KARACHI, Dec 30: Pakistani stock market lost 55 per cent of its value (in rupee terms) in the year ended December 2008, placing it at the bottom of the table of all the regional bear markets.
Equities having lost their value worldwide, the US market which had triggered the bust, ended the year with the benchmark S&P 500 down 41 per cent, representing the sharpest fall since the crash of black Friday in July of 1932.
“Investors got panicky this year as collapse originally thought to be confined to the US home mortgage sector spread out into a full-blown global credit crisis, that now threatens to prolong global recession,” says Mohammad Soahil at JS Global. With two more trading sessions remaining this year, there could be a slight addition to the drop.In comparative terms, Pakistani stocks remained at the bottom of nine countries in the MSCI Emerging Market Asia, representing a plunge of 65 per cent in dollar terms.
Others that followed on its heels were India and China down 62 per cent; Indonesia 59 per cent; Korea 57 per cent; Thailand 56 per cent; Philippines 55 per cent; Taiwan 49 per cent and Malaysia 43 per cent.
More problems await the local market as MSCI has already announced expulsion from its MSCI EM Index effective Dec 31, 2008 on account of “deterioration of investability conditions on account of floor rule.”
MSCI World Index of 23 developed countries also posted its worst annual loss of 45 per cent during 2008.
Similarly, MSCI Emerging Market Index and EM Asian were down 55 per cent, which analyst attributed to credit related losses and write downs at financial firms.
All of that pushed the so far ‘unsinkable’ economies of US, Europe and Japan into the deepest recessions since World War II.
Apart from the global sell-off, the Pakistani market showed its biggest loss in two decades, due to many of the indigenous factors.
Those included worsening economic indicators, border tensions and terrorism. The balance was clearly tipped more on the risk side than on the rewards for investors in equities.
And finally, in hindsight, the ‘floor’ plastered under the Index for as long as three and half months, did far more harm than good. As the suspended brokers and those under the cloud, claw back to remain in business, the market is still sorting out accumulated losses.
Some of the mightiest of the brokers, who have fallen for their own lack of investment wisdom and lost billions in the process, are now blaming everyone, but themselves.