Dull activities in May: Index declines by 203.76 points on MoM basis

RECORDER REPORT

KARACHI: The Karachi share market witnessed dull trading activities during the month of May 2012 and the benchmark KSE-100 index declined by 203.76 points or 1.5 percent on month-on-month basis to close at 13,786.62 points from 13,990.38 points. 

"The month of May is mostly regarded as a dull period as far as activity at the equity market goes", analysts said. After showing a remarkable performance since Jan-12 to Apr-12, the market maintained upward trajectory with better volumes, they added.

"During the month of May, looming budget related uncertainties are generally held responsible to make investors' shy from the investment path with observably low volumes", Mazhar A Sabir, an analyst at InvestCap said.

In the same vein, during May 2012 activities at local bourse turned out to be quite as the index shed 1.5 percent on month-on-month basis with market volumes were decreased by significant 38 percent on average basis as compared to last month's average volumes, he added.

However, the benchmark KSE-100 index still provided a solid 21 percent year-to-date return (16 percent in USD terms) when compared with the December index level. However, better equity performance is  expected after the budget announcement where no new taxes are expected to be incorporated going forward, he said.

He said in regional contest, during the month of May only two Asia regional countries posted positive returns (Vietnam +3 percent and China one percent), however, Pakistan's equities remained above the average Asia regional equities performance of negative nine percent and posted -1.5 percent during the month. Even better, though at much smaller scale, Pakistan equities stood amongst top-three equity markets standing in the green zone as far as foreign flows towards equities are concerned (receiving 39 million dollars net inflows during May 2012 totaling 77 million dollars year-to-date, as against Asia Pacific's total net outflows of 8.5 billion dollars in May 2012.

Going forward, the KSE-100 behaviour is largely related to the budget announcement. However, the economic survey of Pakistan revealed a gloomy picture of the country where the government missed most of the key economic targets of FY12. In the middle of murky economic indicators, the current appreciation in USD against PKR (4.5 percent FYTD) is also the big concern for the economy. However, budget target for FY13 would set the direction of the equity market going forward.