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Karachi's Floor: Market Suicide

Deepak Shenoy1 min read
Quick Facts
What is "Karachi's Floor: Market Suicide" about?
What category is this article in?
General
Who wrote this article?
Deepak Shenoy, Capitalmind's research team.
When was this article published?
Published 17 September 2008.
How long does this article take to read?
1 min read

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.