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Artificially propping up KSE index is useless
For Pakistan's equity investors the going continues to be rough. The management of the Karachi Stock Exchange (KSE), however, defends its decision to enforce a tight new artificial floor.
- By Farhan Bokhari, Special to Gulf News
- Published: 00:02 October 5, 2008
Islamabad: For Pakistan's equity investors the going continues to be rough. The management of the Karachi Stock Exchange (KSE), however, defends its decision to enforce a tight new artificial floor.
On balance, it is true that the KSE's management has successfully stemmed what could have been a bad share price fall, but that is essentially not a comprehensive solution.
There is a compelling argument to be made in favour of letting the index slide down much further in order to find its own natural level. This is essential for the market finds its real value from where a recovery process will begin.
If markets around the globe are indeed going through turmoil, why should Pakistan be an exception? The fundamentals of economic principles and realities of the market must be come into play.
Performance in areas including agriculture is crucial as almost two-thirds of the country's population lives in rural areas.
Focusing exclusively on the stock market only serves the interests of a few.
- The writer is a journalist based in Pakistan.
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