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Reversal started.

The decline in stock market was reversed in the mid-July. The general index of share prices gained 82.04 points improving from 876.90 on June 19, to 938.34 on July 27. Aggregate market capitalisation gained Rs. 17.603 billion during the same period.
 General Market
 Index Capitali-
Year Number sation

 (Rs. in billion)

19.06.98 876.90 262.655
06.07.98 867.83 260.140
13.07.98 777.26 237.442
20.07.98 882.95 262.410
27.07.98 958.94 280.258

The decision of the government to increase petroleum prices was a great surprise as it was done at a time when international prices were falling. According to experts international oil prices in June this year plummeted to average 12.1 dollars per barrel which was the lowest since 1994 when it had reached 12 dollars.

Pakistan imported petroleum products worth 1.59 billion dollars in 1997-98 compared to imports of 2.25 billion dollars in 1996-97, Federal Bureau of Statistics (FBS) said. This included crude oil in the quantity of 4.04 million tonnes worth 568.7 million dollars while quantum of other petroleum products was 9.732 million tonnes worth 1.123 billion dollars.

A close analysis shows that in dollar value terms decline has been 29.38 per cent whereas quantity has been lowered by only 6.58 per cent in case of petroleum products and for crude oil the quantity was in fact higher by 5.31 per cent compared to last year.

"According to the agreement with the International Monetary Fund (IMF), the government was bound to increase or decrease prices in line with international prices but in spite of falling global prices of petroleum, prices were raised sharply by 25%", Abdul Sami Khan Chairman Pakistan Petroleum Dealers Association (PPDA) said.

The economic situation has not shown any sign of improvement. There were some hopeful news like the meeting of the IMF for the release of $ 260 million tranche of ESAF/EFF credit and soft loan of $250 million from Kuwait and economy recording a real GDP growth at 5.4% during outgoing fiscal 1997-98. Another good news on the economic front is that Pakistan may achieve record production of cotton.

The economic package announced by the Finance Minister provided much needed boost to the ailing stock market. The government allowed partial withdrawal from the frozen dollar accounts and issue of dollar bonds to the depositors and permission to exporters to sell 50% of their export earnings on the open market. These were all good news for the investors.

G-8 countries have reportedly okayed the release of third tranche of hold up soft credit line of $226 million out of the already approved Enhanced Structural Adjustment Facility (ESAF) of 1.6 billion by the IMF.

Sugar industry is facing glut and it is feared that it may go sick. Similarly production of tractor was suspended due to government decision to reduce the tractor prices. It is heartening to note that nationalised commercial banks have shown encouraging results. All the vital health indicators of the United Bank Ltd. are now pointing in the right direction including capital profitability and portfolio quality. In the month of June 98. UBL has achieved its real monthly profit in ten years.
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Title Annotation:stock market in Pakistan
Author:Hameed, Rafat
Publication:Economic Review
Date:Jul 1, 1998
Previous Article:Sugar industry.
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