KSE: Out for the count!

Brokers at the local bourse would fare better delivering pizzas. Given the fact that average volumes for the calendar year to date at the Karachi Stock Exchange stand shy of 82 million shares, it appears the mainstay for brokers - commissions on trades - have slowed to a trickle. And just when you thought activity at KSE couldn fall any further; average volume for the current month stooped to 46.2 million shares traded daily. Not only is this the lowest monthly average for the year-to-date, it also represents a multi-year low, depicting an utter lack of interest among investors. In the absence of investors, the bourse has witnessed one of the least eventful years in recent history and the benchmark index has not managed to top its January 17 high of 12,682 throughout the year. "Besides the political noise which is only going to increase going forward, investor sentiment has been severely dented by the global financial crisis," remarked Khurrum Schezad, head of research at InvestCap. The case in point, Standard and Poors downgrade of US sovereign debt took global markets down by as much as 20 percent, as investors rushed to perceived safe havens. While relatively insulated from such external shocks, the local market has also witnessed FIPI net outflows of $126.63 million since July 2011 to-date, compared to an inflow of $171.14 million during the same period, last year. Undeterred by the deserted market floor, market pundits are eyeing some positivity before bidding farewell to 2012. AKD technical analyst, Qasim Anwar contended that "Overcoming the immediate resistance at 12,100 could clear the way for a move to 12,900 before the end of December." However, any enthusiasm at the end of the year may be pre-empted by banks selling their shareholdings to realise capital gains (though there appears little gain to book!), not to mention the heating temperatures on the political front. However, the upcoming monetary policy announcement could entice some volatility, for now there appears consensus among economic experts that SBP will either maintain the status quo, in its policy rate, or offer a slight cut of 50 bps. Moving forward to the upcoming year, the brunt of IMF payments that is to be felt from mid-February onwards will likely exert pressure on the balance of payments and the exchange rate, and dominate investors views. In other words, while calls for a short-term bullish trend may well draw positivity in the remaining five weeks of 2011, reasons for any sustained improvement in the benchmark index appear few and far in between.