Identifier
Created
Classification
Origin
08ISLAMABAD2631
2008-08-05 13:52:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Islamabad
Cable title:
KARACHI STOCK EXCHANGE HITS 23-MONTH LOW
how-toVZCZCXRO3831 RR RUEHLH RUEHPW DE RUEHIL #2631 2181352 ZNR UUUUU ZZH R 051352Z AUG 08 FM AMEMBASSY ISLAMABAD TO RUEHC/SECSTATE WASHDC 8203 INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC RUCPDOC/DEPT OF COMMERCE WASHINGTON DC RUEHBUL/AMEMBASSY KABUL 8966 RUEHNE/AMEMBASSY NEW DELHI 3610 RUEHLO/AMEMBASSY LONDON 8438 RUEHKP/AMCONSUL KARACHI 0133 RUEHLH/AMCONSUL LAHORE 5875 RUEHPW/AMCONSUL PESHAWAR 4661 RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL RHMFISS/CDR USCENTCOM MACDILL AFB FL RUEAIIA/CIA WASHDC RUEKJCS/SECDEF WASHINGTON DC
UNCLAS ISLAMABAD 002631
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EFIN PREL PK
SUBJECT: KARACHI STOCK EXCHANGE HITS 23-MONTH LOW
UNCLAS ISLAMABAD 002631
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EFIN PREL PK
SUBJECT: KARACHI STOCK EXCHANGE HITS 23-MONTH LOW
1. (U) Summary: On August 4, ebbing investor confidence brought on
by panic over foreign selling and margin calls pushed the Karachi
Stock Exchange (KSE) 100 index 3.13 percent lower, to a 23-month
low. Morning trading was initially suspended on August 5, as the
KSE Board and the Securities and Exchange Commission of Pakistan
(SECP) met, but trading opened late morning. In August 5 trading,
the KSE closed up 189 points. High discount rates, political
uncertainty, and Pakistan's poor law and order situation have
significantly impacted investor confidence and consequently the KSE.
End Summary.
2. (U) On August 4, heavy selling pressure resulting from eroding
investor confidence caused the KSE-100 index to fall 318 points
(3.13 percent of its value),closing the day at 9,853 points - well
below the psychological floor of 10,000. Morning trading was
initially suspended on August 5, as the KSE Board and SECP met.
Trading opened late morning and the KSE 100 closed the day up 189
points, ending at 10042.
3. (U) Over the last three months, the KSE has witnessed heavy
selling pressure due to prevailing uncertainty on the political
front, weakening economic indicators, a declining rupee value
against the dollar, and increasing discount rates. The KSE is now
at a 23-month low, having lost 37 percent of its value (5,823
points) from its all time high of 15,676 points.
4. (U) Overall market capitalization since April 2008 has declined
by Rs 91 billion to Rs 3.087 trillion. Showing current capital
flight, the Special Convertible Rupee Account has seen outflows of
USD 154.94 million since July 2008. The GOP has attempted to calm
market jitters by extending the Capital Gains Tax exemption until
2010 and establishing a Rs 20 billion market support fund. However,
both have had negligible impact on the troubled KSE.
BODDE
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EFIN PREL PK
SUBJECT: KARACHI STOCK EXCHANGE HITS 23-MONTH LOW
1. (U) Summary: On August 4, ebbing investor confidence brought on
by panic over foreign selling and margin calls pushed the Karachi
Stock Exchange (KSE) 100 index 3.13 percent lower, to a 23-month
low. Morning trading was initially suspended on August 5, as the
KSE Board and the Securities and Exchange Commission of Pakistan
(SECP) met, but trading opened late morning. In August 5 trading,
the KSE closed up 189 points. High discount rates, political
uncertainty, and Pakistan's poor law and order situation have
significantly impacted investor confidence and consequently the KSE.
End Summary.
2. (U) On August 4, heavy selling pressure resulting from eroding
investor confidence caused the KSE-100 index to fall 318 points
(3.13 percent of its value),closing the day at 9,853 points - well
below the psychological floor of 10,000. Morning trading was
initially suspended on August 5, as the KSE Board and SECP met.
Trading opened late morning and the KSE 100 closed the day up 189
points, ending at 10042.
3. (U) Over the last three months, the KSE has witnessed heavy
selling pressure due to prevailing uncertainty on the political
front, weakening economic indicators, a declining rupee value
against the dollar, and increasing discount rates. The KSE is now
at a 23-month low, having lost 37 percent of its value (5,823
points) from its all time high of 15,676 points.
4. (U) Overall market capitalization since April 2008 has declined
by Rs 91 billion to Rs 3.087 trillion. Showing current capital
flight, the Special Convertible Rupee Account has seen outflows of
USD 154.94 million since July 2008. The GOP has attempted to calm
market jitters by extending the Capital Gains Tax exemption until
2010 and establishing a Rs 20 billion market support fund. However,
both have had negligible impact on the troubled KSE.
BODDE