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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT APRIL 2011 KARACHI STOCK EXCHANGE OFFICIAL 6 MONTH STATISTICS US$ millions # Shares millions Total Volume Average Daily Volume Total Volume Average Daily Volume Stocks Jul-10 791.16 35.96 1,741.59 79.16 Aug-10 660.14 30.01 1,387.88 63.09 Sep-10 551.20 27.56 1,431.97 71.60 Oct-10 883.61 42.08 2,772.80 132.04 Nov-10 1,105.05 61.39 2,443.61 135.76 Dec-10 1,483.10 70.62 3,413.12 162.53 TOTAL 5,474.26 44.60 13,190.97 107.36 Bonds Jul-10 0.00 0.00 0.00 0.00 Aug-10 0.00 0.00 0.00 0.00 Sep-10 0.00 0.00 0.00 0.00 Oct-10 0.00 0.00 0.00 0.00 Nov-10 0.06 0.00 0.00 0.00 Dec-10 0.72 0.03 0.01 0.00 TOTAL 0.79 0.01 0.01 0.00 Other Jul-10 0.00 0.00 0.00 0.00 Aug-10 0.00 0.00 0.00 0.00 Sep-10 0.00 0.00 0.00 0.00 Oct-10 0.00 0.00 0.00 0.00 Nov-10 0.00 0.00 0.00 0.00 Dec-10 0.00 0.00 0.00 0.00 TOTAL 0.00 0.00 0.00 0.00 Market Capitalization (US$ millions) Index MONTHLY STOCK VOLUME VS INDEX (US$ millions) Stocks Index MONTHLY MARKET CAPITALIZATION (US$ millions) Jul-10 34,389.25 10,519.02 Aug-10 31,970.83 9,813.05 Sep-10 32,162.16 10,013.31 Oct-10 33,782.61 10,598.40 Nov-10 35,765.21 11,234.76 Dec-10 38,055.28 12,022.46 CONTACT INFORMATION 1,600 1,400 1,200 1,000 800 600 400 200 0 14,000 40,000 12,000 35,000 10,000 30,000 8,000 25,000 20,000 6,000 15,000 4,000 10,000 2,000 5,000 0 0 Jul Aug Sep Oct Nov Dec Jul Aug Sep Oct Nov Dec Contact Name Mr. Haroon Askari E-mail ha@kse.com.pk Website www.kse.com.pk PAGE 76
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT APRIL 2011 KARACHI STOCK EXCHANGE ECONOMIC AND POLITICAL DEVELOPMENTS Economic Overview of the Country Pakistan’s precarious economic outlook was dealt a further blow in August 2010 by the worst flooding in the country’s history. The disaster saw at least 20mn people displaced (with at least 6mn in need of emergency assistance), causing massive damage to infrastructure and agricultural output. With the economy already having shown signs of deceleration before the crisis, we believe that stagflation (i.e. rising consumer prices, subdued growth) is a major concern as we head into 2011, and have revised our macroeconomic assumptions accordingly. Meanwhile, the government’s slow response to emergency relief has added to its unpopularity. With security still a major headache and the Prime Minister Syed Yusuf Raza Gilani also facing a stand-off with the country’s judiciary, Pakistan’s overall country risk profile is weaker than ever. Rising inflation and unemployment following the flood disaster in August will add to the woes of a poor security environment and popular distrust in the government. Meanwhile, tense relations with India remain a potential flashpoint. Pakistan’s business environment remains weak and, therefore, ranks a lowly 114 out of 167 emerging markets in our business environment ratings. Going forward, we believe that Pakistan’s business environment will remain highly challenging, with the shaky security situation and a dire energy shortage continuing to weigh on economic activity, particularly much-needed investment. Given the recent damage to infrastructure in the recent flooding – and the massive clean-up costs necessary to get the economy back on its feet – we believe that the country’s investment appeal will remain unattractive for the foreseeable future. Hyper inflation and high unemployment rate potentially brining serious civil instability. The economic report has showed stability in today’s economic indicators compared to last few years’. Some of those indicators presented in the Economic Survey (2009- 2010) are as listed below. • The economy grew by 4.1% during 2009-10 after a modest growth of 1.2% in 2008-09. • The industrial output expanded by 4.9%, with Large Scale Manufacturing posting a 4.4% rate of growth. • The services sector grew by 4.6% as compared to 1.6% in 2008-09. • For 2009-10, the fiscal deficit is aimed to be kept in check at 5.1% of GDP, despite the absorption of larger-than-budgeted securityrelated spending. • The external current account deficit was contained to 5.6% of GDP (US$9.3 billion) in 2008-09 from a high of 8.3% of GDP in 2007- 08 (US$13.9 billion). The current deficit is expected to decline to under 3% of GDP in the current year. • Foreign exchange reserves have been rebuilt to nearly US$15 billion, from their low of under US$6 billion in October 2008. • Inflation declined from 25% in October 2008 to a recent low of 8.9% in October 2009, though it has accelerated sharply of recent and is showing persistence. • The total installed electricity generation capacity has increased to 20,190 MW during July-March 2009-10 from 19,780 MW during the same period of last year • The number of villages electrified increased to 147,038 by March 2010 from 133,463 by March 2009, showing an increase of 10%. • Overall exports recorded a positive growth of 8% during the first ten months (July-April) of the current year against a decline of 3% in the same period last year. • Trade deficit improved by 13.9% from $14,218 million in July-April 2008-09 to $12,238 million during July-April 2009-10. • Social safety nets have been strengthened. Benazir Income Support Program is being streamlined. Pro-poor spending is significantly rising over recent years • 2009-10 started with a recovery in the Capital Markets following the global financial crisis. • Net inflow of foreign investment in Pakistan from July 2009 to March 2010 was US$431.9 million which was a large increase considering the negative foreign portfolio investment in the last financial year. (Economic Survey 09-10) Political Outlook During the period 2010, the government of President Mr. Asif Ali Zardari faces mounting security, economic, religious and political pressures. Zardari’s government remained under stress on account of recent intensification of US drowns attacks into Pakistani territory continues under President Barak Obama regime. The present USimposed emphasis on military operations in the Federally Administered Tribal Areas (FATA) is proving costly in terms of Pakistani military personnel and morale, not least with regard to the important Inter-Services Intelligence (ISI) agency. This intensification of US activity is putting Zardari under severe strain. It has started to bring allegations in the Pakistan media that he is complicit with it, which could prove fatal to his political reputation. Zardari may struggle to survive the year without losing his parliamentary majority or falling victim to one of Pakistan’s recurrent military coups. Attempts to raise power tariffs and petroleum prices had to be partially abandoned in the face of widespread rioting. However, the policy framework agreed between Pakistan’s government and the IMF calls for a rise in revenue mobilization from 9% to 15% of GDP. This will be difficult to achieve without imposing an agricultural tax on the landlord classes, which dominate the political system (including the National Assembly) and are unlikely to comply without a fight. The conditional IMF lending packages also meet fierce political resistance contributing rising political opposition. Information obtained from the Exchange. Key Information Contacts Government of Pakistan www.pak.gov.pk Ministry of Finance www.finance.gov.pk Privatization Commission www.privatisation.gov.pk State Bank of Pakistan www.sbp.org.pk Security and Exchange Commission of Pakistan www.secp.gov.pk PAGE 77
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