KSE-100 plunges 1,375 points as fears grow over protests

By AFP
Published: August 11, 2014
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Last week, the KSE-100 index fell by 933 points (3.1%) to close at 29,380 points. PHOTO: AFP

Last week, the KSE-100 index fell by 933 points (3.1%) to close at 29,380 points. PHOTO: AFP

KARACHI: The Karachi Stock Exchange saw a huge fall of 4.6 percent on Monday, sparked by fears of a political crisis as opposition figures called on supporters to join a march to overthrow the government.

The benchmark Karachi Stock Exchange plunged by 1375 points or 4.6 percent to 28,037 in the morning trading session, reversing weeks of positive performances that saw it touch a 68-year high.

“In the beginning investors believed that there might be some political reconciliation before the march takes off,” said Mohammad Sohail, the head of Topline Securities in Karachi.

“But after the yesterday call of Qadri, panic gripped the investors,” he said.

The drop came as the capital of Islamabad braces for protest marches led by cricketer-turned politician Imran Khan and cleric Tahir-ul-Qadri who have vowed to topple the government of Prime Minister Nawaz Sharif.
The two plan to march on August 14 accompanied by tens of thousands of supporters, claiming that last year’s general election was rigged.
Both protest rallies will be held on Thursday when Pakistan celebrates its independence day.
“This is the largest ever fall in the stock value in one day as panic grips investors,” said Farhan Mahmood, a research analyst at Karachi-based Sherman Securities.
Pakistan’s economic outlook has generally improved since the government of business-friendly Sharif came to power.
Foreign exchange reserves have doubled from $7 billion to $14 billion following succesful negotiations with the International Monetary Fund for debt servicing assistance, the sale of bonds, as well as auctions for 3G and 4G licences.
In July, ratings agency Moody’s upgraded Pakistan’s country outlook to ‘stable’ from ‘negative’ citing its improving external liquidity position and commitment to reforms.

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Reader Comments (48)

  • Aamer Khawaja
    Aug 11, 2014 - 10:51AM

    This both a trailer of Naya Pakistan & a no-confidence motion by the business community of Pakistan on IK-TuQ.Recommend

  • Saad
    Aug 11, 2014 - 11:05AM

    “…government failed to make any headway…… prompting PTI to go ahead with their planned march….”

    Couldn’t agree more. The PM is continuously trying to save his throne, not realising he is slowly axing it himself. If me being a naive citizen of this unlucky country can understand that, a man whose been in the office twice before not realising that surprises me.

    Recommend

  • Imran Qadri
    Aug 11, 2014 - 11:20AM

    Its clear that Qadri,Imran & Co are not sincere with Pakistan and these power hungry thugs are just concerned about themselves on how they could come to power by hook or by crook. They don’t realize or care about the damage they inflict to economy of Pakistan.

    Once investor confidence is shaken then its really very hard to woo them again, Imran Qadri gang and their ignorant supporters simply don’t understand that. Both these tainted characters know all too well that through proper channel they can’t ever come to power so these power hungry opportunist always look towards unconstitutional means and short cuts to achieve their nefarious goals.Recommend

  • Aamir
    Aug 11, 2014 - 12:03PM

    Thank you Imran Khan this is what you want us to see a ” new Pakistan “. For God sake let us leave alone we are not interested in your politics.

    Recommend

  • Wali
    Aug 11, 2014 - 12:11PM

    Once IK has compensated the container business from NS wealth he will then cover the losses for KSE stock market with it!

    Recommend

  • MA
    Aug 11, 2014 - 12:14PM

    @Aamer Khawaja:
    no not really. markets don’t care who is incharge. they are driven on sentiments. anyone who studies markets closely could have unwind his position days ago and let the “greedy small investor” take the hit….

    Recommend

  • roadkashehzada
    Aug 11, 2014 - 12:16PM

    “Mubarak ho Mubarak ho”
    next target, lets destroy motorway

    Recommend

  • No No
    Aug 11, 2014 - 12:33PM

    @Aamer Khawaja:
    This is trailor of PMLN coming down who rigged the elections.
    I wonder why the KESC did not go down when every TV channel was showing how much rigged the Geenral Elections were. KESC has it self been manipulated by the big fishes.Recommend

  • Aamer Khawaja
    Aug 11, 2014 - 12:52PM

    @MA:
    Markets absolutely care who is incharge. When Narendar Modi won Mumbai Stock Exchange shot up, this is a reflection of business communities sentiments & confidence. How else would the sentiments come out, Dharna?
    Our sentiments are reflected when we pull out money from the economy, the real sentiments will be reflected at the end of the month when exports & private companies loans show a negative trend or ‘sentiment’. Please note, we don’t show sentiments through Dharna’s we show it through our money.

    Recommend

  • Proud Pakistani
    Aug 11, 2014 - 12:57PM

    @MA: For your information mr. stock expert or mr technical analyst what ever you are the small investers are more in number than the big gamblers like you as majority of small investers are depending on market for their everyday living, so they can’t wait for the market setiments for months to change and invest.

    Recommend

  • Last Word
    Aug 11, 2014 - 1:00PM

    Pakistan economy had stabilised and going upwards after commencement of the military operation in NW and stoppage of bomb blasts in the country. However, PTI along with Qadri are ensuring that this trend is reversed and their own graph goes up thus bracketing them in the same group ie Taliban.

    Recommend

  • Imran Qadri
    Aug 11, 2014 - 1:14PM

    @MA
    I can safely bet that opportunist imran is more greedy then these small investor who we see their live savings wiped out just coz of power hungry khan who is destabilising the country and punishing it just coz he is unable to become pm on his own without looking towards unconstitutional shortcuts

    Recommend

  • Aamer Khawaja
    Aug 11, 2014 - 1:17PM

    @No No:
    My answer is KSE not KESC!
    Thats probably sufficient to answer your paragraph, especially based upon your knowledge.

    @MA: Your friend @No No makes a beautiful case to support that markets do care who’s incharge, they didn’t come down when elections were “rigged”

    Recommend

  • Jamil
    Aug 11, 2014 - 1:19PM

    Imran and Canadian Qadri are responsible for this loss of economy. Both are enemies of Pakistan. Biggest shame for Imran and Qadri.

    Recommend

  • Ranjha
    Aug 11, 2014 - 1:22PM

    Ouch, the Sharif Portfolio just contracted 5%!

    Time to diversify the equity holdings–Tadawul (Saudi Stock Exchange), Borsa (Istanbul Stock Exchange) and Sensex (Mumbai Stock Exchange) beckon!

    May the Standard Deviation be with you!

    Recommend

  • Dilawar
    Aug 11, 2014 - 1:23PM

    Please arrest Imran Khan for destroying the KSE index. He is responsible for this loss.

    Recommend

  • Stock Market
    Aug 11, 2014 - 1:23PM

    TUQ and IK must be hanged publicly to end this drama. All person opposing the government must be hanged. How dare anyone sending the stock market to crash.

    Recommend

  • Rehan
    Aug 11, 2014 - 1:25PM

    KSE will come even more down due to politics of agitation by IK and TUQ.
    IK is the ex son in law of England.
    TUQ is a canadian citizen.
    Both are foreign agents.

    Recommend

  • Adnan
    Aug 11, 2014 - 1:36PM

    After destroying KPK, now Imran wants to destroy the whole country. Biggest shame for Imran Khan. He is worse than Taliban for Pakistan.

    Recommend

  • Imran
    Aug 11, 2014 - 1:39PM

    Isn’t this just transfer of wealth than loss of wealth…afterall somebody , somwhere has made money………..

    Caveat emptor………never trust the gelled , back combed bankster in the pin stripe suit. If the stock have tumbled, surely they were overvalued to start with……..

    Nothing lost, because the common man didn’t reap benefit of a booming stock exchange anyways……

    Recommend

  • Ishaq Khan
    Aug 11, 2014 - 1:40PM

    I think this is a short lived shock, it will go up once uncertainty is resolved. In fact, this stock market is not a representative of our economy as we are agro based economy, a small number of companies benefits from the capital they raised via KSE, majority of the small companies and medium size companies are not public.

    Recommend

  • Hamza
    Aug 11, 2014 - 1:41PM

    Imran and Tahir ul Qadri should be deported from my country. Their every move is for the destruction of pakistan. They wish that no investment come in Pakistan. They are doing dirty politics full of agitation.

    Recommend

  • Arsal
    Aug 11, 2014 - 1:44PM

    @Aamer Khawaja: As uneducated a remark as anyone could expect. This only represents the lack of trust investors have in govt to tackle the present scenario! Besides, stock market health always depends on political stability in the country which is the reason for this heavy decline in the past few days!

    Recommend

  • Kamil
    Aug 11, 2014 - 2:07PM

    KSE was 18000 points when Nawaz Sharif became PM in June 2013. It crossed 30000 points in about one year.
    Now Imran and Qadri want to reverse this index.
    Dirty politics by dirty Imran and Qadri.

    Recommend

  • Blithe
    Aug 11, 2014 - 2:09PM

    All hard work by pml no going down the drain by the miscreants who have no regard for rule of law or judiciary???

    Recommend

  • W.S
    Aug 11, 2014 - 2:18PM

    It is known fact that stock market always over reacts to political instability. The efforts of IK cannot be condemned because the stock market has nosedived. The demands of IK are genuine and they are in the interest in the common people of Pakistan. Undoubtedly, the path to achieving those demands will cause some chaos but it is for the overall betterment of the people of Pakistan.

    Would you rather live in a country where the stock market is on uptrend but where social evils such as corruption, bad governance and nepotism is rampant?

    Recommend

  • salman
    Aug 11, 2014 - 3:23PM

    Wonder how the sharea of companies that manufacture containers are doing?

    Recommend

  • Ranjha
    Aug 11, 2014 - 3:29PM

    @W.S:

    Agreed. What you perhaps forgot to mention is that emerging markets–and most notably, thinly traded and small market cap frontier markets–stocks are driven mostly by sentiment and liquidity which is based on reading the political tea leaves than any real earnings prospects. Excel spreadsheets of company reports produced by the very brokers whose job it is to trade in those companies are useless.

    KSE is a big casino, where the odds are always in the favour of the house.

    Recommend

  • Sodomite
    Aug 11, 2014 - 3:32PM

    The Index should crash not fall.

    Recommend

  • RUKHSAR
    Aug 11, 2014 - 4:15PM

    @No No:
    KSE not KESC…(KSE stands Karachi Stock Exchange) KESC (Karachi Electric Supply Corporation.)..now change with KE.

    Recommend

  • IK_TUQ
    Aug 11, 2014 - 4:17PM

    Both IK and TuQ are injecting their frustration to the general masses. They have invested in Dharnas, Rallies and media so why would they care what happens to KSE or even to Pakistan. And by the way why should they wait till next election? Imran is 68 years now and next election is 4 years later. TuQ has already put all his hard earned dollars into this game, it will take him another 10 years to “earn” this much amount.

    God save us from so called Inqilaabiz.

    Recommend

  • MA
    Aug 11, 2014 - 4:26PM

    @Aamer Khawaja:
    @Rehan:
    @Proud Pakistani:
    Yours and most people’s comments reflect typical Pakistani behaviour. Not taking responsibility of their own actions and blame others for their losses. And seiously that doesn’t make any difference to me!!

    Funnily enough, all those who think that stock index reflect the country’s true economic health are delusional. How much 12000 increase in index has helped a common man? I am pretty much sure that your lives are pretty much the same as they were a year ago.

    in 2005 there was no political instability, but markets crashed and “small investors” lost over $20 billion…how would you justify that in terms of political sense?

    Those small investors are the very people who would go to lenghts to negotiate price when buying groceries. But when it comes to stock investing they think that they can easily double their investment in no time. In real world its called gambling. those who are not ready to put in time and effort to understand how the system works are bound to lose it one day or another. And I have no symapthy for them. For investors, who have studied markets for years big investors leave credible footprints, to adjust their market views.

    Recommend

  • Last Word
    Aug 11, 2014 - 5:07PM

    All establishments and political parties pulling in different directions for their self-interests is a perfect recipe for disintegration of Pakistan for which no orchestration is required.

    Recommend

  • MAd
    Aug 11, 2014 - 5:46PM

    Index will bounce back once things stabilize i.e. there is a stable govt in charge whoever that may be. Thats how markets work. I remember index shooting up day after Benazir was kicked out. I also remember it going below par value in 1999-2000

    Recommend

  • H Chaudhry
    Aug 11, 2014 - 8:49PM

    @MA The better stock market shows improving health of underlying companies that triggers an economic uplift./hiring etc. These things don’t happen in vaccum or overnight. The gains amassed by the companies yield more revenue for government in taxes and off course jobs.

    Problem with people like you is expecting overnight solutions. What makes you think there will be a stable government every given the precedence. What if there is a new government in 1 year and things are still slowly Improving but another party gets agitation and cycle goes on.

    For sake of Pakistan, I hope IK comes to senses.

    Recommend

  • Muslim Leaguer
    Aug 11, 2014 - 8:59PM

    @Wali: The loss to all these investors is due to the stupid statements of Imran Qadri. This loss should be recovered by selling the personal property including 300kanal Banigala Palace, Zaman Town Bungalow, Agricultural Lands at Mianwali, Model Town Bungalow and a motorcade of bullet-proof SUVs.
    Interestingly, all this wealth is tax evaded because Imran paid hardly a tax of Rs 194,936/- only (source: http://download1.fbr.gov.pk/Docs/201469962916404PARLIMENTARIANSTAXDIRECTORY2013Dt.09.06.2014.pdf) whereas Qadri didn’t pay any tax!
    Stop trolling Shireen Mazari, who had acknowledged that PTI has been hijacked by Jahaz Group.Recommend

  • Arsal
    Aug 11, 2014 - 9:04PM

    @Muslim Leaguer: If only you knew how the stock market works! When index goes down, it does not mean investors are losing money… it only means investors are taking their money and selling whatever shares they had… money is re-distributed but not lost! try to make a little sense please.

    Recommend

  • Arsal
    Aug 11, 2014 - 9:10PM

    @H Chaudhry: The only problem with you argument is that tax revenue has, in fact, gone down over the last year. Also, I don’t think PMLN has anything to do with the index improving over the last year. The world economy has been improving since last 2-3 years so of course, Pakistan’s market was also gonna go up. You can’t really blame PPP for the stock market crash in 2008, can you? Because there was a worldwide recession and Pakistan’s economy is a part of the international economy!

    Recommend

  • Muslim Leaguer
    Aug 11, 2014 - 9:19PM

    @Arsal: so “Mr Expert” what happens to the investors who have holding in stocks? What happens to the Mark-To-Market value? Isn’t there any decline in value?
    Your lame argument proves that all PTI Burger Kids are pseudo-intellectual…Recommend

  • Arsal
    Aug 11, 2014 - 10:56PM

    The reason a stock crash (like this one) happens is that the investors sell their securities and leave the market because of lack of faith in the market. The share prices are based on demand and supply, as more investors sell the shares and there are no buyers, the price goes down… but that doesn’t mean that ‘money disappears’. Yes, money is re-distributed but money does not disappear. Some investors are better off than before and some investors lose money… What I’m saying is that as a whole the investor community doesn’t suffer… the businesses suffer because of a crash.

    Stock index crashed based on breaking news are not something new. Happens in Pakistan and happens in every other country… A couple of days ago, US Stock market showed the biggest decline in a couple of years just because Obama decided to carry out airstrikes in Iraq… Stock market runs on news and sentiments.

    (Did I mention that I’m a PTI supporter? Please keep the assumptions to yourselves)

    Recommend

  • Muslim Leaguer
    Aug 12, 2014 - 12:13AM

    @Arsal: You don’t need to write lame excuses to explain your allegiance to the Tsunami, which is nothing less than a catastrophic destruction…
    Except for a few pseudo-indellectualls, all sane people know the meaning of tsunami & destruction. Investors can smell the tsunami catastroph through its media rants, especially after the alliance with Container-II.

    Recommend

  • Arsal
    Aug 12, 2014 - 6:51AM

    @Muslim Leaguer: Yeah that was totally a very logical reply to my comment above. Indeed.

    Recommend

  • H Chaudhry
    Aug 12, 2014 - 9:41AM

    @Arsal

    Your point is well taken but there is a fundamental flaw! First and foremost comparing Pakistan economy where there is none to little regulations on monetary transactions vs. USA/UK where there is a lot of regulation.
     

    The stock market in Pakistan is a way for people to use their money and bring it in the market thus creating a flow. The flow in turn let companies grow that are getting this capital for expansion of operations since there is no other way in Pakistan to get cheap capital.

     

    Therefore this cheap capital and resulting growth of business directly impacts common man by affording more jobs. Also, the higher returns that investors are getting is a secondary impact as these people with new found money will circulate money further due to spending weather its in new cars, resturants, cloths, foreign trips etc etc.

     

    compare this to western world, the impacts are similar but not primary since regulations allow for many people to not accumlate huge sums and taxation takes away from such savings. This is not case with Pakistan. While the taxation system is improved, stock market and infrastructre investment are the two only ways to stimulate economy which PMLN is doing right fully so. The economic movement at macro level, allows for government to borrow in international markets at better rates. This is a cycle and please try to understand

     

    Finally, lower taxation for corporations is neither wrong nor right. It is driven by the economic factors in my opinion. This is the worse time to Tax corporation in Pakistan. Tax is cost. The cost takes away from bottom line and thus stalls hiring. Actually, at this time Gop Should give a 10 year Tax holiday to every corporation in the Pakistan or may be 25 years for them to come to Pakistan and invest. These Tax Holidays come with regulations like hiring 90% of workforce locally, train management, contribute to local economies, salaries at decent level. Every company that is looking for long term low cost will try to come to such country.

     

    To do this all you need stability and that is where PMLN government needs help from every one. Things do happen over night and people will not get jobs over night. Free education and Free health care is great but who will pay for it when Government has no money and honest taxation is years away

     
    For sake of Pakistan, let this government complete its tenure, let the stability come in and let some development occur. Hope my comment goes through!

    Recommend

  • H Chaudhry
    Aug 12, 2014 - 9:53AM

    @Arsal

    Your point is well taken but there is a fundamental flaw! First and foremost comparing Pakistan economy where there is none to little regulations on monetary transactions vs. USA/UK where there is a lot of regulation.
     

    The stock market in Pakistan is a way for people to use their money and bring it in the market thus creating a flow. The flow in turn let companies grow that are getting this capital for expansion of operations since there is no other way in Pakistan to get cheap capital.

     

    Therefore this cheap capital and resulting growth of business directly impacts common man by affording more jobs. Also, the higher returns that investors are getting is a secondary impact as these people with new found money will circulate money further due to spending weather its in new cars, resturants, cloths, foreign trips etc etc.

     

    compare this to western world, the impacts are similar but not primary since regulations allow for many people to not accumlate huge sums and taxation takes away from such savings. This is not case with Pakistan. While the taxation system is improved, stock market and infrastructre investment are the two only ways to stimulate economy which PMLN is doing right fully so. The economic movement at macro level, allows for government to borrow in international markets at better rates. This is a cycle and please try to understand

     

    Finally, lower taxation for corporations is neither wrong nor right. It is driven by the economic factors in my opinion. This is the worse time to Tax corporation in Pakistan. Tax is cost. The cost takes away from bottom line and thus stalls hiring. Actually, at this time Gop Should give a 10 year Tax holiday to every corporation in the Pakistan or may be 25 years for them to come to Pakistan and invest. These Tax Holidays come with regulations like hiring 90% of workforce locally, train management, contribute to local economies, salaries at decent level. Every company that is looking for long term low cost will try to come to such country.

     

    To do this all you need stability and that is where PMLN government needs help from every one. Things do happen over night and people will not get jobs over night. Free education and Free health care is great but who will pay for it when Government has no money and honest taxation is years away

     
    For sake of Pakistan, let this government complete its tenure, let the stability come in and let some development occur.

    Recommend

  • Arsal
    Aug 12, 2014 - 10:28AM

    @H Chaudhry: I absolutely agree with almost everything you just said. But I think you misunderstood my point. My argument above wasn’t that KSE is useless etc… My only point was to negate the comment above that investors lost money because of the recent KSE stock depreciation… There is no second opinion on that a healthy stock market is good for the economy of any country.

    And KSE of NYSE or NASDAQ or any other stock market are no different in the aspect that their health greatly lies on sentiments, political stability and important news in the country and in the rest of the world.. And my comparison with UK/US market was just to point that out that ANY sort of news that could point toward political instability would send the KSE down and THAT BY NO MEANS SUGGESTS A LACK OF CONFIDENCE OF INVESTORS IN IMRAN KHAN OR QADRI.

    As far as taxation is concerned, I agree with you completely that this isn’t a good time to increase taxation. But all we want is to ensure proper tax collection at the present tax rates from the major business empires in the state which unfortunately PMLN has failed to improve so far. To be clear on that, I’m absolutely against not letting PMLN complete its tenure… its too early to assess the performance of PMLN in terms of economic growth..

    Recommend

  • Orange
    Aug 12, 2014 - 12:54PM

    Mubarak Hoo! Mubarak Hoo…

    Recommend

  • Nida Alvi
    Aug 12, 2014 - 7:50PM

    @Ranjha: Your copy/paste of the names of different stock exchanges prove that Burger Kids are good for nothing, except banging their key boards :)

    Recommend

  • fatima
    Aug 26, 2014 - 12:36PM

    its too early to assess the performance of PML(N) in terms of economic growth.. pleaseeeee give them time to prove themselves that they can be a better leader not like IK and TUD..Recommend

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