Karachi Stock Exchange loses Rs363b in three days

KARACHI - Karachi Stock Exchange (KSE) has lost a massive market capitalisation of Rs363 billion in just three trading days after the restoration of 5 per cent upper and lower locks limits on July 11. The overall decline in the KSE capitalization had been estimated at Rs1519 billion from April 18 to July 16, 2008.
On April 18, the benchmark KSE 100-Index reached the all time high, at 15,676 points but prolong political uncertainty and fragile economic situation coupled with deteriorating law and order situation in the northern part of the country and the US threats of direct attacks in tribal areas, have not only shattered the confidence of foreign investors but also pulled out the local investors from the equity markets of the country.
These major issues had pushed down the KSE-100 index from life high at 15,676 points recorded on April 18 to 10.491 points, reflecting a big decline of 5,185 or 33 per cent.
On the other hand, so far KSE 100-Index saw decline of 1,204 points in three trading after the restoration of 5 per cent lower lock limit.
“At the time market is quite unpredictable but good news and support of government by establishing proposed equity market fund can prop up the stock market because local investors have already invested their funds, so it’s now the government turn to inject investment at the stock markets,” CEO of Dalal Securities M Siddique Dalal said.
“Employees Old-Age Benefits Institution (EOBI), State Life Insurance Company, National Investment Trust (NIT), private and public sector banks have capacity to pour fresh funds into the share markets,” he added
Although share prices at attractive levels but the investors are still concerned to further invest in the share markets due to the expected increase in discount rates, fragile law and order situation and burgeoning political confrontation.
At the moment stock markets are in the grip of confidence crisis and only the government could restore the confidence of the markets, he added.
“I don’t see formation of equity market fund soon, it takes few weeks for launching the fund,” Siddique said
“All eyes are now on today’s meeting between SECP and stock markets, it is being expected that mechanism of the equity market fund will be finalized. If the Rs50bn support fund is launched, it may act as a catalyst for the stock market,” Siddique said. He said that restoration of 5 percent lower lock limit could not manage to provide absolute exit to the small investors so far