Downward slid in global market boosts idleness at KSE (11102008)

LEADER REPORT
KARACHI: Investors continued to remain isolated from the market on Friday as flooring mechanism was endured. The Index showed no movement, as it closed at the previous session's closing level of 9,181.35 points, while volumes remained extremely low as 1.64mn shares were traded. 47 scrips remained unchanged while 9 scrips gained values against 10 scrips that lost weights.
Local liquidity crisis ease off …
The liquidity crunch of the local currency in the market eased off after SBP step to slash CRR by 1 percent, as stabilisation was witnessed in the PKR-USD parity and overnight call rate. The prevailing pessimism was, however, disturbed by a positive news announced by SBP about the country's foreign reserves that have increased by USD190mn to USD8.32bn. The increase was in the reserves held by the SBP on the back of the disbursement of loan by ADB, while the banking reserves remained flat. The banks have imported dollars to cater the huge demand due to the panic withdrawal, as different rumors were bruited in the market. A hike was witnessed in the CFS rates that stood at 62.87 percent on Thursday.
Global Economic recession continues to reflect on worldwide indices…
The temporary positive movement in the global indices after the cut in discount rate could not prolong and a major decline was witnessed. The fears of fall of demand if the credit crisis push the global economy into recession bring international oil prices down to 83 dollars per barrel.
Economy starving for foreign inflow…
The economy is desperately in search of foreign inflow for which the economic managers have been seen working. The visit of a delegation to China, headed by the prime minister's advisor on finance, Mr. Shaukat Tareen accompanied by the SBP Governor, for discussions with the IMF and the World Bank on the current economic chaos and the President, is expected in the next week. In case of success in attracting any foreign inflow, the pressure on the currency is expected to ease off and with the support of the government with a fund will result in some activity at the market.
Pressure accumulates as floor continues…
Market is anticipated to continue with the stagnant & dull performance till the removal of floor mechanism, while after the removal of floor, placed at the index, a selling pressure is expected to hit the market due to the uncertainties in the economic situation and worsening law and order situation throughout the country. The KSE management's meeting to review the floor mechanism has been rescheduled today. Short term investors are advised to remain side-lined while long term investments can be carried on yield basis.