Abstract:
Investment is the driving force in the development of any
country. Despite the reasonable saving rate in Pakistan the
investment has not really been picking up. The government’s
recent policies regarding the reduction in interest rates
have made people think about other options like the stock
exchange. Moreover, in the post 9/11 scenario, the foreign
remittances by the Pakistanis living abroad have also
helped in raising the foreign reserves to a respectful
level. The rising interest among people towards investing
in stock market has shown the bullish trends in the Karachi
Stock Exchange.
This study is carried out in the perspective of seeing the
impact of news on the performance of Karachi Stock
Exchange. The recent government measures have given more
incentives to corporate sector and have opened up the
Pakistani markets for foreign investors and encouraged
Pakistani producers to explore foreign markets. Thus the
events happening around the world have greater impact than
in the past. In this study the news about the Musharraf
Takeover, Wana operation, Tsunami and London suicidal
attacks are taken as independent variables and their impact
is seen on the Karachi stock market. Event study test is
applied and the results of the tests showed that not all
crises result in sharp rise or falls in markets - whether
they do or do not seem to depend on their relative
significance to the economy. The breakout of news and their
impact on a stock market is greatly influenced by the
structure of the stock market.
