KSE trading volume touches new low

KARACHI (December 01 2008): The Karachi share market witnessed lowest ever trading during the week ended on November 30, due to prevailing uncertainty over the removal of price floor and the KSE-100 index remained unchanged at 9,187.10 points.

"The prevailing uncertainty over the removal of price floor and unavailability of market stabilisation fund did not allow the investors to take fresh positions", analysts said, adding that law and order and geopolitical situation in the region further deepened investors' concerns.

The market witnessed lowest ever trading volume of only 3,700 shares on Friday. The average daily turnover declined to 64,920 shares as compared to previous week's average of 95,972 shares. No trading was recorded at the futures counter during the week.

Market capitalisation declined by Rs 6 billion to Rs 2.820 trillion. Atif Zafar, an analyst at JS Global Capital, said that the mood of the market remained dismal with the continuing uncertainty regarding the lifting of the price floor mechanism. Even the Karachi Stock Exchange's board of directors meeting ended without any breakthrough on removal of price floor.

Despite the uncertainty, average daily volume in the off-market increased. However, average discount sought by investors in the off-market remained almost the same. The absence of buyers at the share market forced the trapped investors to offload their holdings at off-market counter with high discounts.

The average trading volume at the off-market counter increased by 21 percent to 9.7 million shares as compared to previous week's 8.0 million shares, with an average discount at around 30 percent, he added.

Romessa Mirza, an analyst at Invest Capital & Securities, said: "Although the 9,144 points floor has been in place for over three months now, no official date has been announced to release the market. In fact, efforts are still underway to solicit the required amount for the stabilisation fund. The meagre volumes were unable to nudge the market as the KSE-100 index stood dead still at 9,187 points throughout the week. The prevalent off-market transactions are undermining investors' confidence further still." The average daily volume declined by 32 percent while futures volume has now been nil for past seven weeks.