June 23, 2006	Friday	Jumadi-ul-Awwal 26, 1427

KARACHI, June 22: The money that was pulled out from the stock market was channelled into the banking system, but was not invested in the gold or property markets, market sources indicated.

The market capitalisation shrank by Rs966 billion (30pc) between April 17 and June 17. Since last week the market started improving and so far 13 per cent recovery has been witnessed.

Director Research, Jehangir Siddiqui capital Markets Mohamamd Sohail believed that the people, who had pulled out their capital from the stock market, had put their money in the banking system.

“The money, which came out from the stock market, did not go in the property market,” he said. When hard times grip bourses – investors usually put their money in the banking system like in term deposits.

However, the small investors were the real losers of stock market crash. “Small investors will definitely not take the risk of coming back in shares business after the record downfall in stocks prices,” Sohail said adding that small players have virtually sidelined themselves from the bourse.

Property market has been quiet for the last few months and transactional activities have further slowed down after the imposition of two per cent capital value tax (CVT) on or above 500 yards plots and houses. It may remain slow in coming months, he added.

The government has slightly increased the rates of return on its various national saving schemes in the budget, but Sohail ruled out the idea that the people, who had pulled out their money, would invest in national saving schemes.

“Banks offer more attractive returns than national saving schemes,” he said. He also ruled out the possibility that the losers of the stock market had entered the gold market. “The yellow metal rates have been falling and investors have avoided taking risk in the bullion investment,” he says.

Owner of Parekh Estate in Clifton, Abdul Wahab Parekh also ruled out the injection of money in the property market by those people who had withdrawn their money from the stock market.

“Sale and purchase of property is normal these days. Neither the money has come in the real estate and nor it has gone to other investment avenues,” he said.

Terming the stock market as the “stroke market” after the historical index fall last week, he said that rates of plots and bungalows had not seen any fluctuations. “There is no negative feeling among the buyers and the sellers regarding the imposition of two per cent CVT. Market is calm and cool these days,” Parekh said.

The turbulence in share prices actually paralysed small and medium size investors, who had suffered heavy losses, from April 17. “However, big investors know how to play in casinos and how to recover their losses. They already pull out their investment after smelling winds of change,” he commented.

Chairman All Pakistan Gem and Jewellers Association (APGJA), Saeed Mazhar Ali said that people, who had made profits from the stock market boom ahead of historical crash last week, had landed in the gold market when bullion rates were on the rise. But share prices in stock market and bullion rates had started falling simultaneously on different ground realities.

The recent pull out of amount by the investors had not found its way in the gold market because gold prices had fallen sharply owing to change in international rates.

However, he said that the investors were not annoyed over the falling prices of yellow metal. “They are investing as they know that they can reap long term benefit in gold in anticipation of further increase,” Mazhar said adding that in stocks there might be a short term benefit but there is no concept of long term owing to uncertain situation in the bourse.

He said gold prices were linked with international rates. The recent calm prevailing between Iran and the United States over the nuclear issue has caused stability for the time being in the global gold rates. International market is reeling between $570-580 per ounce after reaching a new peak of $730 per ounce in the second week of May.