Friday, December 19, 2008

KSE 100-index falls to 3-year low

KARACHI: the Karachi stock market shares fell to end at a more than three-year low on Thursday and dealers said the market is likely to remain under pressure as off-market transactions were up to 40 percent lower than official share prices.

The Karachi Stock Exchange 100-share index fell by 3.95 percent, or 320.37 points, to end at 7,785.26 points, its lowest close since Sept. 1, 2005.

Turnover was 20 million shares and dealers said most trade was in third-tier shares with almost none in heavyweights. The KSE 100-index has shed 15.26 percent since the removal of a floor on it on Monday.

The index has fallen 44.7 percent this year. The floor was imposed in late August after sharp falls and it led to the withering of trade.

"Shares traded off-market are still 35 to 40 percent lower even though the KSE-index is now 15 percent lower," said Shuja Rizvi, director broking operations at Capital One Equities Ltd. According to the latest data up to Dec. 17, National Bank of Pakistan was being traded at 45 rupees a share, or 40.6 percent lower than its official closing on Thursday. Pakistan Telecommunication Co Ltd was traded at 15 rupees, or 41.6 percent lower than its Thursday close. Dealers said reports of a support fund for the market did not help improve sentiment and they would believe the fund if and when it materialised.

Shaukat Tarin, the country's top economic adviser, said on Tuesday a support found was being set up and shares worth 20 billion rupees ($247 million) would be sold to overseas Pakistanis, the Dawn newspaper reported on Wednesday.

Tarin, who was not available for comment, said the "modalities" of the fund would be released in two or three days, Dawn said.

Legal cases were also dampening trade. The KSE management, including the Securities and Exchange Commission and the National Clearing Company of Pakistan Ltd, are facing cases filed by brokers seeking settlement of amounts borrowed through a continuous funding system, a funding mechanism for some stocks listed on the KSE.

In the currency market, the rupee was flat at 79.40/50 to the dollar compared with 79.40/60 on Wednesday and dealers said the outlook was bleak even though the current account deficit in November narrowed.

The current account deficit narrowed to $810 million in November, compared with $2.172 billion the previous month. Dealers said even if imports had decreased, they were expecting a slowdown in exports and overall economic growth, which would put pressure on the rupee. The rupee has lost 22.4 percent against the dollar this year.

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