Wednesday, August 27, 2008

At Least This Intervention Is Obvious..... :-)

Unlike many others hidden & covert interventions / bailouts ( see end of the post ) that are going on right now...... But as long as they can avoid or postpone Stoning & Riots .... :-)

Immerhin kennzeichnen die Pakistanis Ihren Markteingriff √ľberdeutlich...... Was man bei den ganzen offenen und versteckten Bailouts ( siehe Ende des Postings ) an den westlichen M√§rkten momentan ja nicht gerade behaupten kann..... Immerhin werden so wohl vorerst weitere Steinigungen in Karachi verhindert bzw aufgeschoben.. :-)

Pakistan Stocks Snap 6-Day Slump as Exchange Sets Floor Prices Bloomberg
Aug. 28 (Bloomberg) -- Pakistan's benchmark index rose for the first time in seven days after the exchange set a floor for stock prices to halt a plunge that has wiped out $36.9 billion of market value since April.

The Karachi Stock Exchange 100 index rose 55.85, or 0.6 percent, to 9,200.78 at 10:18 a.m. local time, snapping a six- day, 16 percent slump.

Securities can trade within the 5 percent daily limits ``but not below the floor-price level'' of yesterday's close, the exchange said on its Web site,without giving details.

The exchange is working to restore confidence after President Pervez Musharraf quit on Aug. 18 to avoid impeachment, and ruling alliance members nominated rivals for the presidency. Investors stoned the exchange last month after it removed a 1 percent daily limit on price declines. Today's decision follows a collapse in the index to the lowest in 26 months.

``This could cause liquidity to dry up because who wants to buy if they can only pay a higher price?'' said Daphne Roth, Singapore-based head of equity research in Asia at ABN Amro Private Bank, with about $30 billion of Asian assets. ``Risk appetite is low and investors are avoiding markets where there is political instability.''

Pakistani Riots over Stock Exchange from the beginning of August


Dank an Zeitenwende

Slashed Spending
Foreign investors slashed their spending on Pakistani stocks to $62.2 million in the 11 months ended May 31, from $1.76 billion a year earlier, according to data compiled by the central bank.

``With these draconian measures to support the market, there's a real question whether you can get out,'' said Mark Tan, director at UOB Asset Management Ltd., which oversees about $3 billion in Asian equities but not Pakistan stocks. ``It adds to the uncertainty.''

Sharif quit the coalition on Aug. 25, accusing Zardari of reneging on a pledge to reinstate judges fired by Musharraf. Stocks have plunged on concern the political instability will blunt government efforts to tackle a rising Taliban insurgency, grapple with inflation at its highest in 30 years and revive the faltering economy.

``The market is definitely in a condition where it will need some extraordinary measures,'' said Nasim Beg, who manages the equivalent of $370 million in stocks and bonds as chief executive officer of Arif Habib Investments Ltd. in Karachi.

Value Plunged
Pakistan's stock market value plunged to $38.8 billion on Aug. 26 from the peak of $75.7 billion on April 4.

Police and paramilitary forces ringed the exchange on July 17, a day after hundreds of investors stoned the building and shouted anti-government slogans. The Securities and Exchange Commission of Pakistan, which had imposed a 1 percent daily limit on price declines, was forced to remove the measure as trading volume plummeted. The commission sought to halt a slide that wiped out $30 billion of market value in three months, threatening to undo a 14-fold rally since 2001.

``Freezing the index would not be a good idea,'' said Habib-ur-Rehman, who manages the equivalent of $91.5 million of stocks and bonds at Karachi-based Atlas Asset Management Ltd. ``Direct intervention in market movements would lead to further complications as we have seen in the recent past.''

UPDATE:

Speaking of hidden & covert interventions / bailouts ....

Zum Thema der verdeckten Markteingriffe.....

Bloomberg Holders of asset-backed securities can get money 39 percent cheaper at central-bank auctions than through investors. A Spanish mortgage-backed bond rated at the highest credit rating trades with a spread of about 2.8 percentage points to the euro interbank offered rate, or Euribor. The resulting rate of 7.76 percent compares with an average rate of 4.74 percent at yesterday's ECB auction for three-month money.



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4 Comments:

Anonymous Barley said...

Two observations:

1. Investors like and look for politicial stability. Pakistan is not a stable place, period.

2. The whole notion of risk reward and the pricing of risk goes out the window.

My view - a number of countries will wake up one day and say: "My God, how did we get to own all of this worthless stuff". Governments are being played/conned into backing bad business decisions. Instead of a few good business defaults maybe we will end up having some massive government defaults. Its simply a different version of an inevitable occurance.

8:09 AM  
Anonymous worried said...

nothing has changed though. A few months ago bhutto was shot. What has changed since then?

For some years a military dictatorship has been in place

For some years the country has been between a war zone and India a country that has been for years a sworn enemy.

What actually changed?

Nothing at all changed.

Instead you have a dynamic between greed and fear. That is all that seems to have changed.

Possibly what you see changing is the world power dynamic. Who now is going to be pakistans friend?

Will people fight for pakistan?

Neither the Chinese or the Russians need Pakistan

Who cares about pakistan?

11:49 AM  
Blogger jmf said...

Moin,

the headline should make it clear that this post was sracstic :-)

"Who cares about pakistan?"

To my knowledge this is one of a very elite circle that has the "A- Bomb".....

9:15 PM  
Blogger jmf said...

Moin again,

"My view - a number of countries will wake up one day and say : "My God, how did we get to own all of this worthless stuff". Governments are being played/conned into backing bad business decisions. Instead of a few good business defaults maybe we will end up having some massive government defaults"

I totally agree.

This is one of many reasons why i cannot have a portfolio without a gold position.... :-)

9:17 PM  

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