Identifier
Created
Classification
Origin
07ISLAMABAD3738
2007-08-27 11:48:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Islamabad
Cable title:  

KARACHI STOCK MARKET CONTINUES DOWNWARD SLIDE

Tags:  EFIN ECON EINV PREL PK 
pdf how-to read a cable
VZCZCXRO1116
RR RUEHBI RUEHLH RUEHPW
DE RUEHIL #3738 2391148
ZNR UUUUU ZZH
R 271148Z AUG 07
FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC 1353
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHRC/USDA FAS WASHDC 4096
RUEHNE/AMEMBASSY NEW DELHI 1633
RUEHKA/AMEMBASSY DHAKA 2208
RUEHLM/AMEMBASSY COLOMBO 1434
RUEHLO/AMEMBASSY LONDON 6220
RUEHML/AMEMBASSY MANILA 2869
RUEHKP/AMCONSUL KARACHI 7170
RUEHLH/AMCONSUL LAHORE 3254
RUEHPW/AMCONSUL PESHAWAR 1687
RUEHBI/AMCONSUL MUMBAI 3709
UNCLAS ISLAMABAD 003738 

SIPDIS

STATE FOR SCA/PB, EB/TPP, EB/IFD/OIA, AND EB/IFD/OMA
USAID FOR ANE MWARD
TREASURY FOR OSSA
COMMERCE FOR ANESA/OSA
MANILA PASS USED AT ADB
STATE PASS USTR FOR RGERBER, DHARTWICK

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EFIN ECON EINV PREL PK
SUBJECT: KARACHI STOCK MARKET CONTINUES DOWNWARD SLIDE


UNCLAS ISLAMABAD 003738

SIPDIS

STATE FOR SCA/PB, EB/TPP, EB/IFD/OIA, AND EB/IFD/OMA
USAID FOR ANE MWARD
TREASURY FOR OSSA
COMMERCE FOR ANESA/OSA
MANILA PASS USED AT ADB
STATE PASS USTR FOR RGERBER, DHARTWICK

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EFIN ECON EINV PREL PK
SUBJECT: KARACHI STOCK MARKET CONTINUES DOWNWARD SLIDE



1. (U) The Karachi Stock Exchange (KSE) took another dive on
August 23 on rumors of the Supreme Court's imminent decision to
clear the Sharif brothers return to Pakistan. The market lost 319
points or 2.6 percent to close at 12,001 points, slightly less than
its biggest one day loss on August 8 on rumors that the Government
of Pakistan would declare a state of emergency. Volume of shares
traded August 23 increased 25.2 percent over the previous day.
Overall market capitalization declined by nearly $1.5 billion
dollars, or 2.4 percent.


2. (U) The KSE has lost almost 18% of its value from its 2007
mid-July high, and, unlike other exchanges, shows no signs of
recovery. In comparison, the composite of Dow Jones World Index
excluding U.S. (DJWI ex. U.S.),a broad market index excluding U.S.
based stocks, has begun to recover since bottoming out August 16. In
August alone, the KSE has lost 12 percent of its value versus 6
percent for DJWI ex-U.S. Over the past year, the KSE has been about
twice as volatile as the Dow Jones. (Note: the DJWI ex-U.S. was used
instead of the regular DJWI because the U.S. markets have seen a
higher rate of recovery over the past week than the rest of the
world which could skew comparisons. End Note.)


3. (SBU) Comment: Observers remarked that growing uncertainty over
Pakistan's political future has made investors wary of making equity
investments here. This is clearly reflected in the volatility of
the market here since June. The market has not bottomed out yet and,
in our view, is unlikely to do so until Pakistan's political future
is clearer. End Comment.