Dubai Woes Devastate Karachi Stock Exchange (KSE)

Equities at Karachi Stock Exchange (KSE) declined over 2 per cent after a four-day holiday Tuesday on fears that fallout from the Dubai debt contagion could reignite global financial turmoil, while political uncertainty and grim security situation also hampered the investor confidence.

Although, the benchmark KSE 100-Index slumped by 2.1 per cent or 193.17 points it managed to sustain 9,000 levels and closed at 9,013.17, KSE 30-Index plunged by 2.3 per cent or 223.56 points to finish at 9,482.92 levels, whereas KSE All Share Index declined by 1.98 per cent or 129.56 points to end at 6,399.88 levels.

Dubai last week asked creditors of government-controlled Dubai World and Nakheel for a delay on debt repayments as a first step to restructuring.

He further elaborated that there were fears that the recent credit woes could halt or slowdown the pace of remittances and FDI flows into the country. Moreover, declining Pakistan dollar bond prices also discouraged investors as it could raise the risk premium of the country, he added. Punjani further noted that investors remained cautious over political uncertainty in the backdrop of end of National Reconciliation Ordinance (NRO) tenure.

Market started the day with 91 points into the negative zone; thereafter red numbers accumulated quickly and within just 30 minutes after the opening bells index breached the psychological barrier of 9,000 points and touched its intra-day low of 8,985 points (-ve 220 points) as investors who were worried over the Dubai financial crises preferred to take an exit from the market. Adding to the pressure was the blast in Swat and uncertainty on the political front.

Therefore selling continued mainly in oil, banking and fertiliser sectors and market remained in the negative zone right throughout the day but managed to close just above 9,000 levels.

Volumes were slightly better as 89.8 million shares traded in the market which is 5.2 million shares more as compared to turnover of 84.6 million shares Thursday. Out of total 350 active issues, 227 declined and 105 advanced while 18 issues remained unchanged.