Re: KSE's frequent orgasms !
I have not followed Pakistan's economy all that closely in the last few years, except to read an article here and there or to find some nuggets from what you guys post here, but here are a few thoughts anyway.
Such massive surges can mean different things to different people. An optimist will say that the market was hugely under-capitalized pre-9/11 and since then the massive investments of foreign funds is driving the exchange up and up.
A more cautious approach will suggest that there is some major investment happening in key sectors (e.g telecommunications) and one should keep an eye on those sectors, while the rest of the index-components are just reaping the benefits of availbility of funds.
Although, I fail to see how such massive capitalization can occur in the stock market without a corresponding increase in the performance of base companies. I am sure there is a link, but it seems quite disproportionate. I would stake my bet on what Akif has been saying for a while... some of this increase is genuine, but most of it is speculative and driven by a few influential brokers in KSE, who are getting very rich (and richer) in the process. The high volume of activity suggests that there are now a huge number of fairly unsophisticated investors in the market and they are likely to bear the brunt whenever the rug is pulled. The key is to keep an eye on the performance of the Companies you are investing in, and not just go by their stock price.