KSE ignores terror in Lahore, crosses 7,000 points

[Naveed Yaseen]

By Tanveer Ahmed
KARACHI: Despite the horrible terror incident in Lahore and the strengthening of the ill wind that blows no one any good, all was well with our stock market on Monday.

Benchmark KSE-100 index witnessed by breaking successive levels when terrorists were carrying out their brutal acts in Lahore by claiming more than 20 lives and finally were eliminated in a nerve-breaking operation, which lasted from morning to afternoon.

Normally, the world equity markets move cautiously in uncertain security situations. But in case of Pakistan, things moved to the contrary of normal practices, and today’s more than 200 points gain in equity market was glaring example of our market’s behaviour in such critical situation. It leaves a lot of unanswered questions on the fundamentals on which equities trading operate as well the cast doubt on the genuine parameters of shares trading.

Economists have always questioned the logic behind the booms and bust in our equity markets and have raised eyebrows on the “gains” in the stock market by arguing that market fundamentals do not justify these “gains”.

“It was not something new for our market. During the Lal Masjid Operation in July 2007, market was setting new records when corpses were lying everywhere in Islamabad,” a market player remarked.

Natural markets didn’t behave, he pointed out, like ours, which is controlled by some bigwigs, who have little regard for anyone and are just interested in minting more and more money. KSE-100 index crossed 7000 points level in today’s session.

Stock analysts are also surprised to see such a bullish rally in the market amid a major operation against terrorists in Lahore.

It maybe the case that the positive developments in the political arena are fuelling the bullish sentiments in the market in spite of the terrorisms incidents in Lahore and the blats in a mosque in Khyber Agency a couple of days back.

The same thing happened in the past when equity markets were setting records with everyone hailing and terming it the strength of the market.

However, after the bubble busted, the market fell like ninepins with everyone at loss except for those few movers and shakers who were behind all this mess.

“The encouraging political signs were enough to infuse the bullish sentiments in the market and it overshadowed the horrible incident of Lahore,” Yaseen Lakhani, a member-director of Karachi Stock Exchange (KSE) told Daily Times.

Though, the incident was shocking, he said the developments on other fronts like Obama’s annual assistance of $1.5 billion annually, growing offshore investors’ interest in local share market, new petroleum policy and healthy corporate earnings boosted investor’s trust.

Analyst Khurram Schehzad attributed the bullish trend to settling of political dust with the two major political forces—PPP and PML-N—eager to enter another political reconciliation.

Apart from that, he said that market positive trends could also be traced in the impairment investment values of December 31, 2008 as it would be adjusted during the current year. As the first quarter is ending on March 31, 2008, the market on higher side would bring down the impairments losses of those companies, which were trapped in the last year’s stock market fiasco.

http://www.dailytimes.com.pk/default.asp...2009_pg5_1