By Farhan Bokhari, Special to Gulf News
Published: March 28, 2009, 23:03
Reports last week of a significant decline in corporate profits in the past few months must be troubling for the future of Pakistan's equity investors.
The Karachi Stock Exchange or KSE, the country's largest stock market, has seen its fortunes tumble badly in the past few months as share prices declined significantly, hitting the fortunes of many.
In the past week, the KSE has shown some recovery though that continues to be range bound. On the one hand, falling profits at a time of a considerable economic slowdown are bound to hit the outlook for Pakistani companies in a difficult period. Redundancies have already been reported as a follow-up to the phase where new hirings have practically been on a freeze.
On the other hand, the falling profits of companies are bound to have a cyclical affect. For instance, the increasingly constrained capacity of companies to expand would essentially mean that their ability to make significant purchases would also weaken. This outlook is bound to be complicated further with Pakistan's worsening internal security conditions. At a time when the country faces a fast growing menace of terrorism, economic conditions are bound to worsen.
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