Adil Najam
On Tuesday the Karachi Stock Exchange’s (KSE’s) KSE-100 Index – Pakistan’s equivalent to the Dow Jones Index – broke the psychological barrier of 15,000 for the first time. At the time of writing this (on what is Wednesday morning in Pakistan) the Index remains well above that mark.
The rise of the stock market(s) in Pakistan in recent years has been phenomenal. Much of this matches the rise of emerging markets all over the world, but the rise over the last year is particularly phenomenal given just how depressed, depressing, uncertain and unclear the politics of the country has been. My friends who work in the financial sector tell me that money can be made from bad news as much as from good news. I am sure they are right, though I am not sure if I understand all the nuances of how.
But it still intrigues me why and how the market in an economy like Pakistan – where the stock market itself is rather small in terms of size as well as participation – works in relation to what is happening in the society at large. The charts, and news, clearly indicate that the stock exchange in Pakistan has not been oblivious to the political and socio-economic upheavals of the last many months. But the direction seems to have been clearly upwards and it is not clear just how much of those events are reflected in the market.
One is used in larger markets (USA, Europe, Japan) to seeing the happenings in society and politics to have deep and immediate impacts on the market fluctuations. Is it the same in Pakistan? Or is it that because so many fewer people are actually invested in stocks that the stock market’s rhythms are less intertwined with local happenings and more with global and international happenings (especially if much of the capital flow is from international investors)? And, if, indeed, the stock market in Pakistan is as much of a barometer and reflection of what is happening in the country, then what is it that the market has been telling us all year, and is telling us now?
I know that many of our readers have far greater expertise in this area. Maybe they can help me and others decipher the meaning of all of this better.
(Graphs from Bloomberg)
Shan,
Can you expand on your comments as you seem to know your stuff, please email me at wasim@otherpakistan.org
Feimanallah
Wasim
Before I forget, though BSE gains a lot of attention, the NSE (National Stock Exchange) also based in Mumbai has roughly the same market cap as the BSE:
http://www.nseindia.com/
Aqil,
The BSE (Bombay Stock Exchange) website has a lot of interesting statistics.
See:
http://www.bseindia.com/about/st_key/volumeofturno verbusiness_tran.asp
From here I get:
Total Market Cap (USD in Bil): 1472.07
So your USD 1.5 trillion estimate was right on the mark :)
“Well I have a question. How much is the speculation in the larger stock exchanges, such as the Dow Jones, Tokyo or London? Does it increase with increased market capitalization, remains the same or goes down?”
I don’t really know the answer to that. I don’t think there is a clear link between speculation and changes in market capitalization in these developed economies, but I can’t be too sure about that.
Atelier says:
The Karachi Stock Exchange – 100 index is saying out loud to Respect the Mandate.
I say: And do not respect Mush who does not have self respect.
zia m says:
Faisal,do you know if they have discovered a religious gene yet?
I say: No! not yet but it is suspected to be in the gene pool of Pakistanis. Long time back,after partition of India, a delegation from Pakistan met King Farooq of Egypt to brief him about Pakistan. After listening to them patiently he later commented: Listening to Pakistanis it seems as if Islam came into existence in 1947.