June 14, 2008	Saturday	Jamadi-us-Sani 09, 1429

KARACHI, June 13: The Karachi Stock Exchange lost 193 points or 1.4 per cent during the week ended on Friday, which evidenced that it was neither the Capital Gains Tax (CGT) nor the budget, but the ongoing political turmoil that had rocked the boat of the bourse.

Closing at 12,942 points on Friday, the KSE-100 index has receded 11 per cent since April 18, when the current bear-run began. Net foreign equity sale figures displayed by the National Clearing Company of Pakistan Limited stood at $24.2 million which analysts said reflected the overseas investors’ reluctance to pick up the Pakistani stocks even when they were on offer at considerably low price-to-earning multiples.

Local investors including mutual funds decided to wait and watch from the sidelines and in consequence the average weekly volume of shares traded dropped to a 63-week low. “Investors were also reluctant to re-enter after having burnt their fingers during May,” says an analyst.

On the budgetary front, the stock exchange could not have asked for more. The government kept up its promise of extension in the CGT for two more years up to June 2010 and abstained from adding burden to the Capital Value Tax (CVT). On second thoughts, though, most stock brokerage firms rated about every sector on the KSE as sustaining a “neutral to negative” impact from the budgetary proposals set forth on Wednesday. Fertiliser was perhaps an exception.

On the ready market 126 million shares came up for trading, that represented 28 per cent drop from volume of 176 million shares the week earlier. Speculators and punters, who suffered severe beating for their greed by excessive leveraged buying, were still licking their wounds.

In consequence the CFS investment, which in better times, scarcely dropped much below the maximum of Rs55 billion limit, stood at just around Rs34 billion for the week, with the CFS rate at relatively cheaper rate of 14.9 per cent.

Cumulative outflow of foreign portfolio investment for the year 2008 now stands at $176.4 million. Most equity traders said on Friday that the market does not actually see a sign of the return of the bull, until the political concerns are set at rest.