KARACHI, Oct 22: The Karachi Stock Exchange (KSE) recorded growth of 38 per cent during the year ended June 30, 2007, with the index closing the year at all-time high at 13,772 points.

KSE Annual Report 2007 released by the bourse on Monday stated that the major thrust came in the fourth quarter when the index registered a jump of 22 per cent. During the year, the market capitalisation also rose by a remarkable 43 per cent to reach its peak at Rs4 trillion ($66bn).

“The two halves of financial year 2007 portrayed distinctly different trends, whereby the first half remained almost flat and registered only 0.51 per cent increase,” the report stated and added that in the second half, the market witnessed rise of 37 per cent in the KSE 100-share index.For all the healthy run-up in the stock market during the year, which was the sixth consecutive year of rally, the Ready Market turnover averaged 221 million shares during FY07, which was stated to be the lowest since FY02. As a result, the average daily value also shrank to a three-year low of Rs22 billion ($362bn).

During the year under review, the KSE saw a total of 16 new listings and 12 companies offering equity, which set out to raise Rs6.3bn including premium. It included OGDC’s second issue, which accounted for 38 per cent of the total issue size. That was against the earlier year’s total 14 new listings including 12 public offerings to the tune of Rs6.5bn. The directors stated in their report: “The subdued interest was observed by the private sector, mainly due to lack of tax incentives for listed companies and the stringent requirements of corporate governance”. At the end of financial year, 658 companies remained listed on the exchange. Like equity markets, corporate debt market also witnessed three new listings of Term Finance Certificates (TFCs) valued at Rs6bn.

The annual report stated that there were many contributing factors leading to booming conditions at the market. Those, inter alia, included improvement in the country’s economic fundamentals and regional political environment, government’s commitment to capital market reform agenda and pro-market policies, stability in exchange rate, regionally cheap valuations of the scrips, large scale mergers and acquisitions, improving relationships with neighbouring countries, successful GDR offerings and increase in Pakistan’s coverage by large international brokerage firms and investment banks. “The biggest push to the market was caused by the interest shown by foreign investors with huge liquidity at their command, looking for investment opportunities throughout the world”, the KSE directors stated.. They added that it was substantiated by the fact that (the share of) foreign funds reflected a sharp jump from 3.2 per cent of market capitalisation in June 2006 to 6.3 per cent by the end of March 2007.