KARACHI, Dec 31: Most investors and brokers would want to shake the memory of the most dreadful year in two decades, out of mind.
But that could barely lessen the pain of having lost more than half their fortune (58.34pc) in the turbulence that marked 2008. And the bitter part is that the worst is far from over.
Shares shed 2.86 per cent on the last day of the year, including which the Pakistani equities market was down 67 per cent in dollar terms for the full year, which left it under the spotlight as the “worst performing market in the region.”
In comparative terms, Pakistani stocks remained at the bottom of nine countries in the MSCI Emerging Market Asia.
Other bad performers included: 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 (all of those not including Dec 31).
Just five years ago, investors in stocks at the KSE were rolling in cash, as the bourse scarcely tired of declaring itself as the “best performing market in the world.”
But for all of the misfortunes that fell the investors in 2008, it would be the late entrants who would have scars to show; those in the business since 2002, when the market first began its ascent, from barely the 2000 point level, would have made what local people love to call “loss in profit.”
Only the previous year, Paki-stani stocks had gained 40 per cent (38 per cent in dollars).
”2008 was the worst year ever since the KSE 100 Index was composed in 1991 as investors lost tons of money due to weakening economy, political tension, security concerns and global financial meltdown”, says Mohammad Sohail at JS Global.
Imposition of price floor by the regulators for three-and-a-half-month was the confidence killer for the market as it created one of the worst crisis in local markets.
Just how much the floor hurt is quantified by Sohail: “Karachi bourse that fell by 35pc (47pc in US dollar) before the imposition of floor, crashed by 36pc in 12 trading sessions after the lifting of floor rule.”
During the outgoing year, Market capitalization evaporated from $70bn,to $23bn, which resulted in Market Cap-to-GDP ratio, a measure of size of capital market in any economy, scaling down to 14pc from 49pc the earlier year.
Average daily volume of shares traded in the cash market dropped by 48pc to 133m shares.
“Foreign selling was at its peak, due to global financial crisis, which later intensified because of the imposition of price floor that resulted in exclusion of Pakistan from MSCI,” says Sohail at JS Global, adding: “Foreigners bought and sold shares worth $2.2bn and $2.6bn, respectively, resulting in net sale of $439m.
Foreigners who were holding shares worth $5bn at the beginning of 2008 now hold Pakistan equities estimated at $1.5bn only, on account of eroding share values and offloading of shares.”
