How sad for Karachi Stock Market. KSE index was going down and down since 18th April. But last week was eventful. KSE went down on Monday (23rd June) as usual.
KARACHI, June 23: Karachi Stocks down 493.11 points:
Than good news came Monday evening:
Pakistani court bars former premier Nawaz Sharif from running in upcoming by-elections; Shahbaz case referred back to ECP: ISLAMABAD, Pakistan, June 23 (AP) - The Lahore High Court ruled Monday that former Prime Minister Nawaz Sharif was not eligible to run in upcoming parliamentary by-elections … (First Posted @ 19:20 PST Updated @ 21:10 PST)
http://www.dawn.com/2008/06/23/welcome.htm
Good news meant KSE bounced next day with highest gain KSE ever seen. Investors thought that Presidency is still strong and would not allow Nawaz Shareef, Zardari and goons of their party to destroy the country by their loot and plunder.
KARACHI, June 24: Karachi Stocks up 960.50 points:
This momentum that started kept going:
KARACHI, June 25: Karachi Stocks up 307.62 points:
KARACHI, June 26: Karachi Stocks up 21.79 points:
But then black cloud came back in evenings of 26th June. Bye-election results showed that some Pakistanis love turmoil and destruction by trusting looters, plunderers, crooks, thugs, and liars, rather prosperity and development of Pakistan by using their votes intelligently. Next day sentiment of people who invest in Pakistani economy, give most of the taxes to country and jobs to poor got into panic. Obviously, people love their country and want the country to prosper, so they invest. But when investors learn that crooks and thugs are in power who would loot and plunder the country, they shy away from investing. Thus, KSE responded and went into negative again.
KARACHI, June 27: Karachi Stocks down 98.89 points:
Anyhow, I think that KSE response was unwarranted as on ground nothing has changed. No National Assembly seats changed hand in bye-election but only names changed so nothing to be excited about. For instance, 5 NA seats were contested and results are as under:
NA-11 (Mardan): Abdul Akbar (PPP) to Khanzada Khan (PPP)
NA-52 (Rawalpindi): Ch Nisar (PML-N) to Muhammad Safdar (PML-N)
NA-55 (Rawalpindi): Makhdoom Hashmi (PML-N) to Haji Pervaiz (PML-N)
NA-131 (Sheikhupura): Rana Tanveer Hussain (PML-N) to Rana Afzaal Hussain (PML-N)
NA-147 (Okara): Manzoor Wattoo (Ind who joined PPP) to Jahangir Wattoo (PPP)
Seat NA-123 (Lahore) on which NS was intending to contest election was abandoned by Javed Hashmi (PML-N). So, if this seat is going to get contested, most likely PML-N would win again.
Some people may not agree with my concluded reason of strong presidency (plus president giving statement of his worries regarding economy) was cause of stock market bounce on 24th June. These people might try to sell reason that it was government step of changing circuit break percentages (1 percent downward and 10 percent upward, from 5 percent on either direction), plus clamping on short selling by reducing period of settling account, that caused stock market bounce.
I could not agree with them because I could not see how changing circuit break percentage could change bearish market rather it should bring panic and we would have seen 1 percent downward trend getting repeated day after day. Reducing period for settling account could slow down decline but I could not see here also any reason for bullish trend.
All above could create some stability in market if investors think that government has started getting serious about tackling Pakistan economical decline. 23rd June changes in Stock Market rules can be taken as sign of some concern in government regarding economy and declining stock market, but that is all. On the other hand, it is obvious to all (including investors) that Nawaz disqualification shows that Presidency is quite strong plus presidency concern regarding deteriorating economy and past records is bound to create enthusiasm and confidence amongst investors and that is what we saw after 23rd June Court decision, market bouncing a bit back.
This spur of bullish mood could not last unless political government shows seriousness and Presidency shows more strength.