May 06, 2008	Tuesday	Rabi-us-Sani 29, 1429

KARACHI, May 5: The KSE-100 index lost 2 per cent of the value on Monday as investors’ jettisoned stocks disillusioned by the increasing uncertainty on the political and economic fronts.

The index has shed an exact 1,000 points in 10 trading sessions since April 18, tumbling from the height of 15,674 points. “That is a scary turnaround to the South,” affirmed a market participant.

As nervous investors scrambled to seek an exit, the index at one point dived down by 500 points on Monday, but recovered to close at 14673 level, losing 284 points for the day.

KSE Managing Director Adnan Afridi told Dawn in reply to queries that there had been “no defaults and all risk-management systems were in place”.

Independent enquiries also suggested that none of the brokers had gone broke, though there had been margin calls from banks to brokers and brokers to client, which forced weak holders to unwind their long positions.

The major worry was the possible flight of foreign capital, given the incessant weakening of the rupee, which at one point dipped to record low of Rs66.80 to a dollar during the day.

“Net outflow of foreign portfolio investment was recorded at $71.4 million in the outgoing week, adding to a total of $115.8m during the current financial year,” said an analyst quoting official NCCL figures.

A stockbroker, who asked not to be named, was highly critical of Finance Minister Ishaq Dar, who, he said was going about voicing concerns and shedding tears over the country’s economy. “He may have a political agenda and possibly the mission to discredit the previous government,” says this stockbroker, but adds: “The minister hardly realises that in doing so, he is lending credence to foreign investors’ fears of all being not well with the country”.

Besides the grim economic scenario, politics is another major issue that has held the market hostage for the last many months, says a trader.

“Sentiments drive the market,” says he and investors at the moment are at the edge of their nerves. To complete the dismal picture, corporates have unveiled unsavoury results during the current reporting season, with banks and cement companies taking a big hit of 17 pc and 65 pc, respectively on their bottom lines.

The fall of the market on Monday was triggered by the news of arrest of bigwigs of the Bank of Punjab (BoP), including its President Hamesh Khan, whose pay package made even the biggest corporate barons green with envy. But it was not for what he took for himself, but what he gave out in alleged unrecoverable politically-motivated loans that forced the hands of law to push him behind bars.

Stock in BoP was among the first to hit the ‘lower circuit’. But bulls, who were surely down, were not out. Ex-director of KSE Siddique Dalal was selling optimism. “It is an opportune time for investors to enter for value-based buying,” he said.

KSE BOARD MEETING WITH FBR: The Board of directors of the KSE conferred with the Federal Board of Revenue (FBR) on Monday in Islamabad. A director who returned from the capital in the evening said that the one issue around which the discussions circled was the levy of General Sales Tax. “We were given a patient hearing to our pre-budget proposals,” he said.

The KSE Board, which comprises ten directors: four nominated by the Securities and Exchange Commission of Pakistan; one the KSE MD and five broker directors, has been without the chairman, since the departure of Mr Shaukat Tarin, more than a month ago.