Online News Paper

KARACHI — Pakistan’s stock market lost US$19 billion in FY 2008-09 because of political uncertainty, terrorism and a dearth of investment, brokers said on July 2.
“In 2008-09 the overall market capitalisation of the Karachi Stock Exchange (KSE) fell to $36 billion from $55 billion in 2007-08,” Javed Omer Vohra Company CEO Ahmed Nabil said. According to him, in FY 2008-09, which ended on June 30, the performance of the market was the worst in more than a decade.
Against average daily trading of 242 million shares in 2007-08, trading volume fell drastically to 105 million shares in 2008-09.
“The bears continued to maintain their grip on [the] stock market in Pakistan in 2008-09, and the market witnessed a 41 percent decline, the highest since FY 1997-98,” Naeem Securities CEO Muhammad Naeem said.
Pakistan’s stock market made gains gradually every year from FY 2001-02 to 2007-08, but in 2008-09 the political tug of war, terrorism and the KSE’s decision to cap the market in December 2008 caused a major blow to the market. Naeem pointed out that in 2008-09 almost all international stock markets also followed a downward slide triggered by the global economic crisis. The KSE, however, showed greater erosion than other world markets. The capping of the KSE-100 index at 9,144 points paralysed normal trading as this decision shattered investors’ confidence that ultimately dragged the index below 6,000 before turning up once again, he added.
Other brokers said foreign investors also pulled $540 million out of the KSE that further damaged the market sentiment and accelerated the selling pressure in the last financial year.
Brokers said in 2008-09 insurance, textiles, commercial banks, automobiles and paper and board registered the highest decline, with chemical, power production, oil and gas and fertiliser companies showing lesser declines.
The market, however, showed a bullish mood in first two days of the current FY that began July 1 largely because of an increase in domestic oil prices and a cut in the rate of profit in National Saving Schemes, they stated. Those two factors boosted the index by 333 points, or 4.65 percent, raising the KSE benchmark index to 7,495 points on July 2.