CANADA STOCKS-TSX rattled by weak oil, political turmoil

TORONTO, Dec 4 (Reuters) - The Toronto Stock Exchange's main index fell to its lowest close in two weeks on Thursday as a slide in oil prices shook the resource-heavy market, while the suspension of Canada's Parliament weighed on sentiment.

Oil prices fell more than 6 percent to their lowest level in almost four years, pulling Toronto's heavily weighted energy sector down 7.46 percent.

A decision by Canada's governor general to grant Prime Minister Stephen Harper's request that Parliament be suspended until Jan. 26, amid opposition attempts to bring down his government, hurt sentiment since it likely means there will be no government plan to stimulate the economy until at least the new year.

The S&P/TSX composite index .GSPTSE closed down 239.14 points, or 2.88 percent, at 8,057.82 with seven of its 10 subindexes finishing lower.

Toronto's key index is now down 13 percent this week after falling in four consecutive sessions, including a whopping 864-point skid on Monday.

Shares of oil company Canadian Natural Resources (CNQ.TO: Quote, Profile, Research, Stock Buzz), which fell 13.45 percent to C$41.00, were the biggest drag on the index, followed by oil company EnCana Corp (ECA.TO: Quote, Profile, Research, Stock Buzz), which dropped 5.79 percent to C$49.82.

"Commodity prices are weak so that was a problem," said Tim Burt, president and chief investment officer at Cardinal Capital Management Inc in Winnipeg, Manitoba.

"And then with the government being suspended until Jan. 26 it basically means that we're not going to get any initiative out of Ottawa to try and stimulate the economy."

Some stimulus could come from the Bank of Canada, which is scheduled to announce its latest interest rate decision on Dec. 9. The central bank has slashed its key rate by 225 basis points since December, leaving its overnight rate at 2.25 percent.

A 2.45 percent slide by the financial sector, which makes up about third of the TSX index, was also a key driver behind the market's latest selloff.

The drop in the financial index came after three of the four Canadian banks that reported reporting quarterly earnings on Thursday posted lower profits and offered little in the way of outlook for 2009.

Shares of Toronto-Dominion Bank fell 1.36 percent to C$41.92, while National Bank shares dropped 6 percent to close at C$35.55.

Equities open lower, Sensex down 187 points

Mumbai (IANS): Indian equities markets opened marginally lower on Friday and then slid into negative territory on weak global cues with a key index down 187 points some two hours into trading.

Two hours into trading, the 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was ruling at 9,042.61, down 187.14 points or 2.03 per cent from its previous close on Thursday at 9,229.75 points.

The Sensex opened some 25 points lower at 9,204.69 points, hit a high of 9,340.69 before slipping to its current value.

The broader-based 50-share S&P CNX Nifty of the National Stock Exchange (NSE), also showed a similar trend and was ruling at 2740.50, down 47.5 points or 1.70 per cent from its previous close Thursday at 2788.00 points.

The BSE midcap index was ruling at 2,909.65, down 13.15 points or 0.45 per cent from its previous close Thursday at 2,922.80 points.

The BSE smallcap index was, however, still in the green and was ruling at 3,333.27, up 1.47 points or 0.04 per cent from its previous close Thursday at 3,331.80 points.

Overnight U.S. markets closed in the red with a key index of the New York Stock Exchange finishing 3.21 per cent lower. The Nasdaq index closed 3.14 per cent lower than its previous close Wednesday.

Asian markets were mixed with the Nikkei, key index of the Tokyo Stock Exchange ruling 0.08 per cent lower but the Hang Seng, key index of the Hong Kong Stock Exchange was showing gains of 1.93 per cent.

The underlying sentiment is still very much negative and so despite the surge Thursday, markets are again in a bear grip, analysts said.

Karachi Stock Exchange: Trading activities remain limited

Lacklustre trading activities prevailed unabatedly at the Karachi stock market on Wednesday as the economic turmoil and tight monetary policy of SBP remained a concern for investors, analysts said.
The Karachi Stock Exchange (KSE) 100-share index remained unchanged at 9,187.10 points. However, the KSE 30 index shed 23.12 points and closed at 9958.81 points as compared to 9981.93 points of the previous session. The KMI 30 index also remained unchanged at 11,224.18 points respectively.
The market turnover lost 108.12 percent and traded 0.041 million shares as compared to 0.197 million shares traded in the previous session. The overall market capitalisation declined by 0.07 percent and traded Rs 2.818 trillion as against Rs 2.820 trillion traded in the previous session. Out of 17 companies, two closed in the positive zone, six in negative while nine remained unchanged.
Analysts said that the depressed activities are expected to continue, as the bailout funds would take time for the IMF approval.
KSE’s proposal to lift floor on Dec 8 and funds arrangement to bailout the market failed to boost investors’ confidence as they wait for the outcome of various proposals sent to the SECP by the KSE’s management.
They said flag of hope came to half mast as reply to the proposal of ‘unfreezing’ from the final authority IMF is still awaited and a handful of optimists are losing the spirit as the views from the privileged (having access to the ultimate developments) suggest delay.
In the off market transactions, it was a healthy atmosphere, but the buyers were hard to find even at extended discounts, thus indicting that incase of further delay in regular opening the blue chip stocks will be trading at the rates of ‘peanuts’.
The only option left to restrict unprecedented decline is to completely shut down the operations at the KSE and give sufficient time to the authorities to address the likely threats on opening.
Pak Com Leas was the volume leader in the share market with 0.085 million shares as it closed at 56 paisas after opening at 56 paisas with no change in its value.
Habib-ADM traded 0.085 million shares as it closed at Rs 9.36 after opening at Rs 9.74 losing eight paisas. Pak Datacom Ltd traded 0.058 million shares as it closed at Rs 51.31 after opening at Rs 51.41 shedding 10 paisas.
Sitara Energy Ltd traded 0.50 million shares as it closed at Rs 20.52 after opening at Rs 19.62 gaining 90 paisas. Colony (Thal) traded 0.02 million shares as it closed at Rs 3.25 after opening at Rs 3.25 with no change in its value.
Like previous sessions, futures market continued to remain static as no activity was witnessed during the session.

THIRD SOUTH ASIAN CAPITAL MARKETS CONFERENCE-2009

Weekly Recap - Week ending

A horrible experience this year for investors got even worse this week. The losses in the major indices were material and new lows were set in this bear market move.

In fact, with the losses seen this week, the entirety of the gains recorded during the bull market move from the October 2002 low to the October 2007 high were wiped out at one point and the S&P fell to levels seen in 1997.

Uncertainty continued to be the albatross around the market's neck as some key corporate developments (or lack thereof) and a number of economic releases fed the market's concerns about not knowing how deep and how long this economic slowdown will last.

Among the more stunning developments this week was the collapse in Citigroup's (C) stock price. To be exact, Citigroup plummeted 60% to $3.77 per share, or nearly the equivalent of its ATM fee.

Balance sheet concerns were at the heart of the sell-off as burgeoning reports of growing weakness in the commercial loan category fanned fears that Citigroup, and the financial sector, would need to raise a lot more capital to offset losses.

Citigroup bore the brunt of the selling, though, as its management rankled investors Monday when it didn't indicate senior managers would forego bonuses this year, yet announced plans to cut up to 52,000 jobs from the bank's payroll.

That was dumb corporate development #1. Dumb corporate development #2 was the CEOs of the major U.S. auto makers flying to Washington on private jets to beg Congress for billions of dollars of taxpayer bridge financing to avoid bankruptcy.

Ignore the Stock Market Until February

Down in the morning, up in the afternoon. Or is it the other way around? The topsy-turvy stock market is tough to read.

In the last year, the Dow Jones Industrial Average has briefly been over 13,000 and below 8,000. The past month has felt like the Cyclone roller coaster on Brooklyn's Coney Island -- lots of ups and downs, the whole rickety thing feeling like it's going to crash at any minute.

Great investors are taught to listen to the market. Each tick of the tape has something to say about expectations for growth, inflation, policy changes and looming recessions. The stock market is like a giant mass of pulsing plasma doing price discovery and a game of hot potato, getting stocks into the correct hands with the right risk profile. It's way too big for any one person to manipulate, let alone touch directly. Instead, millions of us provide input with our buying and selling decisions.

When it's at its most efficient, with buyers and sellers neatly matched up at the right price, it's a pretty good predictor. The Crash of 1929 announced a recession, and the wake-up call unheeded might have caused many of the bad policies leading to the Great Depression. The Crash of 1987? Not so much.

You see, the market is a great manipulator. In September, the Dow dropped 700 points intraday after the House of Representatives voted down the Treasury's TARP bank-rescue bill. Spooked, the House passed the bill the next week. Or how about this? The Dow was up 300 points on Election Day applauding an Obama victory and then down 1,600 points since.

The market can also be a bold-faced liar. On Jan. 22, the Fed announced an emergency 75-basis-point rate cut in response to huge drops in European markets. A few days later, it came out that a rogue trader at Société Générale lost them $7 billion and the bank was unwinding his positions. Oops.

So which is it now: an efficient mechanism or a manipulating liar? Should you listen to it warning of doom or anticipating renewal? I'd say stick wax in your ears and don't listen to the market until February.

Don't get me wrong. The freezing of the credit markets is wreaking havoc on the world economy. Corporate profits are dropping. Central banks are fighting off deflation and may not turn off the spigots fast enough -- which could ignite runaway inflation. But because of the credit mess, I am convinced the stock market is at its least efficient today. Don't read too much into any move. Here are the five biggest dislocations taking place:

- Tax-loss selling: Whenever you have a loss in a stock -- and who doesn't -- it's always tax smart to sell it, take a tax loss and either buy something similar or wait 30 days and buy the original one back. December can be an ugly month of indiscriminate selling. The December effect will be huge this year.

- Mutual-fund redemptions: Mutual funds are also dumped for tax losses. When the stock market is down in the morning, it's usually because of mutual-fund redemptions.

Fidelity's giant Magellan fund, down 56%, is one of many in the $6 trillion stock-fund business having an awful year. As investors call or click to get out of these funds, Fidelity and the others have to unload shares the next morning to raise cash. This forced-selling overwhelms the system. New York Stock Exchange specialists, who are supposed to maintain an orderly market, stop buying and back away. You get huge drops, which can unnerve even more investors and cause them to redeem.

- Mutual fund cap-gain distributions: To make matters worse, in December mutual funds do capital-gains distributions. In a down year like 2008, you would think there are no taxes to pay. Think again. Legg Mason's Value Trust, run by Bill Miller, outperformed the market for 15 years by buying many "unvalue" names like Amazon. As investors redeem, he is forced to sell many of these stocks originally purchased at very low prices, triggering huge capital gains in a year his fund is down 62%. You can almost guarantee investors also will sell more of these funds to pay their unexpected tax bill.

- Hedge-fund redemptions: Instead of overnight selling like mutual funds, hedge funds typically require 45 days' notice for investors to get out of a fund. They've been furiously selling since September to raise cash to pay investors. This usually shows up as a set of stocks that just go down and down and down with no obvious explanation.

Rubbing salt in hedge-fund wounds is the fact that Lehman Brothers was a prime broker to many hedge funds, holding their shares. While Lehman's bankruptcy was not a problem in the U.S., in England the policy is to freeze accounts until the mess can be sorted out. There are billions in assets locked in this bankruptcy, and hedge funds are forced to sell positions in the U.S. and elsewhere to raise cash, exacerbating the downside here.

By the way, when hedge funds are down for the year, they work practically for free until they make up the loss. We'll see hedge funds close and stocks liquidated as -- no surprise -- hedge-fund managers like to get paid.

- Margin calls: Whenever stocks go down sharply, you quickly find who owns them with debt. We have seen spectacular margin calls, a requirement for more capital to cover share losses. Chesapeake Energy CEO Aubrey McClendon unloaded 33 million shares to cover losses. Viacom CEO Sumner Redstone had a forced sale of $400 million in Viacom and CBS shares because of a margin call on other stocks. You can bet many not-so-public margin calls are behind many huge price drops. These usually take place in the last 30 minutes of trading.

So won't January be alright once these dislocations weighing on the market are lifted? The January effect is supposed to be positive.

Well, often money managers are fired at the end of disastrous years. A new manager comes in, looks at the existing positions and dumps them all and remakes the portfolio with new stocks that he likes, thus generating more selling. My favorite Wall Street adage suggests that the stock market trades to inflict the maximum amount of pain. Remember, you can only ignore the stock market for so long. Once everyone thinks it can only go down . . . it might go up.

Mr. Kessler, a former hedge-fund manager, is the author of "How We Got Here" (Collins, 2005).

TradingMarkets 7 Stocks You Need to Know for Monday

Another roller coaster saw stocks rally from a steep sell-off after midday only to fade into the close.

The Dow lost 337.94. The Nasdaq Composite closed lower by 79.85. And the S&P 500 ended the day off 38.00.

Here are 7 Stocks You Need to Know for Monday.

In a memo to employees, Citigroup (NYSE:C - News) CEO said that the company's revenues are "strong and stable." The Short Term PowerRating for C is 7.

Sun Microsystems (NasdaqGS:JAVA - News) announced on Friday that it was cutting up to 6,000 jobs. The Short Term PowerRating for JAVA is 5.

Reporting a quarterly loss of more than $25 billion, mortgage finance giant Freddie Mac (NYSE:FRE - News) petitioned the U.S. Treasury for more than $13 billion in emergency funding. The Short Term PowerRating for FRE is 5.

Belgian brewer InBev won U.S. antitrust approval for its proposed acquisition of Anheuser-Busch (NYSE:BUD - News). Shares of BUD have gained more than 20% since making an oversold low in late October. The Short Term PowerRating for BUD is 5.

After a dramatic intraday reversal on Thursday, Dell (NasdaqGS:DELL - News) was one of the best performers in the S&P 500 on Friday, rallying by more than 6% intraday. The Short Term PowerRating for DELL is 7.

More retail earnings on deck for Monday. Target (NYSE:TGT - News) reports before the bell, with analysts expecting earnings per share of 0.49. Also reporting before the market opens on Monday is Lowe's (NYSE:LOW - News). Lowe's is expected to announce EPS of 0.28. The Short Term PowerRatings for TGT and LOW is 5 and 4 respectively.

Do you think Target will be Up or Down on Tuesday? Go to TradingMarkets.com to play the TradingMarkets' Up or Down Stock Contest for your chance to win $1,000 each month by correctly guessing the direction of a stock!

Sensex down 151 points in choppy trade

Domestic share indices ended 1 per cent down after a choppy session as traders unwounded positions ahead of the weekend as they expect more negative news flows from global markets next week, dealers said.

The Bombay Stock Exchange’s 30-share Sensex closed at 9385.42, down 150.91 points, or 1.6 per cent, after moving between a low of 9267.49 and a high of 9826.25. National Stock Exchange’s 50-share Nifty ended at 2810.35, down 38.10 points, or 1.3 per cent. Intraday, it moved between 2778.80 and 2938.80.

“Foreign funds sold today in most of the index majors. Also there was no support from domestic funds either. Everybody is expecting more bad news in store and perhaps overseas markets came off lows because of this,” an institutional dealing head said.

Moody’s Economy.com, a subsidiary of global rating agency Moody’s Investor Services, today said that India may face slowdown in foreign direct investment due to heightened risk aversion among investors.

Share indices had risen 3 per cent after headline inflation for the week to November 1 slipped to 8.98 per cent from 10.72 per cent the previous week, its lowest in nearly six months raising hope that the Reserve Bank of India may take more monetary measures.

Investors here ignored positive cues from European markets, which rose around 3 per cent today.

Turnover on NSE and BSE combined was Rs 14,457 crore today against Rs 13,881 crore on Wednesday.

KSE remains static on absence of positive news

KARACHI: The Karachi stock market did not show any change in its index on the last trading day of the week Friday as most of the investors stayed away from the ring on increase in discount rates and investors’ increasing concerns over uncertainty regarding floor unfreeze and government’s bailout plan of Rs 50 billion, analysts said.

The Karachi Stock Exchange (KSE) 100-share index remained unchanged at 9,184.09 points. The KSE 30 index and KMI 30 index also remained stable at 9,981.93 points and 10,003.99 points respectively. The market turnover went down to 13.63 percent and traded 0.57 million shares as compared to 0.66 million shares traded in the previous session. The overall market capitalisation remained unchanged at Rs 2.827 trillion. Out of 24 companies, five closed in the positive zone, five in negative while 14 remained unchanged.

Analyst at Aziz Fida Hussein and Company Husnein Asghar Ali said the likely impact of unasked doubts expressed by S&P rating agency over the likely stabilisation programme, was neutralised by the timely statement by the adviser to PM on finance, who reaffirmed the early claims that in near future the nation would receive billions of dollars from various donor institutions and economies.

Hopes of unfreezing have seemingly tarnished as the meeting held on Thursday has reportedly ended without any conclusion, however to keep the sensation, regarding unfreezing, modalities and date for the special session alive, yet another unconfirmed news of a meeting amongst officials engulfed the arena, meeting is said to be scheduled for Friday and then the next would be held on the 18th.

The only logic that could be established with the date is that the outcome of friends meeting and its support in reducing the pressure on unfreezing of the local bourses would be discussed. Analyst at Shahzad Chamdia Securities Ahsan Mehanti said investors await outcome of board of directors meeting with SECP to discuss market floor condition while foreign selling continued as downgrading of Pakistan foreign currency rating was decreased by a foreign credit rating agency.

National Assets was the volume leader in the share market with 0.14 million shares as it closed at 50 paisas after opening at 42 paisas making a financial gain of eight paisas. Mukhtar Textile traded 0.11 million shares as it closed at 54 paisas after opening at 53 paisas making a financial gain of one paisa.

No trading activity was observed in the futures market.

China shares fall as stimulus plan optimism wanes

SHANGHAI, China (AP) — Chinese shares fell Tuesday as optimism about the government's multibillion dollar stimulus package gave way to renewed caution about the economy and profit-taking, with losses led by financial stocks and other heavyweights.
The benchmark Shanghai Composite Index closed down 1.7 percent, or 31.19 points, to 1843.61 in thin trading. The Shenzhen Composite Index for China's smaller second exchange dropped 0.6 percent to 494.54.
"The package encouraged pessimistic investors yesterday, but it usually at least takes three months for policies to be implemented. And anything could happen during the period," said Xu Zhiyuan, analyst for Capital Edge Investment & Management. "Investors preferred to pull out and watch the situation more after getting in."
Investors also worried that falling inflation could turn to deflation, analysts said.
The government reported Tuesday that consumer prices rose 4 percent in October from the year-earlier period, down from a 4.3 percent rate in September.
Industrial & Commercial Bank of China Ltd., China's biggest commercial lender, fell 1.8 percent to 3.92 yuan. Bank of China Ltd. lost 1.5 percent to 3.24 yuan, and China Construction Bank Ltd. dropped 0.9 percent to 4.35 yuan.
Ping An Insurance Ltd. gave up 2.4 percent to 25.82 yuan after the company said it had no plans yet to raise new money, a move that analysts had said would indicate it believed the global economic downturn had reached its lowest point.
China Life Insurance, the country's biggest life insurer, sank 3.8 percent to 19.9 yuan.
Sinopec, or China Petroleum & Chemical Corp., Asia's biggest refiner by volume, tumbled 3.4 percent to 7.34 yuan. China's biggest oil producer, PetroChina Ltd., fell 2.1 percent to 10.99 yuan.
Construction-related shares bucked the trend as the government's stimulus package promised more spending on infrastructure.
Hebei Taihang Cement Co. surged by the daily limit of 10 percent for a fifth straight day to 3.82 yuan, and China Railway Erju Ltd. gained 5.4 percent to 7.37 yuan.
Real Estate giant China Vanke Ltd., rose 2.3 percent to 6.27 yuan, and rival Poly Real Estate Group, jumped 3.1 percent to 14.54 yuan.
On currency markets, China's yuan was traded 6.8273 against the U.S. dollar late Tuesday afternoon, down from Monday's close of 6.8266.

KSE-index remains unchanged, turnover at lowest ebb

KARACHI: Karachi Stock Exchange (KSE) today witnessed yet another dull and dreary day, as the investors with their shattered confidence preferred to abstain taking any risk and remained lackluster, which saw the volume of trade sliding down to a record low-level, while the KSE-100 index closed unchanged.Trading today althrough the session moved at snail’s pace, as the alarmingly deteriorating economic situation in the country and the apathetic attitude of the rulers kept the investors bewildered about the future state of business, who with their fingers crossed waited impatiently for some good news, when the market closed with no such thing in sight. The economic mangers dragging their feet on IMF package finalization and failing to take some positive measures halting the meltdown of the rupee value has further worsened the situation and drove the investors on the sidelines as mute onlookers.

Privatisation can yield $2-3bn

ISLAMABAD, Nov 4: The government expects to raise $2 billion to $3 billion from the sale of state-owned entities like the National Power Construction Company, Jamshoro Power Company, Faisalabad Electric Supply Company, Heavy Electrical Complex, and the Qadirpur gas field.Unveiling the privatisation plan on Tuesday, Privatisation Minister Naveed Qamar termed it the ‘cornerstone’ of the economic agenda to generate funds for bridging the balance of payment gap.The policy, discussed at a meeting of the Privatisation Commission, would focus on encouraging private sector’s role and minimising government intervention in state-owned entities.An official told Dawn that the meeting decided to submit a summary to the cabinet committee on privatisation for privatising the Small and Medium Enterprise Bank. The committee is headed by Prime Minister Yousuf Raza Gilani.The official said that recommendations about various other ongoing and upcoming sales would also be submitted to the committee.“The privatisation of public-sector entities will remain cornerstone of the government’s economic agenda,” Mr Qamar said, adding that the private sector had the “capability, expertise and resources to run the businesses” and the government should “only focus on policy matters”.An official announcement said that the minister directed the Privatisation Commission to exercise “utmost transparency”, while processing the transactions at different levels.The privatisation process “brings efficiency, enhances production, attracts fresh investment, creates new job opportunities, and generates (additional) revenue”, he said.The meeting also finalised the bidding schedule for the privatisation of the National Power Construction Company (NPCC) and formulated recommendations for the approval of the CCOP.Pak Elektron Limited (PEL), ICC (Pvt) Ltd, Al-Tuwariqi Steel Mills, Karachi, Saudi Cable Company Ltd, KSA, JS PE Management, Karachi, Alfanar Construction Company, KSA, and Zad Investment Company, KSA, have nearly completed the required process.The government will also expedite the process for the sale of 26 Pakistan Tourism Development Corporation (PTDC) motels and restaurants.

Profit booking snaps rally; Sensex ends 5% lower

MUMBAI: The pull-back rally that began two weeks back came to an end Wednesday as traders booked profits. The global markets once again faced the gloomy reality of recessionary pressure after the US presidential elections were over.
Bombay Stock Exchange’s Sensex closed at 10,120.01, down 511.11 points or 4.81 per cent from the previous close. The index touched an intra-day low of 10,051.52 and high of 10,945.41. It was 50 points short on either side of breaching the psychological levels 10,000 and 11,000. National Stock Exchange’s Nifty ended below crucial support of 3000. The index fell 4.68 per cent or 147.15 points to close at 2,994.95. It touched an intra-day low of 2971. The indices have gained over 40 per cent since the lows of Oct. 27. “Global markets gained momentum in last six days. We are in the middle of bear market rally and a correction was on expected lines. Market will remain in a trading zone unless it crosses 10,800 on the Sensex. On the down side, 2250 level on Nifty seems unlikely to be broken,” said Manish Sonthalia, vice president, equity-strategy, Motilal Oswal. One of the reasons for the sharp correction was the fall in Reliance Industries. The oil & gas major, which holds 15 per cent weight in the Sensex, ended 12.76 per cent lower. The index heavyweight fell on reports that it has shut down five polyester units at its Patalganga plant soon after offering exit option to it employees. “The correction in Reliance Industries was mainly on account of fall in petrochem product prices which have declined 20-40 per cent in the past four months. Any fall in petrochem prices results in equivalent drop in EBITDA margins. GAIL also bore the brunt (down 15%),” Sonthalia said. Secondline stocks, however, fared better than their larger brethren. BSE Midcap Index ended 1.5 per cent lower and BSE Smallcap Index declined 1.74 per cent. Tata Steel (-10.05%), Reliance Communications (-9.5%), DLF (-8.79%), Jaiprakash Associates (-10.01%) and HDFC (-8.63%) were also badly beaten. Wipro (2.72%), Satyam Computer (0.27%) and Maruti Suzuki (0.08%) managed to end with gains. Amongst the sectoral indices, BSE Oil&Gas Index ended 9.44 per cent lower, BSE Metal Index slumped 6.88 per cent and BSE Realty Index declined 5.64 per cent. Market breadth, which was extremely strong at open, turned weak as profit booking set in. On BSE, 1,565 declines outnumbered 1,000 advances. Meanwhile, rally in European markets was arrested as economic problems took centrestage. FTSE 100 was down 1.82 per cent, DAX 30 declined 1.16 per cent and CAC 40 fell 2.25 per cent. In the US, stock futures dropped as traders focused on the deteriorating economy that newly elected president Barack Obama will have to take care of. Dow Jones futures were down 0.54 per cent, S&P 500 futures fell 0.75 per cent and Nasdaq futures declined 0.58 per cent.

CORRECTED - FOREX-Dlr recovers on weak stocks, ECB, BoE eyed

LONDON, Nov 5 (Reuters) - The dollar inched up against a basket of currencies on Wednesday, supported by weaker European shares as fears of a recession kept risk appetite low, while a decisive win by Barack Obama to become the next U.S. president also bolstered the currency.
The U.S. currency recovered its footing after sliding roughly 2 percent on a trade-weighted basis on Tuesday, but gains were limited as a slide in dollar interbank lending rates showed that tensions in money markets were starting to subside, easing some demand for the currency.
The euro and sterling were pressured lower after dismal figures offered more evidence that their economies continue to weaken, adding to the argument for big interest rate cuts by the Bank of England and the European Central Bank on Thursday.
The dollar initially rallied on the announcement that Democrat senator Obama had won the presidency [ID:nN05502158], and analysts said that a big slump in the euro zone services sector and weak UK output data also helped to prop up the U.S. currency, which suffered steep losses in the previous session.
Dismal economic data pushed European shares 1.6 percent lower on Tuesday, and analysts said that demand for high-risk positions, including assets in euros, sterling and other high-yielding currencies, would remain low as evidence of a global recession continues to mount.
"If we keep getting bad economic data, it will get harder for equities to keep rallying," said Adarsh Sinha, currency strategist at Barclays Capital in London.
"And so it will become more difficult for the dollar and the yen to weaken."

HK stock index slides 2.5 pct after recent gains

HONG KONG (AP) — Hong Kong stocks fell Friday as investors took some money off the table after three days of spectacular gains.
The blue-chip Hang Seng Index shed 361.18 points, or 2.5 percent, to 13,968.67.
The benchmark has lost more than 48 percent this year.
After soaring 12.8 percent Thursday, investors were bound to cash in their profits given the extreme volatility in recent months.
"The markets are too risky to hold for a long period of time," said Castor Pang, an analyst at Sun Hung Kai Financial. "They want to make money quickly instead of long-term investing."
A less-than-expected rate cut from Japan's central bank Friday also weighed on the market, Pang said.
Financials were mostly lower, with HSBC Holdings off 3.6 percent to $92 Hong Kong dollars and top Chinese lender Industrial & Commercial Bank of China Ltd, or ICBC, down 3 percent to HK$3.54. Insurance giant China Life lost 4.5 percent to HK$20.35.
Troubled conglomerate Citic Pacific Ltd. halted trading in its shares pending an announcement. Earlier this month, the company revealed more than $2 billion in losses from bad bets on foreign currencies.

Rs 20 bln market support fund in next two days: Tareen

KARACHI, Oct 31 (APP): Advisor to the Prime Minister on Finance Shaukat Tareen said Friday that Rs 20 bln stock market stabilisation fund will be launched in the next couple of days and much before the removal of flooring. Addressing the members of Karachi Stock Exchange (KSE), he said that NIT is managing the fund which has four shareholders having an investment of Rs 5 billion each. They are National Investment Trust (NIT), National Bank of Pakistan (NBP), State Life Insurance (SLIC) and Employees Old-age Benefit Institute (EOBI).
He said the government will provide a guarantee to them that they will not lose value of their money. We do not force these institutions to form up a fund. We are doing this for the government itself because we are buying government’s scrips.
“We have decided to make a bouquet of these scrips and sell the fund to non-resident Pakistanis. This will convert rupee into dollars and serve as an investment instrument to overseas Pakistanis, he added.
Shaukat Tareen made it very clear that first of all small investors will benefit from this fund followed by other players in the market. NIT will handle this fund very, very professionally, he observed.
However, he categorically said the removal of flooring was a total discretion of KSE board of directors and the government will not interfere in this affair. “You have to decide when you want to remove the floor on 100-Index and not me”, he maintained.
He said the stock market serves as the barometer of any economy and the government will take care of the interest of its stake-holders. “Your interest will be taken care off.”
Referring to the fears of business community about the future of the economy, PM’s Advisor on Finance said the government will stabilise some macro economic indicators by improving liquidity and foreign exchange reserves to boost the confidence.
However, the Advisor suggested that nobody should tamper with the market. “Markets go up and markets go down. It is a “tough luck” when your bet goes down and it is “good luck” when your bet goes up. It is the part of the market. Once you tamper it you are, in fact, tampering with your reputation.”
He said in his opinion, the putting up of flooring has not done much good to their reputation.
Shaukat Tareen said that from now on the country will move with production-led growth and focus on productive areas of the economy which are agriculture and manufacturing and trade.
We have not focussed on agriculture sector in an organised manner and therefore agriculture growth has been falling by one percent every decade and we are currently having under 2-percent growth, the Prime Minister’s Finance Advisor said.
“This is unfortunate, because two-third of our population lives in rural areas, while its share in GDP is 20 percent. As a result we are importing food”, the PM’s Advisor observed.
Similarly, the growth rate in manufacturing sector is negative, 3.8 percent in the first quarter of current fiscal. Last year too, this sector grew at 3.5 percent. “We need to look at the reasons whether it is high cost of doing business or fragmentation.”
“We have to tackle all this to ensure a sustainable growth rate in our industry. We have to make all our industry competitive so that it can compete in the international market as well as have a defence against imports”, he said.
Tareen said once the industry is competitive, the country will have a balance in its trade.
He pointed out that the country needs to have an integrated energy plan so that there is uniformity in tariff and investors feel that there is a fair market based system.
This plan should also look at how coal, alternate energy sources and hydel energy is utilised, he said and added that human resource should also be developed by focusing it.
Talking of financial market, Shaukat Tareen said the banks need to cater to the needs of all stakeholder, offer new product and they must expand their reach.
Besides, we need to develop debt market and expand capacity of stock exchanges in terms of more products, more sophistication and more investors and the government must help the investors in this regard.
The government has taken a lead by establishing a “yield curve” through a regular auction of Pakistan Investment Bonds and long term paper auction, the PM’s Advisor onFinance said.
He said Planning Commission is being restructured and strengthened and it will devise future policies in consultation with all stakeholders.
Responding to a question about IMF’s conditionalities, the Advisor said inflation has to be brought down to enable the economy to grow on a sustainable basis.
“If headline inflation is 25 percent and core inflation is at 17 percent then nothing is going to be competitive in the country including the manufacturing sector. We will do whatever we can to bring down inflation in the country”, he noted.
He said the IMF was buying whatever Pakistan was telling them. “It is a homegrown plan. We are not trying to inflict any more pain than necessary. I assure you that we will not take any step which is not necessary,” he maintained.

SGX, Karachi Stock Exchange sign MoU

KARACHI: Singapore Exchange Limited (SGX) and Karachi Stock Exchange (KSE) Wednesday signed a Memorandum of Understanding (MoU) to collaborate for the benefit of the financial services industries in Singapore and Pakistan.

The MoU aims to foster a closer relationship between both exchanges. This includes sharing best practices regarding each exchange’s products as well as the operation and governance of their respective markets. Mr Hsieh Fu Hua, Chief Executive Officer of SGX said, “This MoU fosters a closer relationship between the two exchanges. We look forward to working with KSE to help develop our respective financial markets.”

Adnan Afridi, Managing Director of KSE said, “Collaborations amongst exchanges have been increasingly important in the development of the emerging capital markets. A lot can be learnt from SGX on the demutualisation front as KSE is currently in the process of demutualisation.”

KSE board decides to keep market floor in place

KARACHI: The board of directors of Karachi Stock Exchange (KSE) on Thursday decided to keep the market floor in place, however didn’t give an exact date for its removal or further review as was practiced earlier.A statement issued by KSE after the meeting of board of directors didn’t explicitly mentioned the decision taken on market floor and just stated: “All stakeholders including KSE would like the market to return to normal trading parameters at the earliest.”“We may expect this to happen within month of October and final outcome of the discussion will be reached shortly after Eid,” the meeting observed while reviewing the market floor second time during the current month. Well-informed sources confided that market floor could be lifted sometime in mid of October following introduction of a fresh fund, being worked out by the government to stabilise the stock market.“The size of the fund is yet to be announced, however it has been decided in principle to create this fund and it might be in the range of Rs 20 to Rs 30 billion,” sources disclosed.Dawood Jan Mohammad, Member-Director on KSE board when contacted declined to give further details of the meeting. “Whatever we want to share with media has been mentioned in the official statement,” was the brief response of member about the today’s deliberations of the meeting and said that after Eid, the matters would be taken up for review. The statement further stated that KSE has been in discussions with a wide range of stakeholders on a comprehensive road map to enable the market to return to normal trading parameters. Recent events in the global equity markets have further highlighted the need to develop an integrated package so that the Pakistani capital markets can operate in a stable manner. In this context discussions are going on with the Ministry of Finance, Economic Advisory Council and Securities & Exchange Commission of Pakistan.The KSE has been placed under the floor since August 27, 2008 to prevent it from plummeting after it plunged from its record levels of 15,776 points in mid April this year to below 9000 level.All eyes are now set on the government for a bailout plan for the market which, according to market players, needs the government’s help in this crucial situation. The KSE MD accompanied by three top brokers met Governor SBP few days back to discuss the situation in the market and sought the help with the regard to injection of liquidity in the market.“Government will have to come to rescue the market because it still holds 50 percent of the total equity. If market loses further, it will not be a good omen for the foreign investors and the capital flight may increase further,” Siddique Dalal, a broker said while deploring that least was done so far on the part of the government to stabilise the market.A former member-director on KSE board Haji Ghani said that the creation of new fund of Rs 20 to Rs 30 billion almost looked certain and it will hopefully support the market to a great extent.

POL, ARL and APL announce dividends

KARACHI: Attock Refinary Limited (ARL) has announced Rs 8.00 i.e. 80 percent final cash dividend for the year ended June 30, 2008. Company also announced bonus share in the proportion of one share for every five shares, Karachi Stock Exchange announced on Thursday. ARL posted Rs 6.147 billion profit after tax during the year under review against Rs 748 million in the previous year. EPS also rose to Rs 28.24 during the year against Rs 7.10 in the previous year.Attock Petroleum: Attock Petroleum Ltd. (APL) declared final cash dividend of Rs 20 per share i.e. 200 percent for its shareholders in the year ended June 30, 2008.It also announced 20 percent bonus shares for the said year, KSE announcement said on Thursday.APL earned Rs 2.641 billion in 2007-08 compared to Rs 1.728 billion during the last year and company’s eps also jumped to Rs 55.03 during the year under review over Rs 36.01 in the previous year. Net sales rose to Rs 60.130 billion in the year under review compared to Rs 49.939 billion in the previous year whereas cost of production also saw substantial increase during the year.Pakistan Oilfields: Pakistan Oilfields (POL) announced final cash dividend at Rs 16 per share i.e. 160 percent for ended June June 30, 2008, KSE announced. Company also declared 20 percent bonus shares for the year under reveiew.According to financial results for 2007-08, the profit after tax jumped to Rs 8.616 billion in 2007-08 over Rs 5.939 billion in the previous year whereas eps soared to Rs 43.71 in the said year against Rs 30.13 in the previous year. The net sales also spiked to Rs 16.739 billion from Rs 14.239 billion a year before. staff report

world stock markets rebounded

NEW YORK (AFP) – The dollar firmed sharply Monday after Federal Reserve chief Ben Bernanke backed the idea of a second US economic stimulus package and world stock markets rebounded.

The euro sank to 1.3343 dollars around 2100 GMT from 1.3408 dollars late Friday. On Monday it briefly touched a 10-day low under 1.33 dollars.

Against the Japanese currency, the dollar rose to 101.77 yen from 101.63 yen on Friday.

Sentiment was buoyed when Bernanke threw his support behind a second stimulus package this year to jump-start the sluggish economy, battling tight credit, falling house prices and rising unemployment.

"With the economy likely to be weak for several quarters and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," he said in testimony before the House of Representatives budget committee.

Wall Street stocks closed in a powerful rally after the White House said it was open to considering a second stimulus for the economy, reeling from the worst credit crisis since the 1930s Great Depression.

"Such a move would raise speculation that the proactive efforts by the US over the past year leaves them in a better position compared to regions like the eurozone and UK," said Terri Belkas, currency strategist at Forex Capital Markets.

Belkas said that the Bank of England's key rate, pegged at a "relatively restrictive" 4.50 percent, was "leaving the nation likely to tip into recession."

In other dollar-friendly news, the Conference Board said its composite index of leading economic indicators in the United States, covering the coming six months, unexpectedly edged up 0.3 percent in September, the first increase in five months.

"It seems that the market is currently in some kind of transition period between developments purely driven by financial news and 'normal' market conditions, as suggested by the cautious recovery in the money markets," Commerzbank analysts said in a statement.

In late New York trade, the dollar leapt to 1.1501 Swiss francs from 1.1369 late Friday.

The pound fell to 1.7164 dollars from 1.7280

European markets up ahead of Wall Street open

European markets buoyed by falling money market rates, expected strong Wall Street open
LONDON (AP) -- World stocks rose Monday ahead of expected gains on Wall Street as confidence appeared to be returning to money markets.

Britain's FTSE 100 index of leading shares was up 88.49 points, or 2.2 percent, at 4,151.50, while Germany's DAX was 52.53 points, or 1.1 percent, higher at 4,833.86. The CAC-40 in France was 59.25 points, or 1.8 percent, stronger at 3,389.17.

hose gains follow the 3.6 percent advance on Japan's Nikkei 225 to 9,005.59 and the 5.3 percent jump in the Hang Seng index in Hong Kong to 15,323.01.

Wall Street was also headed for a higher open Monday ammid as investors cheered signs that global credit markets are thawing even as they awaited a batch of quarterly earnings to see how companies are weathering the financial crisis.

Ahead of the market's open and the release of earnings reports, Dow Jones industrial average futures rose 251, or 2.9 percent, to 9,022. On Friday, the Dow ended 127 points lower.

Stock markets have been buoyed by the fall in interbank lending rates in light of the flurry of governments efforts to put money into banks over the last couple of weeks, and by coordinated interest rate reductions and massive liquidity boosts by central banks.

"It's crucial for the stability of financial system that money market rates, effectively the lifeblood for markets, are coming down," said Neil Mackinnon, chief economist at ECU Group.

"We've moved away from outright meltdown on the back of the measures taken by governments and central banks and there is some semblance of stability returning to the markets," he added.

Data earlier confirmed that money market rates are falling. The interbank lending rate for three-month dollar loans fell for the sixth day running Monday and by its biggest daily amount since January. It dropped 0.36 percent to 4.06 percent, while the three-month Euro Interbank Offered Rate, or Euribor, fell almost 0.05 percentage points to 5.00 percent.

Overnight, the Hong Kong interbank offered rate, known as Hibor, for three-month loans tumbled to 3.66 percent from 4.19 as the territory's de facto central bank pumped more money into the financial system.

Abnormally high interbank lending rates have been a sign of distress in credit markets and been the catalyst for the crisis in the financial markets over recent weeks. High interbank rates can choke off credit to businesses and individuals, hurting the economy.

Even if Libor rates continue to decline, analysts say stock markets will not be out of the woods given the sharp economic slowdown likely to occur over the coming months, which will become more and more evident as companies report their latest earnings.

"Volatility in financial markets is unlikely to diminish while investors worry about the health of the financial system and the risk of a recession and leveraged investors scramble to close positions," said Tony Dolphin, director of economics and asset allocation at Henderson Global Investors.

Big beneficiaries Monday were financial stocks, particularly on Britain's FTSE, with Lloyds TSB PLC and Royal Bank of Scotland PLC both 3 percent higher. The biggest gainer in Europe was Amsterdam-listed ING Groep NV after the Dutch government injected euro10 billion ($13.4 billion) into the financial company over the weekend. Its shares were up 23 percent, almost recouping most of last Friday's losses.

Energy stocks, such as BP PLC and Royal Dutch Shell, were also up as oil prices rose another $2.37 a barrel to over $74.22 on mounting talk that OPEC will cut production at the end of this week in an attempt to shore up prices that have fallen by 50 percent in three months.

Earlier in Asia, South Korea's Kospi climbed about 2.3 percent after the government's announcement Sunday to provide up to $100 billion to secure banks' maturing foreign currency debt and another $30 billion for the banks. Financials led the way, with Hana Financial Group up 8.4 percent and KB Financial Group Inc., the holding company for top South Korean lender Kookmin Bank, adding 3.2 percent

Mainland China shares, meanwhile, recovered early losses to edge higher in spite of new government figures showing the country's economic growth eased to 9 percent in the third quarter of this year -- its slowest in more than five years.

The reading, while still robust, fed into anxiety that deteriorating financial and economic conditions around the world were damaging Asian growth.

Investors, though, were relieved by lower third-quarter inflation data and pledges of fresh government intervention to support the economy. Shanghai's key index, down more 0.7 percent in the morning, ended 2.25 percent higher at 1,974.01.

In Tokyo, shares moved higher amid hopes for better-than-expected corporate earnings. Panasonic Corp. jumped 8.87 percent after the Nikkei business daily reported over the weekend that, helped by strong TV sales, the electronics giant would beat its interim operating profit forecast by more than 20 billion yen ($197.3 million).

The dollar was little changed at 101.76 yen, while the euro was steady at $1.3418.

AP Business Writers Jeremiah Marquez in Hong Kong, Elaine Kurtenbach in Shanghai, Kelly Olsen in Seoul, Stephen Jacobs in New York and AP Writer Tomoko A. Hosaka in Tokyo contributed to this report.

Stocks open higher as investors watch earnings

Wall Street heads higher as investors weigh 3rd-quarter earnings, Bernanke testimony NEW YORK (AP) -- Wall Street is up sharply in early trading as global credit markets are showing signs of easing. One of the signs: a big drop in the bank-to-bank lending rate known as Libor.

After two weeks of extreme volatility on Wall Street, investors are hoping that an improvement in the credit markets will mean stocks have reached a bottom.

They're waiting to see what Federal Reserve Chairman Ben Bernanke has to say about the financial system and the economy. He's scheduled to testify before the House Budget Committee.

Meanwhile, hundreds of companies are reporting earnings this week, and investors will be looking to see what their outlooks are for the coming quarters.

The Dow Jones industrials are up 105 points at the 8,957 level.

KSE gains 2.9 pts, volumes continue to fall

KARACHI: The Karachi stock market witnessed a positive trading week on support from buying activities as increased expectations of funding by World Bank and Asian Development Bank in economic assistance to Pakistan raised investor’s confidence, analysts said on Saturday.

The Karachi Stock Exchange (KSE) 100-share index gained a modest 2.9 points or 0.03 percent to close at 9,184.24 points as compared with previous week’s 9,181.35 points.

While the continuation of the price floor mechanism is hampering activity in the normal market, more than normal off-market transactions have been witnessed since there is no price limit prevailing there.

The average turn over volume plunged to 0.193 million shares compared to 1.83 million shares traded previous week.

Muneeba Saeed, Analyst at Invest Cap Research said volumes at the KSE fell to 0.193 million shares on Friday, a level witnessed never before, on the back of shattered investors’ confidence. Despite attractive valuations, the KSE 100 index remained frozen at the same level throughout the week, highlighting abysmally low investors’ interest.

Although the KSE board’s decision to finally remove floors and the declining value of oil in the international market was expected to provide support to the local bourse, but the declining rupee against the dollar and depleting forex reserves fanned panic amongst investors.

Atif Zafar, Analyst at JS Global Securities said in his comments with hardly any activity in the official cash and derivatives counter, substantial increase in transactions at the off-market counter was seen.

A portion of the transactions in off-market are the actual buying and selling of the investors, thus reflecting the true market value of the stocks. Based on this week’s transaction, we estimate that KSE index is expected to close at 7,400 points, 19.4 percent down from the official closing of 9,184 points. At the normal counter, average daily volumes last week were at record low because buyers were getting shares at discounted prices in the off-market.

With CFS rate jumping to a 7-year high of 63 percent on October 9, 2008 and many investors unable to rollover their position, the regulator decided to roll over positions forcefully. On Oct 14, 2008 NCCPL decided that investors having position as of October 9, 2008 would have their contract extended for another 22 business days.

This forced rollover reduced activity at the CFS counter. Hence, average daily volumes in CFS declined to 0.3 million shares or Rs 21.9 million only with CFS rate closing the week at 59.46 percent.

Ahsan Mehanti, Analyst at Shahzad Chamdia Securities in his comments over reasons for positive index said recovery in Asian capital markets, easing liquidity crunch, positive expectations regarding maintenance of price floor up to October 27 and hopes on market recovery after PM advisor’s appointment helped investors’ sentiments get positive. staff report

SBP to ask banks to accept property as collateral, KSE assured

KARACHI - State Bank of Pakistan Governor Shamshad Akhtar has assured the directors of Karachi Stock Exchange to direct the scheduled banks to accept the property and other tools as a collateral to lend money to the investors of share market in order to match the margin exposures.
Governor SBP has further assured the directors of KSE to do her utmost for resuming CFS lending, as the banks have halted the CFS lending, owing to concerns over the default of brokers.
The governor SBP said this in a meeting with the directors of KSE that called on her at SBP office on Saturday.
Sources said that directors of KSE met with the governor SBP and sought her assistance to deal with the toughest liquidity crisis in the stock, keeping in view about the expected panic selling after the removal of floor from October, 27, 2008.
Sources, who attended the meeting, said that a number of issues were discussed with the governor SBP and her team to highlight the areas where the SBP could support the stock market in order to reduce the concerns on liquidity related issues.
Sources said that response of governor SBP bank was highly positive and she had realized that stock markets were in great pain over the couple of months and the pain would go from bad to worse if there will be no immediate injection of substantial funds, especially before the removal of floor.
Sources said that they had requested the SBP governor to take rescue measure for the stock market, as she had taken for the banking sector to alleviate the liquidity crunch in the sector.
Sources said that liquidity crisis was the main issue of today’s meeting and there will be additional meetings with the SBP governor on coming Monday and Tuesday as well to chalk out a strategy to counter the threats that were being expected to emerge after the removal of floor.
APP adds: State Bank of Pakistan on Saturday accepted bids of Rs 5,448m during its Reverse Repo Open Market Operation (Injection) in Govt of Pakistan Market Treasury Bills and Pakistan Investment Bonds. This injection is of the two categories �" 07 Days and 14 Days. The rate of return was 12pc and 12.15pc respectively. The total amount offered was Rs 23,198m, says SBP statement here on Saturday.

Still confused by the credit crisis? Then, read on ...

Bemused by the banking crisis and the stock market madness of recent weeks? Business Editor Margareta Pagano answers the key questions

Is the worst of the worldwide crisis in banking now over ?

Governments have committed a total of $2 trillion to be injected into the banking system. Here in the UK, for example, the Government is pumping £39bn into three of the our biggest banks – Royal Bank of Scotland, Lloyds TSB and HBOS – by buying shares in them to provide new capital. The aim is to strengthen the banks' balance sheets so that they can start lending to each other again, and to their customers. But the most important objective is restoring confidence in the financial markets. It's too early to tell whether this has been achieved. But the way the world's leaders took such committed action last weekend to put together this co-ordinated action appears to have gone far to prevent a systemic collapse. Don't take too much notice of the volatile reaction of the stock markets last week after the news was announced. The markets are now looking forward to the next crises – the unwinding of the derivatives market and recession.

Who isto blame?

We all are, to some extent. Over the past decade the US and UK governments allowed people and companies to borrow too much and too cheaply. In the US, mortgage companies were offering "teaser" mortgages at only 1 per cent, so when interest rates were raised, many could not afford to meet the new mortgage payments – leading to the so-called sub-prime market. In the UK, banks were lending money to people to buy mortgages at 100 per cent. They were also encouraged to take on more credit. With house prices rising, everyone felt wealthy and so they replaced equity in their house for debt to fund the next holiday. Savings ratios crashed. But then last year Northern Rock collapsed, sending shivers through the financial system because it could not raise enough money to meet the demands of its depositors. So you could say governments were to blame for allowing the debt mountain to grow, the financial regulators for not keeping a tighter control over the banks who lent beyond their means too, and the public for indulging in their debt addiction.

Why won't the banks lend to each other?

They have been too scared. They have been nervous about lending because none of them had confidence in each other. This was because none of them knew exactly what sort of exposures they had to the US sub-prime market and other securitised loans.

Who controls the half-nationalised banks? Their shareholders or taxpayers?

Details of the UK bailout are still being worked on. At the moment it looks as though the Government may end up owning some 60 per cent of the shares in Royal Bank of Scotland because it is investing about £20bn in the bank. The Government will put directors on the board and will take part in the bank's everyday decision-making; just as it is doing with Northern Rock and Bradford & Bingley. But in reality this means the taxpayer indirectly owns those shares because the Government is raising the money going into the banks by raising new gilt-edged bonds – in other words, the public debt which we all own as citizens. The case of Lloyds and HBOS, which are merging, is different because the Government will be a minority shareholder. But it will still put a representative on the board. The rest of the shares in the banks are owned by the City's big investors, the pension funds, and insurance companies. They are angry at the Treasury's decision not to pay out dividends for at least a year until the Government's preference shares are paid. But the Government's plan is to return the banks to the private sector as soon as it can.

What is moving the markets up and down at the moment?

Stock markets move with events, but they also try to take account and predict the future. So the equity markets are volatile and fragile at the moment because now that they have been assured that the banking system is not going to collapse, they are looking ahead to what will happen to companies' profits as we head into recession. That's why the UK FTSE 100 index and the US Dow Jones index saw hairy trading last week: the big institutional investors, the hedge funds and retail investors were busy selling shares in companies which they think will suffer from the economic downturn. On the commodity markets investors were also selling natural resources such as metals and oil, because if the world goes into recession there will be less demand for these products. Only gold shot up again last week because it is seen as the safest commodity of all.

If the markets are going down, what has that got to do with me?

Everything. The markets work together like a great big machine and we are all connected. If you have a pension, then this is invested in the companies that are listed on the market and your pension comes from the dividends earned by those companies. For example, the big pension funds and insurance companies such as the Prudential or Standard Life are some of the biggest investors in the UK stock market as well as in those overseas. They also own government bonds. So if those prices fall, the value of your pension falls along with them. Those people who are retiring this year or next will have been severely hit by this bear market.

Why are some people predicting the FTSE will be at record levels in 18 months ?

Some economists reckon that's when we will be coming out of recession. It's based on forecasts that the world's big economies – the US, China, India, Russia and the growing markets of the Middle East – will by then be recovering and trade gets going again. That means British companies, particularly those with big overseas exposure, will do well and so will their share prices.

How will we know when the worst of this banking crisis is over?

If only we knew. If the banks can recapitalise smoothly and start lending again, then this will be an enormous boost of confidence to the "real economy". It means they will start lending money for mortgages again and to the corporate sector. When we hear that companies are having no problems in raising money for new investment, that will be a good sign.

How bad is the global economy looking ?

Touch and go. China, the powerhouse of the world, is slowing down, but it's economy is still expect to grow at 9 per cent next year. But it won't prevent us from tipping into recession. Other trouble spots in the world are Ukraine, Hungary, the Baltic states and Turkey – even Switzerland had to save its banks last week. Then, of course, there are fears over the $513bn ticking time bomb of the derivatives market, which may go off at any time.

How much worse is it going to get?

Next year will be tough. Economists reckon we have now officially hit recession in the UK. Unemployment will exceed two million by the end of this year; house repossessions are rising, and investment in business is falling. Retailers are getting ready for the worst Christmas since the late 1980s. But interest rates will be slashed and inflation will come down as oil and food prices drop. And the recession will last only a year.

The downturn in numbers

4.8%

Annual sales fall announced by the John Lewis Group last week

2m

Projected unemployment figure for December. About 1.79 million out of work now

11.5

Average number of sales per estate agent last quarter – a 30-year low

£467

Battle-scarred Reykjavik stock exchange resumes trading

REYKJAVIK (AFP) - After three full days of suspended trading, a disfigured Reykjavik stock exchange reopened Tuesday, shorn of the financial stocks that were long the cornerstone of Iceland's economy.

Due to "unusual market conditions," the Icelandic stock exchange, which had shed more than half its value since the beginning of the year, first suspended trading in all financial stocks on October 6 before shutting down completely on Thursday.

When the bourse finally reopened its doors Tuesday morning, its OMX15 index immediately plunged more than two-thirds compared to its last close less than a week earlier.

Market officials quickly insisted the astounding 76 percent figure was misleading since the country's three largest banks, which had accounted for three quarters of the exchange's value, had been removed from the index after they were nationalised last week.

Other financial stocks would remain on the index, the bourse said, but would not resume trading until Iceland's Financial Services Authority gave the green light.

Not counting financial shares the main index opened a mere 0.57 percent lower and closed down 5.84 percent.

"We have stripped the three main banks from the index. Earlier they accounted for 75 percent of the index," exchange spokeswoman Kristin Johannsdottir told AFP.

With those not included, "the index is mechanically down to 25 percent of its previous value," she explained.

The island's three main banks Kaupthing, Landsbanki and Glitnir, which were especially hard hit by the global credit crunch after years of aggressively expanding their businesses abroad, were taken over by the Icelandic state last week when they could no longer lay their hands on enough cash to keep going.

The Reykjavik stock exchange's chief executive, Thordur Fridjonsson, cautioned it would likely take a while for the country's financial stocks to resume trading.

"They will probably not be coming back for some time. The three main banks are not being listed since they are being placed under state control," he told AFP.

Trading in the stock of three other financial sector companies, the Reykjavik Savings Bank, Straumer-Burdaras and Exista, also remained suspended until further notice.

This means that of the 23 companies usually listed on the Reykjavik exchange, six will no longer be traded, at least in the short term.

Iceland's dramatically transformed stock exchange offers a clear indication of the massive blow dealt to the country's economy, recently based almost entirely on a financial sector that represented between eight and 10 times its gross domestic product.

The Nordic nation of 313,000 people, which over the past decade has seen its economy grow on average four percent a year with a peak of 7.7 percent in 2004, gone from prosperity to the brink of bankruptcy in a week.

In its ongoing struggle to boost Iceland's tortured economy, the central bank said Tuesday it had drawn on swap agreements with Denmark and Norway worth a total of 400 million euros (546 million dollars), and had begun negotiating a massive loan from Moscow.

Fridjonsson said the first day back up after last week's chaos had gone better than expected.

"This morning, there was a slight pressure down. I am relieved because many people out there thought the stocks would collapse," he said.

The International Monetary Fund (IMF) has sent a mission to evaluate the situation in Iceland, but Prime Minister Geir Haarde said the country had not yet decided whether to turn to the body for help with its financial meltdown.

"It's not like the IMF is here to take over the country," he said.

On the trading floor, in an unadorned room in a building on the outskirts of the capital, there was calm.

After the days of forced idleness, about half a dozen traders were again seated in front of their screens, which nonetheless remained bathed in red.

A newly-hired security guard stood on duty, where before trading was shut down last week the exchange was not guarded. "It's just preemptive. A lot of people are angry these days," he said with a shrug.

Dow plunges, finishes down 733 points

NEW YORK - Investors agonizing over a faltering economy sent the stock market plunging all over again Wednesday after two disheartening reports convinced Wall Street that a recession, if not already here, is inevitable. The market's despair — fed by a stream of disheartening economic data — propelled the Dow Jones industrials down 733 points, or 7.8 percent, to their second-largest point loss ever. The other major indexes all lost at least 7 percent.
The slide meant that the Dow, which lost 76 points on Tuesday, has given back all but 126 points of its record 936-point gain of Monday, which came on optimism about the banking system in response to the government's plans to invest up to $250 billion in financial institutions.
Wednesday's selloff began after the government's report that retail sales plunged in September by 1.2 percent — almost double the 0.7 percent drop analysts expected — made it clear that consumers are reluctant to spend amid a shaky economy and a punishing stock market.

Financial crisis: Australia and New Zealand guarantee all bank deposits

Australia and New Zealand have announced co-ordinated moves to guarantee all savings deposits in banks and financial institutions amid growing concern over the fallout from the global economic crisis.
_____________________________________________________________________
The move comes after currencies and markets in both countries suffered heavy losses last week.
Australian Prime Minister Kevin Rudd said his government would guarantee Australia's entire deposit base of AU$600-A$700bn (£238-£278bn), including savings in credit unions and building societies, for three years.
"We are in the economic equivalent of a national security crisis, and the challenges are great," Mr Rudd said.
He referred to recent moves by other economies, such as Britain, Germany and Ireland, to extend guarantees or state aid to their banking systems and warned Australian banks could be disadvantaged if his government failed to act.
"I don't want a first-class Australian bank discriminated against because some other foreign bank, which has a bad balance sheet, is being propped up by a guarantee by a foreign government," he said.
Last week, $190 billion was erased from the Australian stock market when the benchmark S&P/ASX 200 Index slid by nearly 16 per cent. At the same time, New Zealand's NZX 50 fell by 11 per cent. The Australian dollar slid by more than 5 per cent against the US dollar on Friday alone.
But on Monday Australian shares rallied to their biggest one-day gain since October on the heels of Mr Rudd's announcement, with bank stocks making some of the largest gains despite warnings from analysts that the new-found optimism could be short-lived.
New Zealand Prime Minister Helen Clark announced her deposit guarantee scheme moments after Mr Rudd.
Speaking at the launch of her party's campaign for the Nov 8 election, she said: "Our government has agreed to implement a deposit guarantee scheme which will provide New Zealand depositors with additional confidence."
New Zealand, which is in recession, has offered to guarantee retail deposits for the next two years, with deposit-taking finance companies also included in the scheme.
Institutions with less than NZ$5bn (£1.8bn) in deposits would have accounts protected for free while those with larger deposit bases would be charged a fee of 0.1 per cent a year.
Despite the move, Mr Rudd said Australian bank finances remained in "first class financial order".
"Right now, the balance sheets look great," he said.
"This measure puts our banks on a similar footing to other banking systems around the world."
Mr Rudd said his government was in close contact with other nations, including the G-20, and coordinated action was crucial.
Mr Rudd said: "The measures I've announced today are part of international (efforts) designed to help unclog the arteries of the global financial system, critical for the international economy, critical for the Australian national economy."
The International Monetary Fund (IMF) recently said the Australian economy will not only withstand the global economic crisis, but its economy will continue to grow -- albeit at a slower rate.

European Markets Rise in Relief

Markets in Asia and Europe reacted with hope — or at the very least with calm — to moves made on both sides of the Atlantic over the weekend to convince traders to suspend the Great Stock Dump-a-Thon that eviscerated indices for most of the previous week. After Asian markets progressed with modest gains Monday, trading in Europe opened with similar advances, with France's CAC 40 and London's FTSE surging nearly 6% after the morning's opening.
The question now: will it last?
The short answer many European economists give is that it ought to. There are few reasons, they say, why markets shouldn't return to a situation somewhere closer to normal — though they add there was little in macro-terms to justify their bearish frenzy last week. But following Sunday evening's agreement by the 15 leaders of euro-zone countries to accept collective rules to underwrite loans between banks and inject new capital into those facing serious trouble, hope is now rising that the situation in Europe may stabilize. Indeed, euro-group leaders used the most encouraging language they could muster as their summit broke up, underlining the fact that their objectives were as much psychological as financial in thrust.
"I want to tell our compatriots in all the countries of Europe that they can and should have confidence," declared French President Nicolas Sarkozy, who hosted the meeting since France now holds the rotating presidency of the European Union. European Central Bank President Jean-Claude Trichet echoed a nearly identical message of assurance. "The force of unity that we showed today," Trichet said, "is a fundamental element of confidence."
That show of decisive European unity was all the more important in the wake of Saturday's G7 meeting in Washington, where leaders said government intervention would be taken in all the world's major economies to prevent major banking failures and loosen frozen credit. It all proved enough for markets to take heart again, at least for now. By mid-morning, London's FTSE 100 was up 6%, Paris' CAC 40 rose 6.68%, and Frankfurt's DAX jumped 6.25% — a remarkable turn-around from last week's battering that ended Friday with losses of 7% to nearly 9%. Most indices in Asia similarly rebounded, with Hong Kong's Hang Seng rising 6.77%, and Syndey's All Ordinaries up 5.14%. Though the region's showcase Nikkei index remained closed during Japan's public holiday, most Asian markets aside from Taiwan were all posting modest advances.
Despite the measured optimism engendered by that start to an historic week, all eyes will be looking with a mix of hope and fear towards Wall Street as its Monday opening nears.
The fillip of hope was exactly what leaders attending the euro group summit had hoped to inspire, but they were careful to note it was only a beginning. European Commission President José Manuel Barroso, for example, stressed the collective package "isn't of an immediate miracle", and many more trials and jittery nerves would have to be overcome before the nightmare of the past months would be over. Still, the mere framework of a strategy proved sufficient to calm the fear that that drove last week's panic-driven sell-off.
The euro group plan aims at freeing up credit markets by underwriting loans banks make to one another — activity that has virtually halted amid general suspicion about borrowers' ability to reimburse funds — and resume the lending to companies and consumers necessary for economic growth. The euro group package will also allow national governments to buy preferred shares through capital injections to save swamped banks from failing, and allowing those in less perilous condition to fully sanitize their finances and return to normal operation. As such, the euro group plan was largely inspired by the rescue package British Prime Minister Gordon Brown rolled out the previous week, which matched $438 billion loan guarantees with up to $88 billion in capital investments to save troubled banks from failure. On Monday, the U.K. government said it would spend up to $63 billion in additional funds to take substantial stakes in three of the nation's leading banks.
Though the common rules adopted under the euro-group plan will still be applied at the national level at the discretion of individual governments, the action marks the first concerted effort to address the chaos in Europe following weeks of dislocated, often controversial responses by each country on a case-by-case basis. In announcing their plan, Sarkozy and his partners applauded both its comprehensive scope and the unity of support it enjoys.
"The crisis has over the past few days entered into a phase that makes it intolerable to opt for procrastination and a go-it-alone approach," Sarkozy said. "This plan treats all aspects of the financial crisis." That's not to say further treatment won't be necessary.

Pakistani authorities to meet to discuss floor removal

KARACHI, Oct 13 (Reuters) - Thinly traded Pakistani stocks ended flat on Monday as investors waited for the outcome of a meeting later on in the day about the removal of a protective floor level placed on the index.
The Karachi Stock Exchange (KSE) benchmark 100-share index ended 0.03 percent higher, or 2.89 points, at 9,184.24, just 40 points above the floor placed on Aug. 28.
Volume was 28,000 shares.
The KSE board of directors are due to meet at 4:00 p.m. (1000 GMT) on Monday, according to exchange officials to discuss the removal of the floor and establishment of a 20 billion rupees fund.
The Pakistan market has been left in limbo while overseas markets fell as a result of the global financial crisis spreading out of the United States.
One measure under consideration is a 20-30 billion rupees fund to pay off foreign portfolio investors who wanted to sell their holdings at a predetermined price by a certain date, the source said.
According to sources, the tentative date set for the removal of the floor is Oct. 27.
Some brokers over the weekend demanded closure of the stock market for at least 15 days, as the continuous funding system (CFS), a funding mechanism, had become illiquid.
There were also talks of some brokers defaulting, though this was denied by regulators and authorities after a series of meetings over the weekend.

Arab markets rebound after govt action

KUWAIT CITY (AFP) — Stock markets in the Middle East, including the oil-rich Gulf, rebounded on Monday following a series of local and international measures to try to ease the global financial crisis.
The Saudi market, the largest in the Arab world, soared 7.7 percent at the opening to well above the 6,000-point mark after plunging to a four-year low at the start of the trading week on Saturday.
The Tadawul All-Shares Index was trading at 6,263.92 points, bolstered by a 7.7 percent jump in the leading petrochemicals sector.
On Sunday, monetary authorities cut the repurchase rate by a half percentage point to five percent and reduced to 10 percent the compulsory reserves Saudi commercial banks have to maintain on deposits, thus giving them more freedom to lend.
Gulf stock markets have been on a roller-coaster ride as panicked investors went on a selling spree amid concern about the effect of the global financial meltdown on the region.
Over the year, the Saudi market alone has lost 45 percent.
In the United Arab Emirates, the Dubai Financial Market Index surged 10.53 percent to 3,343.56 points, bolstered by market leader and giant real estate firm Emaar whose shares jumped 15 percent.
The other UAE bourse, the Abu Dhabi Securities Exchange, closed up 6.92 percent at 3,350.22 points, as the key real estate sector leapt 9.3 percent.
The two markets rebounded after a government decision to guarantee deposits and savings and a pledge to protect the country's banking system.
The UAE finance ministry said on Monday that the guarantee also includes foreign banks operating in the country and is valid for three years. However, a banking source said regional banks, including Iranian businesses, would not be part of the deal.
The Kuwait Stock Exchange, the second biggest Arab bourse, was the only exception, closing 0.26 percent down at 11,826.70 after earlier moving into positive territory.
The government in the oil-rich emirate has pumped billions of dollars into the financial system and slashed interest rates by 1.25 percentage points to 4.5 percent in a bid to boost the market.
Monetary authorities in Saudi Arabia, the UAE, Kuwait and Bahrain have slashed interest rates and pledged to pump in billions of dollars to shore up the financial system in the face of the world crisis.
Economists said investor confidence was also shattered because of the massive drop in oil prices, as crude earnings represent more than 80 percent of revenue for the Arab states of the Gulf.
In Asian trade on Monday, New York's main contract, light sweet crude for delivery in November was trading at 80.74 dollars a barrel, recovering from one-year lows reached on Friday.
In gas-rich Qatar, the Doha Securities Market closed 8.45 percent higher at 7,624.09 as all market sectors increased. Oman's Muscat Securities Market closed 5.2 percent up at 7,121.32 points.
Elsewhere, Egypt's key CASE-30 stock index leapt 5.5 percent to 5,794 points in early trade.
The CASE-30, which lost more than 20 percent of its value amid widespread selling on global stock exchanges last week, had finished 3.1 percent down at 5,492 points on Sunday.

Eastern Light Capital Comments on Today's Stock Price Increase

SAN FRANCISCO, CA, Oct 06, 2008 (MARKET WIRE via COMTEX) -- Eastern Light Capital, Incorporated ("ELC") (ELC:

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ELC 4.57, +0.07, +1.6%) , a specialty lender organized as a real estate investment trust, has received a number of recent inquiries about today's common stock trading. After today's close, Richard J. Wrensen, Chairman and Chief Executive Officer, commented, "While we are unaware of any specific reason for today's increase in Eastern Light Capital's common stock price, about 30 months ago we began to de-leverage our capital structure, and have reduced the systemic risk of current credit market conditions to our shareholders."

This afternoon, ELC's common stock closed at $6.15, up $1.47 in above average trading volume. Year to date the common share price has appreciated approximately 52% and the Company has reported net income in 2008's first and second quarter. At today's closing price, the common shares trade for approximately 79% of the June 30, 2008 basic book value. In early 2006, the Company suspended all new residential mortgage originations and eliminated new mortgage investing to concentrate on residential asset management and reducing debt.

About Eastern Light Capital

ELC is a specialty lender, organized as a REIT that has historically invested in non-GSE conforming mortgage loans located in California. Only residential loans with a combined loan-to-value of 75% or less were originated for ELC's mortgage investment portfolio. ELC is examining strategic changes to its capital structure, investment policies and business model to enhance shareholder value. The Company has previously forecast that it expects to report a profit for the fiscal year ended December 31, 2008.

This document contains "forward-looking statements" (within the meaning of the private Securities litigation reform Act of 1995) that inherently involve risk and uncertainties. ELC's actual results and liquidity can differ materially from those anticipated in these forward-looking statements because of the changes and composition of ELC's investments and unseen factors. As discussed in ELC's filings with the Securities and Exchange Commission, these factors may include, but are not limited to, changes in general economic conditions, the availability of suitable investments, fluctuations in and market expectations for fluctuations in interest rates and levels of mortgage prepayments, deterioration in credit quality and ratings, the effectiveness of risk management strategies, the impact of leverage, the liquidity of secondary markets and credit markets, increases in costs and other general competitive factors.

Severe recession in ME stock markets today

DUBAI: A severe recession continues today in the stock markets of the middle east.

According to Arab TV, there is a trend of severe recession today at the start of trading in the stock markets of the United Arab Emirates and Oman due to world monetary crisis.

A decline of six per cent in Dubai stock market, three per cent in Kuwait, four per cent in Abu Dhabi and 3.5 per cent in Muscat stock market has been witnessed.

This may be called that stock markets all over the world are facing the situation of crash due to world monetary crisis during the previous week.

Indonesian stock exchange halted indefinitely

JAKARTA, Indonesia (AP) — The president of the Indonesian stock exchange says trading will be suspended indefinitely "to prevent deeper panic" after another huge drop on Wall Street.

Indonesian authorities planned to reopen the market Friday morning after a suspension was imposed Wednesday.

But a last-minute change of plan has been announced after Asian stocks tumbled Friday morning amid fears of a global economic downturn.

Bourse President Erry Firmansyah says, "The situation is not yet conducive. This is to prevent deeper panic. It will be closed indefinitely while we will continue to monitor."

Market jitters have driven down the benchmark JSX index 21% this week. The index is down 47% this year, making it one of the worst performers in Asia.

Iceland Closes Stock Exchange

Iceland’s stock exchange on Thursday suspended trading in all shares citing unusual market conditions after the country moved to take over its largest lender, Kaupthing Bank, the third bank to fall in state ownership in a week.

In a press release the exchange, part of the Nasdaq OMX Group, said trading would resume on Monday, Oct 13.

Vienna Stock Exchange resumes trading after opening delayed

VIENNA, Austria (AP) -- Trading on the Vienna Stock Exchange resumed after its opening was delayed as a precautionary and calming measure in light of international financial turmoil.

The Vienna bourse opened several hours late Friday morning to prevent a panic sell-off and thwart losses.

Share prices nose-dived repeatedly this week in Vienna, buffeted by the economic chaos that has seen stocks plunge worldwide.