| December 13, 2002 | Friday | Shawwal 8, 1423 |
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The Scud anti-climax
Unbelievable
THE news of the spectacular gains in the stock market last Monday came virtually as an Eid gift for the new government of Prime Minister Zafarullah Khan Jamali. The way things were moving on the economic front in the country over the last few months, it was not unexpected that the KSE 100-share index would soon cross the 2,400 points. It did so with a single-day record surge of 55.23 points. On the face of it, investors seem to be regaining their confidence and responding to the enabling environment built through reform measures. The recent significant reduction in the cost of money could have provided the immediate impulse for this happy development. As it is, the country seems to be awash with a lot of liquidity, most of which has come from abroad since 9/11. This expanded bulk of liquidity because of its very nature is looking for investment avenues where returns are quick and which also provide revolving doors for a fast getaway if and when needed. So, part of this money, mostly the savings of overseas Pakistanis amounting perhaps to a billion dollars-plus, is now being channelled into KSE scrips which promise quick returns and also have the in-built ability to provide the investor a quick exit.
Since this money has been remitted to Pakistan to prevent it from being tainted or frozen by the world-wide investigations going on to trace the financial links of the so-called Al Qaeda network, the owners of these resources are not looking for long-term investments avenues, in which case they would have to wait at least three to four years for a return and which do not permit quick withdrawals once an investment has been made. The other avenue of investment for such resources is real estate, and sure enough the prices of real estate have been rising over the last six months or so.
However, the major focus of these resources is still the Karachi bourse. But the KSE has only a limited number of blue chips. This situation has caused the value of these scrips to soar. Their weightage in the index is more than 80 per cent, and hence the dramatic rise in the Karachi 100-index in a short period of time. According to one recent calculation, the entire capitalization of the KSE is no more than Rs 544 billion and of this only one-fourth is said to be tradable; the rest is owned by the sponsors who do not need to trade on the exchange. Also, there has not been any major flotations on the stock market for a long time because of the depressed investment climate in the country. In 2001 there were only four Initial Public Offerings of stocks; the aggregate value of these IPOs was estimated to be no more than two billion rupees. So, while the recent steep rise in the KSE index value is welcome and can be regarded as a good omen for Pakistan’s investment future, the new government should use the opportunity to consider adopting specific policies to encourage investment in the economy which would in turn create conditions for new flotations on the KSE and an increase in real investment.
“WHAT a remarkable cock-up,” a BBC TV correspondent said during a Wednesday night newscast while commenting on the Spanish navy’s seizure, at America’s instance, of a freighter carrying Scud missiles from North Korea to Yemen. A cock-up it was, indeed. The missiles were bought by Yemen for its defence forces; their sale was confirmed by the Yemeni president as far back as in August. Yemen is one of the closest collaborators with the US in the “war on terror”; it was lavishly praised for its cooperation following the attack on the US warship Cole off the port of Aden. Neither North Korea nor Yemen subscribe to the missile technology control regime and therefore were not in breach of any international law. The US State Department itself has been forced to say there was no legal prohibition preventing Yemen from acquiring the missiles. The Scuds shipment is now being allowed to move to its destination. Red faces among the anti-terror coalition partners, with Spain ending up as the ultimate fall guy.
But there is a more serious side to the episode. It shows how the Bush administration is letting its doctrine of preemptive action get on its nerves. It is making the US act in haste and without due care. Its obsession with the need to attack Iraq is leading it into irresponsible actions that can set off a major international crisis. The first reports in the US media about the Scuds were based on speculation that the missiles could be headed for Iraq, which is one example of the way in which people in America are being conditioned to jump to dangerous conclusions. Washington’s paranoia may actually be precipitating fresh trouble for the world. North Korea has already said, in response to the US stoppage of fuel supplies, that it may reactivate its frozen nuclear development programme. It may now turn even more hostile. The US action in taking away the Iraqi weapons dossier from the UN before other Security Council members have had a chance to see it is another instance of the Bush administration’s readiness to ignore even ordinary courtesies and established traditions. There is still time for Washington to consider with a cooler head the consequences of the course it has chosen to pursue, which is not winning it new friends and maybe alienating many of those who are.
THE report of a three-hour robbery at a petrol station in Karachi that shares a boundary wall with the local headquarters of the Pakistan Rangers is quite startling. Even though it happened at the deserted hour of around three in the morning, it is strange that it could go on undetected while it was in progress. In fact, some of the nine robbers that descended on the petrol station even acted as attendants without arousing any kind of suspicion, reportedly filling fuel for motorists and motorcyclists. The employees at the petrol pump said that the men broke down at least a couple of doors and parked their vehicle where no parking is allowed. Yet, no one heard or saw anything, not even the round-the-clock guard at the Rangers headquarters.
That this happened in the heart of Karachi’s main commercial district, close to major hotels and the residence of the Sindh governor, is an indication that robbers, thieves and other criminal characters think that they can operate with impunity. What is perhaps equally troubling is the fact that despite the passage of almost three days, the police station of the area refused to even register an FIR. This goes very much against the Sindh IG’s repeated claims that ordinary citizens should feel no hesitation about registering criminal complaints with their nearest police station. Not registering an FIR is a novel way used by SHOs to deliberately under-report crime in their respective jurisdictions and tell their bosses that criminal activity is on the decline. The whole episode is full of unexplained mysteries, including the daredevil style of the robbers, and calls for a thorough investigation.