The trend in volumes has been extremely sluggish day in, day out throughout the last week. And the KSE-100 benchmark has remained singularly one-dimensional – flat. If there was a rise it was in single digit, ditto for the fall, the only exception being Wednesday when the rise was 40 points plus. The volumes have been so low that the first two sessions this week witnessed just 20 million shares traded, while on Wednesday it jumped to the vicinity of 35 million – definitely far below the market’s heydays. But this was not unanticipated. This being the holiday season in Europe and the US, not to mention the Far East, the activity channelled through the trading houses from there comes to a standstill. As for the local investors, there is too much uncertainty, and the inspiration provided by gains from dividend and bonus shares are somewhat far off to perk them up.
With absolutely nothing driving the market, mostly jobbers – for the uninitiated, speculators who buy at some point on any given day and offload their purchases for a little gain or loss in the same session – have only been active, and that too quite sporadically. This also is understandable. The jobbers become hyper when there is volatility. That is when they smell profit. No fluctuation means no real opportunity for a quick buck. So, they too wait and watch, listlessly looking at the computer screens now and then to keep abreast of the goings-on, all this while monotonously munching on gram and little sugar pellets that is the staple with which brokers entertain them, before filing out around the time of closing.
For the Average Joe Investor, there are nuggets to learn from in what the big daddy amongst the stockbrokers, Mr Arif Habib, chairman and CEO of the group named after him, said on Tuesday at a reception in Islamabad. In a nutshell, this is what he said, “Economy is improving but we are faced with a bigger problem of perception… Our capital markets are one of the best in the world, giving 31 per cent return on average in the last 10 years but it is also facing the issue of image… Interference in the capital markets hasn’t helped bring improvement… There is no Capital Gains Tax in most countries and the system is not as frequently altered in developed countries.”
Mr Habib is anything but an Average Joe Broker. He knows his turf better than a shark would know its patch in the sea. Indeed there are some who may know the market as well but there are few who could manipulate it better than him. In all three points picked from his little speech, every word is drenched in depth and wisdom. Seldom are even the best speakers this precise and objective – hitting the nail on its head unerringly time after time. The CGT is an issue that has acted as a bugbear for the market for quite some time now. And the recent spurt of lobbying has come to naught, for the federal finance minister Hafeez Sheikh has shot the proposal down with the kind of finality that is not likely to endear him with the brokers. The perception part too is critical. In these troubled times there are other reasons why foreign traders have pulled out large chunks of investment from our markets, but our much battered image too is one serious pickle.
The return of investment part of Arif Habib’s speech has been talked about too often in this space to bear repeating. But this is something that should reinforce the Average Joe Investor’s faith in the market.
Last week one had talked about ‘a few mouth-watering buys in cheap and middle range that one has discovered’. But again, the word count is up, and since nobody is in a rush to buy and there is nothing to lose in waiting for a week, so until next Thursday.
The writer is Sports and
Magazines Editor, Pakistan Today
