KSE-100 inches closer to 17,000 points in intraday trading

farhan_9909

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KARACHI: Pakistani stocks hit a record high in intraday trading for the fourth straight session on Friday, but settled lower as traders booked profits to close out the week.

The Karachi Stock Exchange's (KSE) benchmark 100-share index surged as high as 16,903.46 in intraday trading.

It closed at 16,807.91 points, down 0.10 per cent or 16.64 points.

The index has hit record highs in eight of the last nine sessions, and was up more than 25 per cent since mid-June.

Lotte Pak rose 11.32 per cent, or 0.83 rupee, to 8.16 per share, while Azgard Nine was up 2.07 per cent, or 0.18 rupees, to 8.88 per share.

Maple Leaf Cement fell 6.93 per cent, or one rupee, to 13.43 per share.

In the currency market, the Pakistani rupee weakened to 96.70/96.76 against the dollar, compared to Thursday's 96.54/96.59, ahead of scheduled government debt and oil payments, dealers said.

Overnight rates in the money market eased to 9 per cent from 10 per cent on Thursday.

KSE-100 inches closer to 17,000 points in intraday trading | DAWN.COM
 

Known_Unknown

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Wow great news! What's the reason for the positive market sentiment? Any recent successes in suicide bombings or killing of infidels? :rolleyes:
 

farhan_9909

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Wow great news! What's the reason for the positive market sentiment? Any recent successes in suicide bombings or killing of infidels? :rolleyes:
fall of world fastest growing economy india from 8.4% to 4.9%

this is the reason
 

Singh

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Guys,

Keep the banter limited to banter.
 

sesha_maruthi27

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I didn't mean you Sesha bhai
The warning was to be applied henceforth, not retrospectively. :)
Anyway Paji, I did not want to start another debate and fight with our pakistani brother......

They are not understanding that INDIANS are their brothers and are thinking that the west is providing them with money for just making them as their dogs. I feel very bad that my brothers are still being ruled by the WESTERNERS even after getting Independence.....
 

Apollyon

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Karachi Stock Exchange, the insignificant pariah with a Market Cap of $30 Billion :pound:
No one cares whether it touch 17k or 170k it will still be insignificant :rofl:
 

Rage

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This article is incisive:

Evolve or die

EACH day over the last week, the stock market has been scaling new heights. As I write this, we are informed that it nearly broke through the 17,000-point barrier on the Karachi Stock Exchange index.

So what's going on? In my ignorance, I had assumed that the share index was a pretty good barometer of an economy's performance. Here we have a country with huge law and order problems, interminable power cuts that have brought industry to its knees, and rampant corruption.

Given these negative features, why is the stock market surging so powerfully? Are we going through an artificially inflated bubble, or are there positive underlying factors at work here?

To get a sense of what's behind this phenomenal rise in share prices, I asked Yaseen Lakhani, an ex-president of the Karachi Stock Exchange and an old friend, to fill me in. Was the boom due to short-term trading with borrowed funds, or did it represent confidence in the economy?

Yaseen explained that computerisation and other reforms of the system meant that buying on margin with money borrowed on the badla market had been minimised. Now, most trades were genuine: the rise in prices was largely due to increased earnings in several industries, as well as in the financial sector.

Others have spoken to me about the boom taking place in the rural areas caused by a significant rise in procurement prices of agricultural produce. Higher incomes for farmers have led to greatly increased demand for consumer goods. Manufacturers are thus making higher profits and paying more dividends to share holders. Banks, too, are doing well with more liquidity being generated in small market towns.

For decades, economic planners have kept wheat, cotton, sugar cane and rice prices low. While this has led to widespread poverty in the rural areas, it has kept food prices in the cities low. Textile mill magnates have also benefited from this policy.

This was done with the knowledge that high food prices in cities could lead to political unrest. Farmers, on the other hand, tend to be long-suffering.

This government has taken the welcome step of reversing this policy. The reason, however, lies not in its benevolence, but in cold political calculation. The PPP's support base is now almost totally rural, and the party can scarcely count any urban constituency as a safe seat any more. In Lahore and Karachi, the PPP has been all but totally wiped out.

But while the party's strategy of wooing the rural vote through higher procurement prices makes short-term sense, in the long term, the PPP is going the way of the dinosaurs. Currently, Pakistan's urban population is 36 per cent of the total, and is expected to rise to 50 per cent in another dozen years or so.

Apart from purely demographic factors, the country's economic progress is also bad news for the PPP. Today, around 70 million Pakistanis are estimated to be in the middle class. While this is less than half of our total population of approximately 190 million, it does represent a significant increase over the last decade.

The aspirations of the middle-class change as they have more income: roti, kapra aur makaan — bread, clothes and shelter, the PPP's original pledge — become less important. Law and order, good governance and greater opportunities are more essential once the basics are taken care of. In these areas, the PPP promises little and delivers even less.

I caught the edge of this growing small town boom when I drove from Gilgit to Islamabad on the Karakoram Highway a couple of months ago. When I did the Mansehra-Abbottabad stretch after dark a few years ago, there were few lights on. Now, both towns were lit up with advertisements; restaurants were doing brisk business; and oddly, there were scores of CNG pumps with lights blazing.

So clearly, far more people have lots more money to spend. More CNG pumps mean more cars which, in turn, means greater sales and profits down the supply chain. Oddly, this trend defies the worldwide recession that is blighting so many lives in other parts of the world. But despite this improvement in living standards for millions of Pakistanis, serious gaps remain. My son, a Karachi-based entrepreneur, says his firm has a major problem finding qualified staff, even though they pay very well. Many others have voiced the same frustration.

Although we have witnessed a mushroom growth of private schools, colleges and universities, most impart substandard education. And children condemned to suffer at our state institutions start life at a terrible disadvantage. The third educational stream in Pakistan is the one offered by madressahs, and these produce graduates better prepared for the next world than this one.

This key sector has been utterly neglected by successive governments, including this one. But as the middle class expands, demand for better education will increase. Sadly, there seems little capacity to meet this need, given the low priority education has been accorded for decades. Indeed, our appalling literacy rate keeps Pakistan near the bottom of the education table worldwide.

Apart from education, totally inadequate power generation has hamstrung industry and agriculture, while making summers a living hell for millions. Here, this government has failed utterly. And to reward him for his failure, the minister responsible for the mess has been promoted to the prime ministerial slot. For its incompetence in the power sector alone, this government does not deserve to serve another term.

Perversely, as more and more people escape the poverty trap, the less support the PPP is likely to get, given its shrinking rural base. For the young, it is difficult to connect with the cult of the jiyala, the hardcore Bhutto supporter. There is little evidence to suggest that there is any thinking going on within the party high command to change the nature of its appeal. Indeed, the whole concept of introspection and self-analysis runs counter to the party's ethos.

As the recent by-elections showed, the PPP's presence in Punjab is increasingly tenuous, except in the south. In Sindh, it has been pushed to the rural north. So while the economic, demographic and electoral scenario is rapidly changing, the PPP remains rooted in the past. And political parties incapable of evolving become extinct sooner or later.
Evolve or die | DAWN.COM
 

Rage

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A little insight:

At first glance, that the stock market in Pakistan is doing well and that conspicuous consumption is growing, while the economy is doing badly appears to be a paradox that puzzles everybody: the headline numbers indicate an economy in an abysmal state, but everywhere one looks, there are people shopping like there is no tomorrow.

So how is this possible?

ANSWER: There is no paradox. The answer is not at all surprising.

We do not need to look for complicated explanations in the shadows of reality like informal economy, underground consumption, over-invoicing of imports, under-invoicing of exports et cetera.

The explanation is a whole lot simpler than that.

To see how this works, go to the finance ministry:
http://www.finance.gov.pk/survey/cha...bilization.pdf

Look at Table 1.4 on Page 9 to see the "Composition of GDP Growth":

GDP = Consume + Invest + Exp-Imp
4.2% = 9.4% + (-1.4%) + (-3.8%)

Now we can see how obvious and unsurprising the answer to that "riddle" is. The gung-ho consumption we see (1st term on RHS) is simply coming at the cost of falling investment (2nd term on RHS)and at the cost of frittering away the remittances through consumptive net-imports (3rd term on RHS). Note the spectacular performance of Consumption (9.4% growth) in the context of the relatively dismal performance of GDP (4.2% growth on LHS).

Okay, we go next to Table I.4 in the APPENDIX and see "EXPENDITURE ON GROSS NATIONAL PRODUCT AT CONSTANT PRICES".

A) Look at the dramatic rise (in constant 2000 prices, i.e. no inflation) of:
1) Private Consumption Expenditure
2) General Govt. Current Consumption Expenditure
3) Import of Goods and Non-Factor Services

B) Then look at the collapse (in constant 2000 prices, i.e. no inflation) of:
1) Gross Domestic Fixed Capital Formation
2) Export of Goods and Non-Factor Services

C) Then look at the modest change (in constant 2000 prices, i.e. no inflation) of:
1) Expenditure on GDP at Market Prices

Again we can see how obvious and unsurprising the answer to that "challenging riddle" really is. Again we note the same implication. The gung-ho consumption we see (A1 & A2 terms) is coming at the cost of falling investment (B1 term) and at the cost of frittering away the remittances through consumptive net-imports (B2-A3). The GDP numbers in C(1) are still dismal.

SUMMARY: The boom in conspicuous consumption is coming at the expense of saving & investment. There is no miracle here. Just misguided people frittering away their seed-corn. The consumption boom we are witnessing is not sustainable and always ends in the same way: Financial Crisis, BOP crisis, Currency crisis, Total Macroeconomic Collapse.

Following are more data that make the same point from different angles of looking at the economy:

Take a look at the latest GOP report (2012) on Manufacturing--
http://www.finance.gov.pk/survey/cha...ufacturing.pdf

In Table 3.1 on Page 39, we can see the following:

A) Growing Sectors:
1) Food & Beverages
2) Textiles
3) Leather
4) Pharmaceuticals
5) Packaging Materials

B) Collapsing Sectors:
1) Steel: -28.5%
2) Rubber: -24.6%
3) Engineering: -10.2%
4) Electronics: -7.9%
5) Petroleum: -5.7%
6) Chemicals: -4.7

Note that all the growing manufacturing sectors are primarily associated with direct household consumption. Also note that all the collapsing sectors are primarily associated with industrial investment.

The collapse in Engineering & Steel sectors is especially frightening because the debacle is so deep and so persistent.
---

Next, take a look at the latest GOP report (2012) on Investments--
http://www.finance.gov.pk/survey/cha...bilization.pdf

In Table I.8 in the APPENDIX at the end of the report, we can observe the following:

(1) From the peak in 2007, investments from all sources (Public-Private-General Government) are down significantly.

(2) Sector wise, however, it is interesting to see that only the following sectors are holding or improving on their 2007 peak investment levels:
(i) Agriculture
(ii) Small-scale Manufacturing
(iii) Wholesale & Retail
(iv) Dwellings/Housing
(v) General Services

(3) Investments in the following sectors, however, have collapsed since their peak in 2007:
(i) Mining
(ii) Large Scale Manufacturing
(iii) Plant construction
(iv) Electricity & gas
(v) Transport & Telecom
(vi) Finance & Insurance

Note that all the 5 sectors in which investments are holding or growing are once again associated with direct household consumption of food, beverage, clothing, shops, restaurants, malls, flats, massage parlors, golf courses et cetera. Conversely note that all the other sectors in which investments have collapsed are associated with core infrastructure industry areas.

SUMMARY: No matter how we look at it. No matter where we go. No matter how much we twist, bend or warp it, the essential fact remains the same-- The current consumption boom is coming at the cost of cannibalizing future growth. Pakistan is right now eating its seed-corn. There will not be much to harvest in the future. This dangerous road always winds through financial Crises, BOP crises, currency crises and eventually leads to but one destination: Total Macroeconomic Collapse.

Is there anybody out there? Is anyone listening? Pakistan must save & invest more. Pakistan must transform & restructure its economy completely. Pakistan must do it NOW!. There is no time to lose. Dr. Ishrat Ahmad and Dr. Ashfaque Khan have said this repeatedly; the only question is this: Is anybody in Islamabad listening?

The PPP Government increased the support prices for essential items (i.e. food-prices) specifically to move purchasing power away from urban areas and towards their key voter base in the rural areas. Obviously, this has led to increased purchasing-power amongst farmers and other rural workers in Pakistan.

However, since this action does not create any additional wealth and only transfers purchasing power from one sector to another, it follows that any increase in the consumption in rural areas must, in general, be matched by a decrease in the consumption in urban areas.

The only reason overall (urban plus rural) or national consumption has increased is because rural incomes are aggregate-taxed at lower rates than urban incomes. Therefore, the real net increase in overall consumption came only because of a decrease in tax revenue.

Still further, since the PPP government did not cut spending in response to this falling tax revenue, but rather increased the budget deficit, it follows that it is this increase in the fiscal deficit that has financed the recent overall consumption boom.

Still further, given that any increase in fiscal deficit crowds out private investment, it follows that the current consumption boom must be cannibalizing future investment & growth.

Once again, the conclusions are exactly the same as I have posted many times before:
A) This is not sustainable.
B) Serious crises (Financial, Debt, Currency) are just around the corner. They could hit at any time now.
C) Without the reversal of current trends & policies, total macroeconomic collapse is the only possible future outcome.
 
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