A week is a long time in the world of finance. Today prices are here, tomorrow there. Today, the trading floor radiates with optimism, tomorrow, a gloom is cast. And so is the case at Karachi Stock Exchange.
When BR Research spoke to equity brokers some ten days ago, most were cool with the precipitation in share prices; "Its a good buying opportunity", one dealer said. And while some asserted that foreign portfolio inflows will resume vigorously once the pressure in global markets subsides, others pointed towards the so-called juicy valuations.
A week later, however, all hell broke loose as fears of EUs debt contagion spread across the world.
As Dow slipped below 10,000 points in intraday trade on the weekend, MSCI Asia Pacific Index plunged to a nine-month low. Investors redeemed $12 billion from U.S, European and Japanese equity funds in the week to May 18, according to EPFR Global, a funds flows data provider.
Soon dissident voices started to emerge at home, with views ranging from cautious to negative.
"It might very well be possible for the KSE-100 to test the 9700-9800 point level in the near term," wrote, Khalid Iqbal Siddiqui of Invest & Finance Securities.
"The market will be looking forward to any news flow regarding capital gain tax, enforcement of value-added tax (VAT), further power tariff hikes and the upcoming monetary policy statement" cautioned KASB Securities.
Even the outlook on interest rates has changed in certain quarters; from we expect SBP to maintain status quo on policy rate until things improve on the fiscal side and inflation eases to we believe that chances of further tightening cannot be ruled out.
This means that price might prune further. Despite falling bottoms and lower intraday peaks, volumes are uninspiring - implying sheer lack of confidence.
You could blame it on the regional and global sell-off, or on fears that discount rate will be jacked up somewhere down the line. Or, you can label dicey politics as the culprit. From what it seems, an outsider, with little or no stake in the market, might tick all three.
Then again, as long as fund managers like Mark Mobius of Templeton Asset Management keep betting on emerging and developing markets, with his local devotees adamant to push stocks towards 11300~11700 points , bubble creation at KSE might resume.
In case that happens, don forget to recite the mantra each morning: a week is indeed a long time in the world of finance. And often when things change that fast, days start feeling like months.