May 19, 2006	Friday	Rabi-us-Sani 20, 1427

ISLAMABAD, May 18: The ongoing bearish trend in the country’s stock exchanges is a normal phenomenon as speculations always gain momentum in the pre-budget month making buyers and sellers cautious, say market experts.

Talking to Dawn Islamabad Stock Exchange former chairman Waheed Jan said every year in May stock markets in Pakistan witnessed a downward trend because of the pre-budget speculations that normally occupied newspapers and media analysis. Investors preferred to stay away from the market to get liquidity and so did the mutual funds, he added.

In March last year, he said, Karachi Stock Exchange (KSE) 100-share index was at 10,461 points, but by May 27, it had come down to 6,640 points.

“This was a 38 per cent decrease in the index points, which was normal keeping in view the importance of this month”, he added.

This year, he said, on April 18, KSE 100-share index reached its peak of 12,327 points. So far the index had retrieved normally and was likely to see a decrease of 23 per cent by the end of the month.

When asked that there was a general impression that people had started investing in gold following surge in the international gold prices that had crossed $700 per ounce, Waheed Jan said: “Gold is a separate issue and is related to money laundering. I think that the downward trend in the Pakistani stock exchanges is due to the pre-budget speculations”.

Zahid Latif, a former member of the board of directors of the ISE, told Dawn that as there was no commodities exchange in the country, therefore, investment in gold had nothing to do with the bearish trend in the stock exchanges. He also attributed the phenomenon to the pre-budget speculations.

He said the Thursday’s shedding of 406 points by the KSE was due to the news that government intended to impose tax on capital gains in the next budget.

Responding to a question, he said, people had started investing in oil and gold worldwide mainly due to the ever rising prices of both the commodities besides there was a downward trend in almost all the stock exchanges of the world these days.

He said the stock exchanges in India and the Middle East were also suffering from downward trends.