VZCZCXRO4540
RR RUEHLH RUEHPW
DE RUEHIL #0779 0530936
ZNR UUUUU ZZH
R 220936Z FEB 08
FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC 5304
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHKP/AMCONSUL KARACHI 9041
RUEHLH/AMCONSUL LAHORE 4891
RUEHPW/AMCONSUL PESHAWAR 3590
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL
RHMFISS/CDR USCENTCOM MACDILL AFB FL
RUEKJCS/SECDEF WASHINGTON DC

UNCLAS ISLAMABAD 000779 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: EFIN ECON EINV PREL PK
SUBJECT: PAKISTAN'S STOCK MARKETS REACH NEW HIGHS 
 
 
¶1. (U) Summary: Pakistan's stock markets have rebounded following 
February 18 parliamentary elections. The Karachi Stock Exchange 
(KSE) 100 index has touched a new high on post election stability 
hopes. The banking, cement and oil and gas sectors performed well, 
and market capitalization increased by USD 80.6 million.  According 
to market analysts, both foreign and domestic investors purchased 
stocks.  The KSE 100 index gained 142.24 points on February 21, 
closing at 14,971.94.  Trading took place in 376 stocks; 197 rose, 
143 declined, and 36 remained unchanged.  End summary. 
 
¶2. (U) The Karachi Stock Exchange (KSE) 100 index reached a new 
record high on February 21, gaining 142.24 points on the day to 
close at 14,971.94.  The Index's previous high of 14,814.85 occurred 
December 26, the day before the assassination of former Prime 
Minister Benazir Bhutto.  The market has seen back-to-back gains 
following the February 18 parliamentary elections, rising 564.1 
points since Friday, February 15.  Market analysts believe the KSE 
gains are sustainable, as investor confidence has increased on the 
hope that an end to months of political uncertainty is at hand.  The 
KSE-100 is up 11.71 percent since the first trading day of 2008, and 
up 49 percent since the start of 2007. 
 
¶3. (U) Overall market capitalization increased by Rs 5 billion (USD 
80.6 million) to a total of Rs 4.565 trillion (USD 73.6 billion). 
On February 21, trading took place in 376 stocks, of which 197 
recorded an increase in their share value and 143 recorded declines. 
 The value of 36 stocks remained unchanged. Trading was particularly 
heavy in the banking and cement sectors.  Ahsan Mehanti of Shehzad 
Chamdia Securities said that increasing oil prices in the 
international market, which crossed USD 100 per barrel on February 
20, also triggered fresh buying of oil and gas stocks. In addition, 
Mehanti believes that the announcement of election results spurred 
investor expectations for political stability. 
 
¶4. (SBU) Comment:  The Karachi Stock Exchange's performance 
following February 18 elections indicates both foreign and domestic 
investor confidence in economic policy continuity.  With 100 million 
consumers under age 25, increasing incomes, record corporate 
profitability in 2007, and a consumption-led growth model, Pakistan 
provides an attractive market for a wide variety of products. Stocks 
listed on the KSE are a bargain compared to other regional markets; 
recent gains and investors' considerable profits over the past 
several years have spurred renewed interested in Pakistan as an 
attractive investment destination.  We will watch to see if the 
KSE's bullish trend continues.  End comment. 
 
PATTERSON