Market Focus: Karachi Races Ahead

Society Pakistan & World Affairs
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Despite of Terrorist attacks, political instablity and possibility of war, Asia’s smallest market has been growing rapidly fast.

FINANCIAL TIMES

Share prices on the Karachi stock exchange on Thursday maintained their upward thrust, setting another record on one of Asia’s smallest but fastest growing stock markets.

The KSE-100 index, up 1 per cent at 2,278 points, now stands almost 79 per cent up on the start of the year.

Thursday’s rise was partly prompted by optimism surrounding reports that the government will soon privatise Pakistan State Oil. PSO markets more than 70 per cent of petroleum products sold across the country. To secure the interests of a future investor, the government last weekend introduced a law through a presidential decree, giving assurances that PSO’s privatisation would not be reversed.

The national privatisation commission is expected to hold a meeting of prospective investors in Islamabad next week, to seek agreement on a cut-off date for seeking offers which officials say would be no later than December.

Some of the rise was also fuelled by quarterly results from Pakistan Telecommunications Corporation, the main telecom monopoly, whose net profits for July to September rose more than 17 per cent.

The KSE’s fast rise has triggered warnings that the bubble could burst following what some analysts consider a potentially overheated market. But Moin Fudda, managing director of the exchange, said: “This market has risen gradually and not just in one steep go. Additionally, the recovery is well dispersed in a number of shares, so the risk of a quick fall is minimal.”

Mr Fudda noted that the risk management measures in place such as monitoring capital adequacy of brokers, and enforcing rules for clearance of settlements within reasonable time, meant that concerns over some of the largest players abruptly running up large losses which could then have a domino effect, are exaggerated.

But Arshad Arif, chief analyst at Karachi’s Khadim Ali Shah Bukhari brokerage house, warned: “We have now entered a period where we have to look out carefully for signs of an overheated market.”

The market’s medium to long term trend could be influenced by the future direction of national politics. Last month’s elections failed to give enough seats to any single party to form a government on its own. For the first time, the country’s Islamic groups under the banner of the Muttahida Majlis Amal’-a coalition of six parties, have emerged as the third largest parliamentary group.

Analysts fear an unruly coalition government may emerge making conflicting demands on the next prime minister. One analyst said: “The market has so far shown little reaction to the danger of political upsets. But down the road, that’s one issue which could have a larger influence.”

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Awesome PT thanks.
Makes me proud.. Go PAK:k:

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Rupee Posts Gain In Kerb

KARACHI: The dollar, which is weakening in the international market, lost more than 20 paisas in the local open currency market Wednesday, to close at Rs 58.55 for buying and Rs 58.60 for selling, a result of growing remittances.

“There is selling pressure in the market from the general public,” said M Irfan, a currency dealer at Khanani & Kalia International, a local money changer. With Ramzan starting today, there are no buyers in the market, and people are cashing their dollars to generate local currency. The banks will remain closed today, so it is expected that the dollar will lose more values, he said.

The euro is still strong in the international market and the reserves are increasing substantially.

“The future of the US currency is not bright in Pakistan,” said Malik Bostan, owner of Bostan International, another money changer. The dollar will lose its value in the market. The State Bank of Pakistan (SBP) is supporting the dollar so that exporters will not be affected. The SBP is waiting for the country to achieve the target of $15 billion’s reserves, after which it will commercialize the dollar, Bostan said.

The local money changers are selling their excess dollar liquidity to the banks as the SBP has stopped buying the dollar from the kerb. But the bank can buy dollars from the interbank market, Bostan said.

The euro lost 45 paisas in the kerb, to close at Rs 58.35 for buying and Rs 58.50 for selling.

Interbank Market: Again, due to the huge supply of remittances from overseas Pakistanis, the dollar slipped one paisa in the interbank market Wednesday to close at Rs 58.72 for buying and Rs 58.74 for selling.

“The US currency will lose more of its value as banks are receiving huge a amount of dollars from overseas Pakistanis,” said a treasurer at a private bank. There is an inflow of $25-30 million in terms of remittances and $15-20 million from exporters on a weekly basis, he said.

“There is a 75 percent share of remittances and 25 percent of export proceeds out of the total inflow in the banking system in terms of the US currency,” said a treasurer at a nationalized bank. Pakistan is only paying for oil import because most of its foreign debt has been rescheduled, he said.

“The SBP has let the dollar go down and is not supporting the currency,” said a treasurer at a foreign bank. The SBP is not buying dollars from the banks, he said.

The euro remained unchanged, closing at Rs 58.60 for buying and Rs 58.80 for selling.

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and who says Karachi is not the industrial center of Pakistan :)

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For Pakistan Bashers, episode II

KARACHI: The share market opened on a highly bullish note on Monday, the first post-Eid session, as both the institutional buyers and punters tightened their grip on the market. They took fresh positions in pivotal stocks in response to reduction in interest rates, expectation of handsome return, positive developments on political front, strong economic fundamentals and continuation of economic reforms, pushing the index up by 55.23 points or 2.36 per cent. The crucial 2400-point psychological barrier was broken in the wake of feverish buying of high-yield speculative stocks by fund managers.

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As Pakistan wins **access to EU market,** we can expect new changes and Ruppee becoming stronger against the US dollar :k:

The Best Eid Ever!

KSE Breaks 2400-Point Barrier

KARACHI: **The share market opened on a highly bullish note on Monday, the first post-Eid session, as both the institutional buyers and the punters tightened their grip on the market.

They took fresh positions in pivotal stocks in response to reduction in interest rates, expectation of handsome return, positive developments on political front, strong economic fundamentals and continuation of economic reforms pushing the index by 55.23 points or 2.36 per cent.

The crucial 2400-point psychological barrier was broken in the wake of feverish buying of high yield speculative stocks by fund managers. The market, which had staged a smart recovery last week following the renewal of MQM’s support to the ruling party and MMA’s assurance not to allow collapse of the PML-Q government, recorded a hefty extended gain on the re-opening of the market after long weekend.**

Thus in less than two weeks, two crucial psychological barriers were crossed which bears an eloquent testimony to the market’s strength. After closing at 2345 on last Wednesday against 2285 at the preceding weekend, up 60 points, the index further jumped up by 55 points in a single session on Monday, taking the index to 2400.34.

In sharp contrast to normal holiday mood in the first post-Eid session, the market witnessed buying frenzy, which is expected to gain momentum with the emergence of year-end buying.

The index is likely to hit the 2500 mark by the close of the year. :k: Extension of support by the US to the new government, strong economic fundamentals and firm resolve to pursue the privatisation plan have reportedly boosted the morale of the investors who seem to have entrenched themselves well in the market.

Heavy inflow of foreign funds has also made the outlook of the market quite positive. At a time when the world bourses are in the grip of depression, the Karachi Stock Exchange is quite buoyant due mainly to the high yield of liquid stocks. :k:

No wonder, therefore, that it has been described as the best performing market of the world. Since January this year, the index has recorded 80 per cent increase. Since October 1999, when Gen Pervez Musharraf took over from Nawaz Sharif, the index has surged from 1100 points to 2345-plus which is no mean achievement.

The current financial year has provided a golden opportunity to the investors to make a killing on KSE because of the very encouraging payouts by leading companies. Surprisingly enough, business volume shot up by around 30 per cent from 195 million to 252 million with the total market capitalisation surging from Rs531.972 billion to Rs 543.855 billion.

The market virtually seethed in a ferment of bullish frenzy said an analyst. This points to the very bright prospects of the bourse in the coming year. This is largely linked to smooth transition from military government to civilian rule. :k:

The buoyant mood of the market was well reflected in the preponderance of plus signs, which stood at 222 against 51 negative ones. Faisal Abbas of AHRL said that after long awaited Eid holidays, investors came in aggressively on account of massive liquidity which initiated the process of re-rating the high yield stocks.

He however, said that the effect of the discount rate revision announced by the State Bank of Pakistan has not been fully incorporated in terms of price where the yields of active stocks like PTC, Hubco and Fauji Fertilizer is still hovering around 10 to 11 per cent and the financial institutions and the punters seemed busy buying these stocks. He maintained that none of the institutions or individual investors wanted to cash in on their holdings but were keen to put more cash in the stocks.

Another factor contributing to the enlivening of the market was regeneration of the investors’ interest in textile shares where market-men are expecting good payouts and handsome earnings. Interest in banking and insurance sectors is also emerging.

Faisal Abbas said that ’ now the cash cushion will prevail more on the market which will dilute negative political development, if any.’ SEMF held firm after strong fundamentals catapulted pivotal to higher levels. Consequently the pivotal regained its composure after weeks of massive selling that hampered its share value.

Adamjee Insurance and Nishat Mills also remained in the limelight as speculative buying forced the two pivotal stocks to close the day at upper circuit breaker limit.

Trendsetters like the PSO, Hubco and PTC along with other blue chips and sideboard items remained positive because of institutional interest. Recent positive developments have removed uncertainty that dogged the share market affecting the prices of pivotal stocks in recent weeks.

These developments have delivered an environment where investors preferred to convert cash into equities. But the sustainability of 2400-point level seems difficult unless the benefits that would stimulate stocks become visible, said a leading analyst.

A leading analyst, Zubair Elahi of KAB Securities, said that the index has closed at 100 months high whereas yield seeking fresh investment is still floating around. The individual stock prices have reached levels where even old stuck holdings are exhibiting gains.

The current rates exhibit good exit for old holdings whereas fresh investors need to wait for more rational levels. KSE-100 index was up by 55.23 points or 2.36 per cent at 2400.34 as against 2345.11 at the last weekend. Of 323 active stocks, 222 posted gains while 51 were placed in the minus column and 50 remained unchanged. The business volume stood at 252,348,900 shares as compared to 195,130,330 at the last weekend. The market capitalisation was placed at Rs543.855 bn as against Rs531.972 bn at the last weekend.

Among the volume leaders were Hub Power, up by 50 paisa at RS29.75 on 57.221million, PTCLA, higher by 80 paisa at Rs24.05 on 47.866 million, FFC Jordan, steadier by 60 paisa at Rs9.10 on 31.870 million, PSO, dearer by Rs4.40 at Rs185.40 on 13.145 million, Nishat Mills, harder by Rs1.50 at Rs18.60 on 12.938 million, Sui Northern Gas, fatter by 30 paisa at Rs19.60 on 12.621 million, Pak PTA, gainer by 45 paisa at Rs7.20 on 7.308 million and Fauji Fertilizer, brighter by Rs1.45 at Rs65.85 on 6.906m.

Among the major gainers were Unilever Pak, up by Rs10 at Rs1020 and Grays of Cambridge, higher by Rs5 at Rs245. Other major gainers were PSO, Adamjee Insurance and Clariant Pak.

In the minus column, Pak Re-Insurance eased by Rs10.10 at Rs 290.00 and Treet Corp fell by Rs7.50 at Rs142.50. Other main losers included Sarhad Cigarette, Millat Tractor and Siemens Engineering.

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http://www.dawn.com/2002/12/09/ebr3.htm
Why is the KSE going up?
Over the short run, stocks act just like commodities. The law of supply and demand becomes the principal determinant of price. The KSE is currently capitalized at around Rs525 billion or $9billion. Of the entire capitalization a good three-quarters of all listed securities are held by sponsors.

The actual tradable pool of shares is thus a fraction of the capitalization. The pool is small to begin with and there hasn’t been any major addition over the past several years.

To be certain, the supply of stocks has not increased much in the past several years. Come September 11, and there is all kinds of money flowing into Pakistan. According to the SBP records, home remittances have gone up from $1 billion last year to $2.4 billion this year. Technically, not all of the money coming back is home remittances.
Not all of the newly arriving funds are destined for the stock market but investment avenues in Pakistan are rather restricted to real estate and stocks. In essence, demand for stocks has gone up sharply while the supply has been more or less flat. That is what is really behind the boom.

The bottom line is that there is currently too much money chasing too few securities. Prices are thus going through the roof. Pakistan’s corporate sector hasn’t all of a sudden become more efficient neither is it expected to generate a significantly higher future stream of profits. In other words, there has not been any change in the fundamentals of the corporate picture either for the better or for the worse. Pakistan’s external sector is more stable than before but that has to do more with America’s war on terrorism than because of any intrinsic factor.

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Full Article

Why is the KSE Going up?

**On the last day of November 2001, the Karachi Stock Exchange (KSE), as represented by the 100-member KSE-100 Index, stood at 1,355 points. Exactly a year later, the index ended at 2,285 points.

That is a year-over-year gain of 930 points or a wholesome 68 per cent surge. Stock market investors collectively made some Rs200 billion. **

Almost over the same period, Morgan Stanley’s MSCI 9-member Pakistan Index has soared by 106 per cent. Out of the 50 stock markets that MSCI tracks around the globe, the KSE has come out as the best-performing stock market.

**Incidentally, on 11 September 2001, the KSE-100 index hovered around 1,250 points. Thanks to Osama, :hehe: the index has since doubled (before its most recent retreat). The index’s historical high was set at 2,661 points back in 1994. The index has been consistently loosing value for the past seven years. It saw a low of 830 points in the last quarter of 1998. **

Over the past few years, foreign fund managers have all but abandoned Pakistan. Morgan Stanley liquidated its Pakistan Fund (smbol: PKF) in March 2001. What really is behind the more recent surge in stock prices?

Over the short run, stocks act just like commodities. The law of supply and demand becomes the principal determinant of price. The KSE is currently capitalized at around Rs525 billion or $9billion. Of the entire capitalization a good three-quarters of all listed securities are held by sponsors.

The actual tradable pool of shares is thus a fraction of the capitalization. The pool is small to begin with and there hasn’t been any major addition over the past several years. In 2001, for instance, there were only four Initial Public Offerings (IPOs) of stocks. The new offerings were that of the Arif Habib Securities, the Fayzan Manufacturing Modaraba. the Wordcall Multimedia and the NBP. The aggregate value of these IPOs was just over Rs2 billion.

To be certain, the supply of stocks has not increased much in the past several years. Come September 11, and there is all kinds of money flowing into Pakistan. According to the SBP records, home remittances have gone up from $1 billion last year to $2.4 billion this year. Technically, not all of the money coming back is home remittances.

**Pakistanis settled in the US, for instance, have traditionally sent only a small percentage of their income back to Pakistan. What has happened in the post-September 11 era is that Pakistani-Americans - being interrogated by FBI as to the sources of their incomes - began sending their savings back to Pakistan. In 2000-01, money coming in from the US amounted to $134 million. In 2001-02, the same figure reached $778 million.

The UAE is another case in point. Geographical convenience and banking secrecy had encouraged many Pakistanis to stash away their savings at banks in Dubai. The actual or threatened crackdown in Dubai also brought back a lot of money. In 2000-01, money coming in from the UAE amounted to $190 million. This year the amount had gone up to $469 million. **

Not all of the newly arriving funds are destined for the stock market but investment avenues in Pakistan are rather restricted to real estate and stocks. In essence, demand for stocks has gone up sharply while the supply has been more or less flat. That is what is really behind the boom.

The second factor behind the surge in stock prices has been the drop in the rate of interest. Here we must thank Federal Finance Minister Shaukat Aziz. When the military government took over the average weighted lending rate at nationalized commercial banks stood at 15.53 per cent. As of September 2002, the same had come down to 11.62 percent.

**Most lending in Pakistan is done to the corporate sector where total advances hover around Rs800 billion. The almost 400 basis point (4 percentage points) decline in lending rates translates into lower financial costs for the corporate sector. The savings could have amounted to a colossal Rs 32 billion resulting in an almost equivalent increase in corporate profits, and thus an increase in the price of their stocks. **

A third factor that might eventually further reduce the cost of borrowing for the corporate sector is the growing Term Finance Certificates (TFC) market. Over the past year, at least 17 TFC issues amounting to Rs12 billion have come to market. This is indicative of the corporate sector trying to access the suppliers of credit in a more direct way eliminating the banking sector as an intermediary. At this stage this private debt market is not efficient. Blue chip companies can actually raise money through the banks at less than available through the TFC market. In the foreseeable future, corporate may indeed be able to raise capital at a more favourable rate of interest directly from the suppliers of credit than they do via the banking sector.

The bottom line is that there is currently too much money chasing too few securities. Prices are thus going through the roof. Pakistan’s corporate sector hasn’t all of a sudden become more efficient neither is it expected to generate a significantly higher future stream of profits. In other words, there has not been any change in the fundamentals of the corporate picture either for the better or for the worse. Pakistan’s external sector is more stable than before but that has to do more with America’s war on terrorism than because of any intrinsic factor.

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Of course it should go up because there is still lot to do in Pakistan. Most of the things are still not saturated except corruption. :)

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ISLAMABAD, Dec 9: Overseas Pakistanis have purchased special saving certificates and special defence certificates worth over $500 million only in one month period.
According to sources in the Central Directorate of National Saving (CDNS), these certificates were sold in the United Arab Emirates (UAE) in November this year, and there were expectations that by December 30, 2002, about $100 million would have been sold due to better interest rate being offered to overseas Pakistanis.
The sources said the UAE government had allowed Pakistan to sell these special certificates to overseas Pakistanis. “Now we are hoping to shortly get a permission from Bahrain to sell these certificates there,” an official concerned said.
He did not agree that interest rates on saving schemes have declined and said this rate was still about 9 per cent compared to 2.5 to 3 per cent of the commercial banks.
National Saving Schemes (NSS) are domestic debt instruments, geared towards retail investors and administered by the government of Pakistan’s CDNS. Currently, there are available six long-term schemes with maturities ranging from 3 to 10 years. Given the high NSS interest rates that exceed the rates of other government securities, the share of NSS borrowing in domestic debt has been constantly increasing (from 33 per cent in 1996-97 to 46 per cent in 2000-01).
Meanwhile, it was also learnt that the country’s current foreign exchange reserves of over $9 billion were now sufficient for ten-and-a-half months of imports. And these reserves were expected to be equal to one year of imports after reaching to over $10 billion by the end of 2002-03. The target of achieving $9 billion reserves was set for end December which has been completed before time.
The increase in reserves is said to be due to increase in remittances. “And this increasing reserves assure our economic sovereignty and hopefully the ongoing Poverty Reduction Growth Facility (PRGF) will be the last IMF programme in Pakistan,” a senior official of the Ministry of Finance said.
He said that increase in foreign exchange reserves also reflected continued confidence of the investors in the economic policies of the government.
Overseas Pakistanis have earlier sent $1.4 billion in first four months (July-Oct) of the current financial year, which were expected to reach to $3 billion by June 30, 2003.
“Trends were very good and we hope that more and more remittances will be sent by the overseas Pakistani with a view to further help strengthen the Pakistani economy,” another official said.
The flow of remittances has experienced a dramatic increase as it doubled from the last year’s level and played a pivotal role in strengthening the overall position of foreign exchange reserves.
http://www.dawn.com/2002/12/10/ebr1.htm

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Total market cap is only $9 billion?

so what are we jumping over here?

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This is a zero sum phenomenon. The impact is minimal. In the previous years there were alternative routes of remittances that went unchecked by the gov't. This year, the gov't has crackdown on outflows and inflows of capital so we are seeing a spike in remittances. that's all. The bottom line don;t change much.

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[QUOTE]
*Originally posted by ChannMahi: *
Total market cap is only $9 billion?

so what are we jumping over here?
[/QUOTE]

It was 700m before.

*Jump Jump Jump*

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[QUOTE]
*Originally posted by Pakistani Tiger: *

It was 700m before.

*Jump Jump Jump*
[/QUOTE]

Hey they deserve my appreciation at least for keeping the door open to a building that had $5/person deposit inside.:)

Ok so now it is $60 per person. buy a Walkman or something over Chritsmas.:)

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[QUOTE]
*Originally posted by ChannMahi: *

Hey they deserve my appreciation at least for keeping the door open to a building that had $5/person deposit inside.:)

Ok so now it is $60 per person. buy a Walkman or something over Chritsmas.:)
[/QUOTE]

You take over :p

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Here’s a following article with full description :slight_smile:

Rupee Continues to Gain Strength

The US dollar fell below RS 58 mark in the kerb at the very outset last week. It tumbled by 15 paisa on Monday at Rs 57.90/58.00 to a dollar for buying and selling respectively. This was linked to the flooding of the market with dollars which enabled the rupee to hit the year’s peak. Due to uncertain world economic and political conditions, people are preferring to keep capital in their homeland. More so because of strict monitoring of such savings to check funding of terrorist activities by the western countries and the on-going crackdown on money laundering. Exporters also took no chance and repatriated their export earnings with haste to avoid further fall in dollar’s value. However, in sharp contrast to the kerb market’s trend, the dollar recovered 10 paisa in the inter-bank market at Rs 58.33/58.35. Next day, the greenback depicted a firm trend in the inter-bank market gaining one paisa against the local currency at Rs 58.35/58.36 for buying and selling respectively. The dealers attributed the increase in inter-bank dollar rate to banks’ buying but ruled out the possibility of further rise because there were no major outflows. The firmness was partly linked to some borrowing pressure in the market as the banks wanted to build their reserves ahead of the long weekend. But some of the senior bank executives disagreed with this idea and said they did not expect the rates to go up further because the State Bank, as usual, was active in the market due to which the rupee was slightly down. Traditionally, the central bank bought dollars to support exporters. Traders said, the inflows, specially remittances sent by the overseas Pakistanis, had picked up ahead of Eid-ul-Fitr. In the kerb market, stood unchanged at Rs 57.90/58 because supplies outstripped demand. There were virtually no buyers of the greenback while overseas remittances on Eid eve had flooded the market. However, the rupee closed week on Wednesday at Rs 58.00/58.10 due to some speculative buying, Brokers said that the rupee glittered in the market mainly because of continuous flow of good news from the external sector. During the first four months of the current fiscal year, the home remittances swelled by 170 per cent and FDI inflows were up by 234 per cent. The balance of payments was reported to be in surplus by $1.23 billion during July-September, 2002. The foreign exchange reserves of the country crossed $9 billion mark last week with the indication that it may breach $11 billion level by the end of current fiscal. The international financial institutions are pleased with the stabilisation measures of the government. There is general belief that even at this level, the rupee is considerably undervalued because of the State Bank’s deliberate policy to help the exporters. The currency dealers said that the market is usually flooded with dollars during Ramazan on huge remittances from overseas Pakistanis. **Expatriates arrive with huge amounts of foreign exchange to celebrate Eid. **

Despite the fear of increase in the demand for dollars and subsequent weakening of the rupee due to political instability was also belied when the rupee continued to glitter on the currency horizon last week. On the other hand, surging foreign exchange reserves have strengthened the rupee against the greenback. For the first time, in the country’s history, the reserves crossed $ 9 billion mark while the target of $11 billion may be hit by the end of current fiscal year. Apart from inflows from expatriates and heavy repatriation of export dollars, Pakistan’s support to the US-led military campaign in Afghanistan has also been responsible for enhanced aid inflows from the US and other western countries as well as debt rescheduling have also contributed to the swelling of forex reserves. Pakistan has been steadily building up its forex reserves since October 1999. It recorded a quantum jump soon after September 11 incident in the United States. The flow of remittances from overseas Pakistanis has increased astronomically over the past year. Thus the reserves have risen from $500 million at the fag-end of Nawaz regime to over $ 9 billion at present. Though Shaukat Aziz, advisor on finance and economic affairs to prime minister Jamali, takes all the credit of building such a huge reserve, the fact of the matter is that the bulk of the reserves are largely made up of purchases by the State Bank from the open market. The central bank called a halt to such purchases only after procuring $3 billion through the inter-bank and open markets in the past two years. This was done after a building up of a reserve of $ 7.2 billion, including over $ 2 billion of private and bank holdings. The purchase was stopped at the behest of the IMF which insisted that the dollar should find its own level instead of helping the rupee stay around Rs 59.50 to a dollar through such purchases. Around $3 billion have been remitted by overseas Pakistanis. As the industry is almost at a standstill, there has also been drop in import of machinery and plant thus saving another few millions for reserves. Due to massive borrowing of the dollar by the State Bank from the open market, the rupee sharply depreciated against dollar which could be had only at Rs 67/- to Rs 69/- each before September 11, 2001. Then a sudden surge in dollars’ inflow has brought the greenback down Rs 58.00 within a short period of a little more than 14 months. Because of State Bank’s intervention in the inter-bank to keep the dollar at a certain level to protect the exporters’ interest, the dollar rate has been maintained at above Rs 58 level in the inter-bank market. Left to market forces, the greenback would be selling at Rs 55/-. Some analysts predict that the greenback may come down to even Rs 50/- within three months making a saving on foreign loan of Rs 180 to Rs 360 billion. This is a massive sum when viewed in the context of below Rs 400 billion tax collection thus far. Hence artificial propping of the dollar is meeting with widespread criticism. The SBP would do well to let the dollar find its natural level at a time when it has taken a steady downhill course in the world market due to USA’s deepening economic troubles. At the same time, the government should give sympathetic thought to the suggestion that it should use the large reserve to revive the economy fast by investing it in various development projects and reducing the widespread unemployment. Since end of joblessness and poverty alleviation are at the top of the agenda of the present government, the suggestion merits attention. ‘The rupee is driven by fundamentals not sentiment. It is stable and I don’t see much of an impact due to switch-over to civilian rule,’ said a dealer at a local bank. The rupee has been strong in the run-up to the polls. With an independent central bank and dollar continuing to flow in from abroad, the currency is unlikely to be disturbed by the change of government, dealers say. In the post-election sessions, there was generally a dull mood prevailing in the market. There was not much activity on the demand side. Thanks to continued inflow of home remittances, export dollars and foreign assistance and investment, the rupee has strengthened further hitting Rs 58/- level. Since September 11, 2001, attack on the New York’s World Tower, the rupee has improved by 12.1 per cent against dollar in the open market and 7.7 per cent at official counters. The dollar traded below Rs 58/- in the open market last week. The rupee has gained strength in the wake of selling of dollars by exporters and increased arrival in remittances. In the inter-bank market it is, however, still fetching a little above Rs 58, thanks to SBP’s intervention. In July-September this year, the dollar slipped by 92 paisa or 1.5 per cent of its value against the rupee in the inter-bank market. The dollar fell to its two-year low on September 30, at Rs 59.11/59.13 on buying and selling counters from Rs 60.03/60.05 on the last day of June 2002.

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....CONTINUE FROM ABOVE ...

Last week, it was further down to Rs 58.33/58.35. It is comforting to note that the US and international donor agencies, like the IMF, the World Bank, Asian Development Bank etc., have expressed satisfaction over election results and have promised continued assistance in case of continuity of reforms programme. US embassy officials said that despite the fact that election results were surprising ,with religious parties under the banner of MMA, having ground beyond any estimation but at the end of the day, dealing party is the ruling one and the US would continue to focus on improved relations with Pakistan, without any prejudice to whosoever comes into power. :D Sources in the World Bank said that despite the fact that results were not anticipated, but one could hope that the new government would continue with the economic reform agenda which the military government had embarked upon some three years back. Thus, election results pose no threat to rupee's stability. The future of the rupee depends on how exports perform, how long lasting are the soaring home remittances and when would imports of industrial raw materials and machinery pick up significantly to impact on import volumes. Exports cannot bring windfalls but improvement could mean additional few hundred million dollars. In the current global and domestic environment, a substantial rise in investment is not round the corner. The sources of remittances are yet to be identified to predict accurately, whether the increase is on account of the reversal of flight of capital or the inflow of workers' incomes or a combination of both and in what proportion. The durability of these inflows is yet to be fully assessed. For the short term, the strength of the rupee will be determined by improved exports, soaring remittances, unprecedented foreign exchange reserves, debt relief by the Paris Club and liberal assistance by the World Bank and the Asian Development Bank. But there is an emerging global trend towards capital outflows from the United States towards states and regions whose nationals do not find the alien lands safe havens for their money. The war against terror is accelerating that process though volumes are too low to impact significantly on the US economy. The investment opportunities for these funds, sent by individuals, for the present, are also very limited.

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Channmahi, you're not Pakistani, so you wouldn't understand.

What to us Americans is peanuts, to them is something big. Actually, what to us Americans is peanuts, is jewels to the whole world.

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Thats awesome, how would someone go about getting into KSE stocks, and sharing some of that 200 BN Rupees. thats like $3.7~bn (yeah?).

What is the estimated private internal wealth of the people of Pakistan. I read that in the UAE (this was a BBC article) is stands at $800bn, obviously Pakistani's wont have anything near that, we must have a decent internal private wealth.

Why dont these ppl invest more forcefully into the infrastructure of Pakistan.