Pakistani shares soar 54% - World's top performing Stock exchange this year

Society Pakistan & World Affairs
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Cracking news.

Despite all the bad vibes from terrorism, The Karachi stock exchange is outperforming all others in a bear market. It would be nice if we could get some benefit out of all that has gone on over the last year and this is good news indeed.

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September 15, 2002

Pakistani shares soar 54%
Dominic Rushe

TERRORISM and the threat of war have taken their toll on the stock exchanges of London and New York, leaving investors with heavy losses.
Not so in Karachi. The threat of nuclear war and its geographic proximity to the “axis of evil” have done little to dampen investor enthusiasm in Pakistan.

So far this year the Karachi Stock Exchange (KSE) is the top-performing stock exchange in the world. Shares are up 54%, comfortably beating the second-best performer, Thailand, which has climbed 19% this year.

From its lows immediately after the September 11 terrorist attacks, the Karachi exchange has risen by more than 80%.

Britain’s FTSE 100 index has fallen 23% since January 1, while America’s Dow Jones is down 17% and the Nasdaq has plunged 34%.

President George Bush’s “war on terrorism” appears to have done nothing but good for the Karachi exchange. Pakistan’s decision to support America has been followed by economic rewards such as an International Monetary Fund loan programme and the rescheduling of part of the country’s foreign debt.

Domestic investors who have favoured offshore investments in recent years have also been bringing their money back home. Analysts believe this trend is partly fuelled by fears that their offshore cash could become entangled in American investigations into terrorist money-laundering schemes.

Lower interest rates have also made the stock market look a more attractive investment. In a small market — just 772 companies are listed on the KSE — a small amount of money can have a big effect.

Sakib Sherani, Islamabad-based chief economist for ABN Amro, forecasts that Pakistan’s economy will grow by 4.5% this year, and corporate earnings are looking pretty healthy.

What about threats of war and terrorism? “The market seems to be able to shrug them off,” Sherani told Business Week magazine.

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Now that is what I called real good news, and something to be real proud of. :k:

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:biggthumb:

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Well, this is not new... Pakistans stock market was actually amongst 2001's best performers, despite the fact that it had alot to do with the events that would ultimately result in a global economic recession... I opened a thread on that in February/March I think...

Long Live Pakistan!

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AWESOME... Pakistan is definently on the recovery side...
And you cant imagine how relieved I am to hear the growth rate will be 4.5% this year... All things remaining the same (or improving), that will mean a big imprvement in Pak economy..
PAKISTAN ZINDABAD:)

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This indeed is good news.

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Sorry to say that the guy has absolutely no clue what he is talking about. This is not even a kindergarten’s worth. Karachi outperforming Footsie and Nesdaq and DJ. Is he out of his unintelligent tiny little mind?

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NYA,

I think he's speaking in relative terms. The Karachi stock markets are on the up whereas Footsie and Nasdaq and DJ have been falling.

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Pakistan on of the best stock markets

In the last year PAKISTANI stock market has had an amazing bull spell that has made it one of the worlds best performing markets !! :smiley:

ISLAMABAD, Pakistan – Against all odds, Pakistan has the world’s best-performing stock market.

The Karachi Stock Exchange index is up 56% since the Sept. 11 terror attacks even as the Standard & Poor’s 500 has fallen 19% and the Bloomberg European 500 declined about 27%.

Pakistani traders say one American hedge fund manager invested $30 million immediately after Sept. 11 and pocketed a 30% profit – $9 million – three weeks later.

Islamic militants still wreak terror in the back alleys of Karachi, where an estimated 10 million to 15 million Pakistanis live, work and pray alongside donkey-drawn carts and herds of goats and sheep. But investment bankers and brokers here are beginning to benefit from reforms in the country’s capital markets.

And the U.S.-led war against terrorism in Afghanistan ( news - web sites), for which Pakistani President Pervez Musharraf pledged support, has brought renewed global attention to a country that investors previously shunned because of corrupt markets and unstable politics.

‘‘What changed after 9/11 is Pakistan’s overall risk profile,’’ says Samir Ahmed, chief of the Lahore Stock Exchange, Pakistan’s second largest. ‘‘We went from being a pariah state to a more acceptable member of the world community, even though there are questions about democracy.’’

‘‘It was hopelessly undervalued. It was almost a no-brainer, honestly, to invest in it,’’ says Khalid Mirza, 56, head of Pakistan’s Securities and Exchange Commission ( news - web sites), who left a World Bank ( news - web sites) job in March 2000 to take over one of the world’s most discredited and least regulated securities markets.

Pakistan investors were battered by the 1998 Asian crisis that spread to emerging markets worldwide. Also in May 1998, the government detonated a small nuclear explosion, escalating regional tensions with India. That sent even the heartiest investors packing. A year later, in October 1999, Musharraf seized power in a military coup that derailed the country’s nascent democracy and presaged an interest-rate spiral that snuffed a small, domestic stock rally.

Musharraf’s authoritarian regime imposed law and order. But he turned the job of managing Pakistan’s economy over to free-market reformers such as Mirza. The results were startling.

Once installed in his panoramic tower office here, Mirza took a hard line against the country’s wealthy investment bankers from Karachi and Lahore who had traditionally ruled Pakistan’s stock markets according to their own whims and wallets.

Mirza pushed hard for the independent management now in place at Pakistan’s three stock exchanges – Islamabad, Lahore and Karachi – and he imposed tough new auditing and management policies at the country’s 725 listed companies. He also supports efforts by the exchanges, which list the same shares, to electronically link their trading floors. That should produce more uniform pricing.

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This is all nice and well.

However, we must remember that stock market is merely one more factor to consider when analyzing the economy and the state of corporate governance in the country. The basic underlying factors which influence the stock market is, and should be, the inherent strength of our industry and corporate sector. Short-term profit taking by international investors and speculative gains in select few stocks can be very deceptive.

In the time I spent playing the stock market game in Pakistan (many years ago) I know for a fact that many times, share prices are artificially manipulated by influential stock-brokers with no underlying change in the performance of the company.

From a purely monetary and economic stand-point, increase in stock market index does not make any SM as the best-performing. With approximately 10 years of downward slide in our stock market, this reversal, even if it is a technical correction, is inevitable. I am not convinced, that our industry has performed to an extent which renders their stocks as under-priced, even at this point. Valuation of stock prices in Pakistan still needs a massive overhaul, and a critical factor absent at this point, is a viable mechanism of rating the performance of the companies indexed.

Unless and until we get rid of the massive corporate mis-governance, be it corruption, or be it fraudulent use of corporate funds for personal benefits, there is no way we can look upon our stock markets to provide an effective reading of the state of our economy.

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Great Analysis, Faisal :hula:

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[QUOTE]
*Originally posted by NYAhmadi: *
Sorry to say that the guy has absolutely no clue what he is talking about. This is not even a kindergarten’s worth. Karachi outperforming Footsie and Nesdaq and DJ. Is he out of his unintelligent tiny little mind?
[/QUOTE]

its a comparitve rise in percentage, not considering the sizes of the markets or index

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[QUOTE]
*Originally posted by NYAhmadi: *
Sorry to say that the guy has absolutely no clue what he is talking about. This is not even a kindergarten’s worth. Karachi outperforming Footsie and Nesdaq and DJ. Is he out of his unintelligent tiny little mind?
[/QUOTE]

The only person here who seems depressed with this news, heh NYahmedi, a report similar to this also appeared in CNN...

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:k:
gr8 newz :slight_smile:

Rab Rakha

DerVaisH