By Tanveer Ahmed
KARACHI: Overcoming all the odds at the political and economic fronts, country’s capital market managed to sail through the turbulent water comfortably by posting 28 percent returns in the calendar year 2010.
Starting the journey below 10,000 psychological barrier at 9386 at the beginning of the year, benchmark KSE-100 index settled well above 12022 points level on the last trading day of the year on Friday.
A market experiencing low trading volume was exceptionally good when it came to returns by registering 28 percent gains and 26 percent in dollar terms, which owed to flooding of the foreign money in the market especially during the last quarter of the year.
“Strong foreign inflows and recovery in corporate earnings led to a strong market performance in the final quarter with the index witnessing more than 71% of the gains in last three months of the year,” analyst Umar Bin Ayaz at JS Global Research said.
Foreigners remained active in the market with net buying of $515.5 million during the CY10 as compared to $33 million during the last year.
The phenomenal performance by the market shines further when compared with peers as Asian and other markets are concerned KSE-100 has given a 27% return as compared to US, China, India, Japan, Singapore and Taiwan.
The strong corporate earnings coupled with foreign portfolio investment played their part in pushing the market to regain its lost glory, however the low trading volumes took some steam out of the ship which, otherwise could have been trading even further high compared to level at the end of the year.
KSE-100 Volume declined by 32% to average 116mn shares as compared to 171mn shares during the same period last year.
Stock analysts and pundits are unison when its come to their comments on the performance of the market and all have, more or less have the common view that the performance was due continuous foreign portfolio investment, rising commodity prices in the international markets and improved economic numbers including all-time high foreign exchange reserves during the year.
Devastating floods and imposition of capital gains tax (CGT), though have dampening affect on the stock business, however market absorbed these shocks well in short of span of time when foreign gave a “big entry” in the market, helping it to break successive barriers and finally closing at 12,000 points level just one day before the close of the year.
In view of the outstanding performance of the market in the outgoing year, the market players and analysts’ spirit is high about the future course of the stock business as they are now eyeing 14,000 points level in the year 2011, which they believed would not be difficult if the strong interest of foreign investors coupled with healthy corporate earnings remained intact in the days to come.
The government can play its part in helping the market to move further high, stock brokers said as the absence of leverage product has kept the local investors on the sidelines and an early launching of leverage product in the market would also pull the locals in the market along with the foreign investors, who are already roaming the market.(DT)
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