The impact of the world turmoil on Karachi Stock Exchange
According to the experts the dull trades appeared at the Karachi stock market were caused by the insufficient economic development and accompanied by the global financial markets turmoil that made investors’ activity to remain at low level. However there were several other factors that affected the market quite negatively. They are long lasting selling pressure that made rupee to fall to its new lows, not clear situation with the forex reserves and its impact on the debt ratings of the country.
So considering the numbers we can see the Karachi Stock Exchange (KSE) index decreased by 52 points and thus having reached the point of 9,201 points. The same happened also to average turnover volume that has decreased to 4.33 million shares.
Due to the analyst at Invest Cap Research the negative numbers that the market witnessed before the closure were caused by the talks concerning the future economic situation that is supposed to decrease forex reserves and increase the external deficit level.
According to Farhan Rizvi an analyst at JS Global the global markets are still depended on the high profile financial sector partly because of the bankruptcy protection filed by the Lehman Brothers in the US that contributed to the growth of the sales at the major international markets while Dow Jones, FTSE and MSCI EM Asia came into red zone falling until September 17th. This situation was partly stabilized by the $210 billion provided by the Central banks of US, European Union, UK and Japan. However the market of Pakistan almost wasn’t affected by the global turmoil as supposed due to the price freeze that prevented any fallout into the domestic market.
Furthermore, increased to $1.5 billion current account deficit caused worsening of the balance of payment and thus have kept its impact on the forex reserves. As for the forex reserves they have declined to the point of $8.9 billion and caused the fall of rupee that reached 77.90 in relation to the USD. It is supposed that the pressure the rupee experiences will remain unchanged because of little progress on Saudi oil facility and $1 billion investment from ADB.
