Stock market review: Volumes drop to nine-year low
Bangladesh sees three times more volumes than Pakistani bourse.
KARACHI:
Karachi Stock market, once a very highly traded market, has gone back nine years in terms of volumes in the outgoing financial year.
Buying and selling of shares, floating of new companies and fund raising by companies, all remained depressed in fiscal 2011.
These low volumes were last seen in fiscal 2002 when the market size was small and faced the 9/11 crisis. Average daily volumes in the cash and futures market of Rs4.4 billion a day in the outgoing financial year was down 40 per cent from fiscal 2010 mainly led by the absence of big players due to their specific issues and individual concerns on the new tax, according to Topline Securities research note.
Besides security concerns, economic slowdown and higher interest rates, leading market players remained concern about the reintroduction of Capital Gain Tax after a gap of more than three decades, says Topline Securities CEO Mohammed Sohail in the research note. As a result of this uncertainty, individual investors have been leaving the market, says the note.
The government has not realised that they have killed the market by imposing this difficult-to-calculate levy on individuals, note adds.
Due to worsening market conditions, issuers are not coming for initial public offerings (IPOs) as only three public offerings were seen in fiscal 2011 compared with the last decade annual average of seven and 1990s annual average of 30 IPOs.
Volumes less than Bangladesh
Pakistan is lagging far behind the Bangladesh market that is in the initial stage of capital market reforms, another dismal issue for the local bourse.
The Dhaka bourse traded $180 million worth of shares a day last year compared with $51 million worth of shares a day witnessed at the Karachi bourse.
Published in The Express Tribune, June 29th, 2011.
Karachi Stock market, once a very highly traded market, has gone back nine years in terms of volumes in the outgoing financial year.
Buying and selling of shares, floating of new companies and fund raising by companies, all remained depressed in fiscal 2011.
These low volumes were last seen in fiscal 2002 when the market size was small and faced the 9/11 crisis. Average daily volumes in the cash and futures market of Rs4.4 billion a day in the outgoing financial year was down 40 per cent from fiscal 2010 mainly led by the absence of big players due to their specific issues and individual concerns on the new tax, according to Topline Securities research note.
Besides security concerns, economic slowdown and higher interest rates, leading market players remained concern about the reintroduction of Capital Gain Tax after a gap of more than three decades, says Topline Securities CEO Mohammed Sohail in the research note. As a result of this uncertainty, individual investors have been leaving the market, says the note.
The government has not realised that they have killed the market by imposing this difficult-to-calculate levy on individuals, note adds.
Due to worsening market conditions, issuers are not coming for initial public offerings (IPOs) as only three public offerings were seen in fiscal 2011 compared with the last decade annual average of seven and 1990s annual average of 30 IPOs.
Volumes less than Bangladesh
Pakistan is lagging far behind the Bangladesh market that is in the initial stage of capital market reforms, another dismal issue for the local bourse.
The Dhaka bourse traded $180 million worth of shares a day last year compared with $51 million worth of shares a day witnessed at the Karachi bourse.
Published in The Express Tribune, June 29th, 2011.