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Karachi's Floor: Market Suicide

Look at this link: http://www.kse.com.pk/kse4/phps/kmi30idx.php

It’s the list of top 30 companies on the KSE – equivalent to the
constituents of our Sensex. I’ve been watching this since the Karachi Stock Exchange set a floor on prices.

  • 15 have zero volume
  • 28 out of 30 have no price change
  • The remaining two have moved a fraction, but above the floor price.
  • Volumes are horrendously low after the top two-three stocks.

It’s not good. the floor isn’t helping. Plus, because of the floor
there’s much lower volatility so the VaR (Value at risk), a
calculation based on how much prices move, has come down. This would
have resulted in lower margins being paid to the exchange. So guess
what they did, the even froze the VAR Margin at a certain level.

This is pretty much market suicide.

  • Girish says:

    >Hi Deepak,

    I like the way you think/analysis. Is learning to read the annual report over-rated? Consider: Lehman Brothers was apparently still reporting a profit as late as June 2008. 🙂 With that kind of financial jugglerly, why even try to follow the wise precepts of Warren Buffet/Peter Lynch? 🙂 What do you say?