The Karachi Stock Exchange remained bearish on the last day of trading on Friday. No such volatility was observed, through the market opened with a bullish trend. This is a sign that the traders mostly based their speculations on fundamentals. Advance selling of the traders cannot be segregated on if the forward selling was done by major blue chips players or the speculators made a reasonable low by selling the shares.
The KSE is directly affected by IMF. Big opinion makers do make an impact on the global level which ultimately affects KSE as well. The International Monetary Market, a division of the CME Group, pioneered the trading of international financial derivatives, most notably futures on the world’s largest foreign currencies. It has since merged into the Chicago Mercantile Exchange.
The US Consumer Price Index, along with the stock indices of many countries like Pakistan, will be helpful to understand the mechanism and history of KSE as the greatest economic indicator, not just for Pakistan, but also for the whole region.
The secondary market was opened for foreign investors on an equal basis with the local investors. This measure along with the government policy of privatisation has resulted in rapid growth of the market since 1991. It may also be mentioned that “privatisation” has been adopted as a philosophy and most of the business and finance activities, which were previously reserved for the public sector, have now been opened for the private sector. The change of policy is most visible in the financial sector where a number of commercial banks, investment banks, discount houses, leasing companies, modarabas, life insurance companies and mutual funds have been allowed in the private sector. Liberalisation policy has led to rapid deregulation of the national economy and the impediments to private initiative have been speedily removed. Foreign exchange holdings and transfers have been liberalised, industrial sanctioning has been done away with except for few sectors where, for strategic reasons, prior permission of the government is necessary.
The regulatory authority for the securities market and corporate sector in Pakistan is the Securities and Exchange Commission of Pakistan. The commission administers the compliance of the corporate laws in the country. So, the mergers of international stocks directly affect the blue chips of Pakistan that Pakistan has willfully accepted by the grand capitalism. So, this economic signal will have a very small effect on the economics of Pakistan.However, it is yet to be seen how market will react when it will open on Monday. It is not easy to predict if the investors will recover their losses or not.
