KARACHI, Oct 8: A record-breaking run of shares at the Karachi Stock Exchange, which started the previous week, propelled the KSE-100 index to an all-time high at 14,367 points on Monday, beating the closing high of 14,236 attained in March this year.The market capitalisation soared to a new peak of Rs4,397 billion equivalent to $74 billion. The climb by 268 points was effortless with volume surging to 343 million shares.

Analysts said that the market was expressing its jubilation on the election of President Gen Pervez Musharraf, though the verdict of the Supreme Court was still due. Was there a support by the government through its holding of nearly 50 per cent of the market directly and indirectly through institutions? A few participants thought that the government might have lent a helping hand, but there was no denying the fact of the return of investors’ confidence in the market. “For local and foreign investors, the status quo on the presidential seat, symbolised a greater possibility of continuation of economic reforms,” said a stockbroker.

Mohammad Sohail, Director of Equity Broking at JS Global, said that after a 15 per cent fall since peak prices in March, equity values had all the right reasons to rebound. He maintained that as the clouds of uncertainty on the political front had started to dispel, the KSE is trying to catch up with the emerging markets, which had outperformed the Pakistani bourse.

The fear of foreign investors deserting the Pakistani bourses also appeared to have been stalled. The SCRA (Special Convertible Rupee Account) numbers with the State Bank of Pakistan showed that the market had been able to pull back all the $196 million that had run out and in addition attracted more inflows in the portfolio investment.

There has been a dramatic upswing of over 1,000 points in the last six sessions. Does that worry investors? For the moment stockbrokers, their agents, investors and speculators appear to be in the mood of celebration, throwing caution to the winds.

“Pakistani stocks are currently trading at attractive valuations of 11.2 times and 10.2 times the 2008 and 2009 earnings, respectively,” says Mr. Sohail, adding that the levels were at considerable discount to the average of the emerging market price-to-earning ratios. Most market participants were optimistic that there still was quite a room for the stocks to rise.

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