Pak-US row intensifies

KARACHI: The Karachi Stock Exchange (KSE) plunged on Monday as the diplomatic row between Pakistan and the United States forced investors to dump shares, traders said.

The KSE 100-share index took a plunge of 341.83 points to 11,265.03 as Islamabad countered the US allegations about involvement of its top spy agency in cross border attacks in Afghanistan, they said.

“The US is the biggest trading partner of Pakistan and investors know that deterioration in relations [with it} is not good for the economy,” said Qasim Ali Shah, Head of Equities at Global Securities.

“We need some positive statements to calm the nerves. The market should rebound in the next session after such a steep drop, but you never know what might happen.”

Shares were expected to rebound because the State Bank of Pakistan (SBP) seems set to cut the key discount rate next month after the government rebased the Consumer Price Index, effectively lowering the official inflation number.

Many shares including National Bank of Pakistan (NBP), D G Khan Cement, Attock Refinery and Pakistan State Oil (PSO) closed down by almost five percent, the maximum decrease allowed in price of a share in one day.

The volume was at 79 million shares, which indicated the slide in the market was broad-based. But Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Pakistan Oilfields Limited (POL) contributed the most to the drop.

The petroleum producers were under pressure despite an increase in the international crude oil price, which rebounded on hopes that European leaders will take measures to boost their economies.

Director Arif Habib Investments Ahsan Mehanti said the market sentiment was also impacted by weaker Asian stocks and uncertainty in global markets over the debt crisis gripping some European countries. He said that there were fears that US economic and military aid could be jeopardized by the strained ties with the United States. Despite the plunge, foreign investors were net buyers of shares worth $1.024 million.

Sep 23 - Sep 26

EUR/USD -0.519 % CAD/USD -0.282 % JPY/USD +0.191 % AUD/USD -0.835 % GBP/USD -0.832 % GBP/EUR -0.315 % JPY/EUR +0.713 % GBP/AUD +0.003 % JPY/AUD +1.035 %

	USD	GBP	CAD	EUR	AUD
	1	1.55243	0.971996	1.34999	0.978684
	0.644148	1	0.626109	0.869599	0.630417
	1.02881	1.59716	1	1.38889	1.00688
	0.740741	1.14995	0.719997	1	0.724951
	1.02177	1.58625	0.993166	1.3794	1

Top Ten Gainers & Losers

Symbol	LTP	% Change	Traded Qty	Traded Value(in Lakhs)	Open	High	Low	Prev. Close	Latest Ex Date	Corporate Action
JPASSOCIAT	73.90	6.71	1,83,94,090	13,352.27	70.90	73.90	70.75	69.25	19-Sep-2011	Annual General Meeting And Dividend Re.0.40 Per Share
DLF	214.00	6.23	49,38,380	10,366.65	205.95	214.40	205.55	201.45	27-Jul-2011	Dividend-Rs.2/- Per Share
TATAMOTORS	155.85	6.20	94,11,397	14,476.61	151.35	156.40	150.60	146.75	12-Sep-2011	Face Value Split From Rs.10/- To Rs.2/-
BHEL	1,664.50	4.93	6,29,045	10,311.56	1,610.05	1,671.30	1,610.05	1,586.35	03-Oct-2011	Face Value Split From Rs.10/- To Rs.2/-
HINDALCO	134.30	4.35	78,53,704	10,475.27	133.00	134.90	130.70	128.70	14-Sep-2011	Dividend-Rs.1.50 Per Share
SAIL	108.50	4.33	14,91,102	1,603.23	106.00	108.90	105.65	104.00	10-Aug-2011	Dividend-Rs.1.20 Per Share
TCS	1,039.30	4.25	15,23,227	15,637.91	1,013.80	1,044.00	1,006.00	996.95	28-Jul-2011	Interim Dividend Rs.3/- Per Share
RCOM	81.40	4.23	65,05,725	5,265.08	80.00	81.90	79.70	78.10	15-Sep-2011	Annual General Meeting And Dividend Re.0.50 Per Share
RELIANCE	791.30	4.23	36,99,838	29,005.25	774.00	792.65	772.00	759.20	05-May-2011	Dividend-Rs.8/- Per Share
INFY	2,449.95	4.03	10,06,972	24,385.14	2,377.20	2,468.65	2,377.20	2,355.00	20-Oct-2011	Interim Dividend

Huge "market"

The fresher the fish the better the price at the market. The "stock market" is just that- a huge "market" where stocks are traded by many different vendors. Similar to the way other things are traded- like fish or vegetables at the old-world market, or cows at the cattle auctions- stocks are traded "at auction". Prices are determined by supply and demand- by sellers and buyers willingness to buy or sell at a certain price. As demand goes up, the price goes up, and so on.

Imagine, over 100 years ago, brokers literally shouting "I have 100 shares of Pacific Railroad for sale, how much will you offer me?" If a broker had an order to buy some stock he would shout "Someone sell me 100 shares of Pacific Railroad! Who has the best price?" You've probably seen some of that happening- in more modern times- in film clips of the Chicago Board of Trade where wheat, corn and pork bellies are bought and sold. Market trading is more organized now. Computers do the shouting.

Brokers arrange for the actual trades (isn't "broker" a funny name for someone that handles your money). A broker is someone who who sells stocks for a dealer. Charles Schwab is a dealer. The dealer holds inventories of stocks and sells them through the sales guy. The sales guy is the broker or the specialist. If a sell order comes across the computer at an attractive price, the dealer buys (through his agent, the specialist) , and adds this stock to his inventory. The brokers, and specialists, using computers, bring the dealers and investors together.

What makes the price of a stock change?
Companies are expected to earn profit. If profits increase, the stock price will likely increase. Even if investors think the earnings will increase, the stock price may go up. If good news comes out on a company, the price, and demand for the stock may go up. With bad news, the price and demand may go down. The price of a stock is even more dramatically affected when supply is very high or very low. It is not so uncommon for certain unscrupulous individuals to "create" news or other financial information, for the purpose of duping unsavy investors into creating a demand situation, into which, the unscrupulous-one "sells into" and makes an unfair profit. Investors beware.

U.S. economy in the short term

In an official statement to the International Monetary Fund, Geithner also discussed the need to both support the U.S. economy in the short term and take steps to lower the nation's long-term deficits.

But his strongest comments were directed at Europe, where the specter of a default by the Greek government has upset financial markets around the world. The nation's long-standing debt problems are threatening to spill over into the European banking system, with possible repercussions for the fragile U.S. economy.

While he praised the actions European leaders have taken so far, Geithner said more needs to be done to create a "firewall against further contagion.

OBAMA talk about the American Jobs

NEW YORK to be outdone by rival social networks Facebook and Twitter, LinkedIn hosted its own presidential town hall online Monday.

Appearing via a live video stream on LinkedIn and the White House web site, President Obama took to the social network to talk about the American Jobs Act and the economy.

The most important thing we can do right now is to help jump start the economy which has stalled, by putting people back to work," Obama said, touting his $447 billion American Jobs Act.

Obama cited estimates that forecast the plan would increase U.S. gross domestic product by 2%, and add about 1.9 million jobs.

Those figures match estimates from Mark Zandi, chief economist for Moody's Analytics, who is among the more bullish forecasters, while many others predict a slightly smaller impact from the plan.

Obama also took questions from LinkedIn members and employees vetted in advance, as well as some members who gathered for the live event held in Mountain View, Calif.

"My mom wants to know... what will happen to Social Security?" one audience member asked.

"You can tell your mom that Medicare and Social Security will be there for her, guaranteed," Obama said, adding that modest adjustments will need to happen to keep the safety nets in place.

The president proposed $3 trillion in spending cuts last week. While the plan did not include any specific reforms to Social Security, it proposes slashing $248 billion in Medicare spending, mostly by reducing overpayments in the system.