Like many other markets of the world, it was a bad year for Pakistan’s capital market where
trading volumes nose-dived to 10-year low. According to market observers, the outgoing year saw the local market posting a negative return of 5 per cent, 9 per cent in dollar terms, with one more session yet to go.
“Buying selling of shares, floating of new companies and fund raising through right shares, all remained depressed in 2011,” said Farhan Mahmood of Topline Securities.
Most importantly, he said, the market players remain concerned about re-introduction of Capital Gain Tax (CGT) after a gap of more than three decades, its understanding and last but not the least its cumbersome calculations.
“Resultantly, individual investors preferred to remain on the sidelines,” Farhan viewed.
The market cap based benchmark KSE 100 index fell five per cent ($9 per cent) in 2011 while free float based KSE 30 index came down by 11 per cent ($15 percent). MSCI Pakistan index was also down 16 per cent in the outgoing year. The value of Karachi bourse trimmed down by Rs302 billion or 9 per cent as market capitalisation reached Rs2.97 trillion ($33bn) at the end of 2011. Hence, average daily volume of 81 million shares was down 34 per cent from 2010 and 63 per cent from 10-year average. in terms of value daily business of Rs3.6 billion ($40 million)
was lower by 19 per cent from 2010 and 77 per cent from last 10-year average.
Farhan said another misery in 2011 was the limited number of Initial Public Offerings (IPOs). A total of only four IPOs (ISL, PKGP, EFOODS, TDIL) were witnessed with total size of Rs1.8 billion, which is far lower from last 20 year average of 16 IPOs a year. Compared to huge selling in global markets, Pakistan in 2011YTD saw net outflow of US$122 million (including US$60 million selling in Hubco) compared to net buying of US$526 million in 2010.
Interestingly, Pakistan with negative return of 16 percent (as measured by MSCI Pakistan)stood as the best Asian Frontier marketstood as the best Asian Frontier markets; outperforming three other Asian frontier markets, Bangladesh, Sri Lanka and Vietnam, by 12-29 percents; outperforming three other Asian frontier markets, Bangladesh, Sri Lanka and Vietnam, by 12-29 percent.