Impact of Musharraf Takwover, London Suicidal Attacks, Tsunami & Wana Operation over Karachi Stock Exchange

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.