupee has also taken a dive, falling some 20% so far this year to a historic low of around 78 to the US dollar last week and inflation has soared to almost 25%. If this government remains unable to govern effectively, then discordant policies and their weak implementation could further set back investor confidence and would damage Pakistan's balance of payments stability as well as the government's fiscal financing prospects. With the investors waiting for any positive news, they do not seem interested in any investment and trading activities due to which the karachi stock exchange faces low trading.