Worst ever crisis: KSE 100 Index declined by 57 percent in 2008

Pakistan's stock market witnessed worst ever crisis during the year 2008 and the benchmark KSE-100 index declined by 57 percent or 8,038.45 points to close at 6,037.38 points on December 30, 2008 with one more trading session remaining.
This was the worst ever-yearly decline in almost two decades ever since this index was formed in 1991, an analyst said. "Besides global sell-off, local factors also affected share values and worsening economic indicators, border tension and terrorism increased the risk of investment in Pakistan", Muhammad Sohail, senior analyst at JS Global Capital said.
Most importantly the crisis erupted by the three-and-half month of price floor that severely affected the confidence of both local and foreign investors, he said and added this crisis also led to the issuance of suspension notices to 32 brokers of the 3 bourses by the National Clearing Company of Pakistan Limited (NCCPL).
Out of 9 countries in MSCI Asian Emerging Market sample, Pakistan under performed all countries. MSCI will be excluding Pakistan from its MSCI EM Index effective December 31, 2008 due to what they believe is the deterioration of investment conditions on account of floor rule, he said.
It has been a brutal year for the global stock markets. Prices of almost all asset classes went down in the calendar year 2008 due to global financial meltdown. The US market's most tracked benchmark, the S&P 500, is down 41 percent since last year's close with only 2 trading days left in 2008. This is very close to the 1931's drop of 47.1 percent, which was the worst ever-yearly decline. Investors got panicky this year as a collapse originally thought to be confined to the US home mortgage sector morphed into a full-blown global credit crisis that now threatens to prolong global recession.
The MSCI World Index of 23 developed countries posted its worst annual loss of 45 percent in 2008. Similarly, MSCI Emerging Market (EM) Index and EM Asian is down 55 percent this year as credit-related losses and writedowns at financial firms pushed the US, Europe and Japan into the first simultaneous recessions since World War II.