Karachi Stock Exchange

MARKET HIGHLIGHTS




KSE-30 Index 10003.99
KSE-100 Index 9182.88
All Share Index 6639.06
KSE-30 Index 11224.18
KSE-100 Vol 1,800
KSE-100 Val (M) 0.09
KSE-100 Change 0.00
LATEST NEWS: Proposal: Shares KSE to be sold to Singapore, Dubai
27-10-08
KARACHI: A senior official of KSE has proposed to sell out shares of Karachi Stock Exchange to Singapore and Dubai to prevent floor from crisis.Meanwhile, Dubai, Singapore, and New Zealand have shown their interests in buying KSE shares while Chairman Securities said that the hegemony of some of the high-class figures working with government would keep demolishing small investors.His statement came after the MQM chief Altaf Hussain urged Sunday to open trade in KSE however brokers and dealers failed to accomplish dialogues to open trade here.He added that KSE might remain frozen for several weeks.
Banks offer fresh financing to local bourse. 20-10-08
KARACHI: Commercial banks operating in Pakistan have offered to provide fresh financing to local bourse. This was agreed after a meeting between commercial banks and the State Bank of Pakistan (SBP) here on Monday.Talking to Geo News, President Muslim Commercial Bank (MCB) Atif Bajwa also confirmed the news.He said the announcement of Rs270 billion bailout package by SBP has resolved the problem of liquidity crunch in the banking system. This amount is sufficient to last till March next year, he added.

HISTORY OF KARACHI STOCK EXCHANGE


KSE began with a 50 shares index. As the market grew a representative index was needed. On November 1st, 91 the KSE-100 was introduced and remains to this day the most generally accepted measure of the Exchange. Karachi Stock Exchange 100 Index (KSE-100 Index) is a benchmark used to compare prices overtime, companies with the highest market capitalization are selected. To ensure full market representation, the company with the highest market capitalization from each sector is also included. In 95 the need was felt for an all share index to reconfirm the KSE-100 and also to provide the basis of index trading in future. On August the 29th, 95 the KSE all share index was constructed and introduced on September 18, 1995. Karachi Stock Exchange is the biggest and most liquid stock exchange and has been declared as the “Best Performing Stock Market of the World for the year 2002”. As on March 31, 2006, 663 companies were listed with the market capitalization of Rs. 3,257.062 billion (US $ 54.28) having listed capital of Rs. 486.489 billion (US $ 8.11 billion). The KSE 100 Index closed at 11485.90 on March 31, 2006 KSE has been well into the 4th year of being one of the Best Performing Markets of the world as declared by the international magazine “Business Week”. Similarly the US newspaper, USA Today, termed Karachi Stock Exchange as one of the best performing bourses in the world
The outgoing financial year ending June 2008 (FY08) turned out to be a difficult year for Pakistan Market, which after witnessing a bull run for 6 consecutive years (FY02-07), ended with a negative return of 11% (21% in US$ terms) and closed at 12,289 points level. Market Capitalization trimmed by 17% from US$ 66.5 bn to US$ 55.3 bn.
The market gained a 2.2% in first half (Jul-Dec) FY08 as against a negative return of 12.7% in second half (Jan-Jun) FY08. KSE-100 touched its all time high of 15,676 on 18 April, 2008, yet closed the fiscal year at 12,289 levels, down 22% from its peak. Weak Macro-economic fundamentals at the back of persistently high international oil prices amidst a less than perfect and a rather tumultuous transition towards perfect ‘Democratization’ led to a downgrading of the sovereign rating, capital outflows and, subsequently, a major tightening in monetary policy were the major reasons behind this massive correction. Moreover, rumors regarding implementation of Capital Gains Tax before the budget, also led to the prevalence of a negative sentiment in the market during the same time period.
In FY08, the average daily volume in ready market stood at 241.6 mn shares (up 14%), whereas average volumes in futures market fell by 10% and stood at 53.6 mn shares. In terms of value, average daily volumes were US$ 411mn in cash market up by 11% while in futures it was US$143 mn up 0.6%. On WoW closing basis, the market witnessed 27 positive closings with remaining weeks ending in red zone.

POLITICS AND ECONOMY DRIVE MARKET DOWN 11%


In FY08, the market posted a negative annual return of 11% in local currency terms (21% in US$ terms) against 6-year (FY02-07) average annual return of 48% in Rupee terms (50% in US$ terms). However, comparing the market’s performance on a half yearly basis, we can observe contrasting performance.
Despite fall in most of the regional markets, KSE’s performance was rather unimpressive as MSCI Emerging Asia (ex Japan) fell by only 6.6%. However, it still out-performed peers such as Taiwan, Malaysia, China and Philippines..



FERTILIZERS & E&P OUTPERFORM, BANKS UNDER PERFORM


Among key sectors, fertilizers and E&P sectors remained top performers with returns of 18.5% and 5%, respectively in their capitalization. Performance of the two index heavyweights was more than offset by dismal performances by banking and telecom sectors, which registered a decline of 40.6% and 30.8%, respectively. Banking sector came under pressure after the removal of Forced Sale Value benefit which resulted in higher NPL’s for the sector. Moreover, continued monetary tightening from the central bank which increased discount rates by 250bps during FY08 also had an adverse effect on the sector’s performance. Similarly, telecom sector’s under performance was mainly attributed to one off huge VSS cost of Rs 23 bn borne by the sector’s giant PTCL


FUTURE OUTLOOK



The medium term change in economic fundamentals for equities around emerging markets now appears to be more than adequately priced in. Moreover, the emerging economies have started to adjust to the new reality of high oil price and hence at the back of an expected slowdown in oil demand growth, any further major spike in oil prices can be ruled out. We’d like to reiterate the fundamental risk and return feature of the equities and the fact that equities have outperformed most other investment classes over the last century around the globe, even after incorporating the various oil prices shocks that the world went through. Pakistan market is still offering a PE discount of 32% as against comparable Asian emerging markets. Going forward, Pakistan market is expected to stabilize around current levels once this ‘over reaction’ to the weakened economic fundamentals settles down. In the short to medium run, a softening in international oil prices, improvement in domestic politics, and softening in monetary policy stance remain the key triggers.