It's like we're on holiday here

Bloomberg: Pakistan stock trading fell to the lowest level in a decade after regulators introduced measures to halt a two-month slump that caused the benchmark Karachi Stock Exchange 100 Index to fall 29 percent. (note: besides Karachi, Pakistan has two other markets namely Lahore and Islamabad stock exchanges). Trading in Karachi slowed 92 percent since the Securities and Exchange Commission of Pakistan limited daily share declines to 1 percent a day on June 24. Fewer than 5.35 million shares changed hands on the Karachi Stock Exchange July 4, the lowest since May 26, 1998. Regulators are reviewing whether the curbs are needed after the exchange announced a 50 billion rupee ($702 million) fund to buy stocks after the close of trading yesterday.

Trading on the 60-year-old bourse in Pakistan's commercial capital this week ranged between 12.7 million and 52.4 million shares, down from a daily average of 225.9 million over the six months ended June 23, the day before the rules took effect, according to data compiled by the exchange. The brokers left in the largely deserted trading hall sit with their backs to their screens, chatting and sipping tea. ``It's like we're on holiday here,'' said stockbroker Haji Ghani Usman``It's become difficult for us to pass the time.''

MyTake: The statements "It's like we're on holiday here" and "It's become difficult for us to pass the time" really strike me as I am feeling the same way too. Whereas holidays are meant to be happy, time to relax after working hard and spending quality time with your loved ones, this 'holiday' is none of those mentioned but exhausting emotionally. Because of the prolonged slumping stock market, clients are sidelined and avoiding the market for the time being. Due to "lesser transactions" the take home pay for remisiers will definitely be hit. Curiously while "on holiday here", I attempted to calculate an average remisier's commission based on yesterday's volume of 290m shares (RM624m) which was the lowest since June 2006.

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The following are my assumptions-

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1) I will assume retailers participation yesterday was at 15%.(still on the high side?)

2) No of remisiers =5,000, commission rate at 0.6% (sharing by company: remisier 60:40)

(As per Bursa 2007's Annual Report, in an active 2007 , the component of total trades for the year by foreigners was 36.6%, retailers was 37% while balance was from local funds/institutions).

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Calculation of average commission per remisier on that "fateful" day is as follows-

[2(buy and sell) X RM624m(share value per day) x 0.6%(commission) x 0.4(remisier's portion) x 0.15(retailers participation) ] / 5,000 remisiers = RM90.00

In reality, if the Rule 90:10 applies( ie 10% of remisiers( or "big" remisiers) takes 90% of the available commission), then commission for 90% of remisiers on that day will be-

2 x [[624m x 0.6% x 0.4 x 0.15] x 0.1(balance for 90% of remisiers's commission portion)] /4,500 (90% of remisiers) = RM10.00

Also, using similar calculation, the other 10% of remisiers( big remisiers) will get RM808.00 on that day.
ie 2 x [[624m x 0.6% x 0,4 x 0.15] x 0.9] /500

So life is still a good for the big remisiers but the smaller ones need to tightened their belts further in order to survive this slump. I really don't think the majority of remisiers feel that they are on a holiday. With no spare money, how can we go on a holiday? Remisiers, like everyone else need to "make hay while the sun shines" and "save for the rainy days", how true.

* Citigroup(yes, it's them again) raised its recommendation on Maybank to "BUY" as the bank's shares have been trading below or near trough valuations. Incidentally, Maybanks's MCB share price closed at 300Rp today. Remember Maybank's purchase price was 470Rp for 15% stake amounting to RM2.17b. Effectively, Maybank has paid extra 36% for this Pakistani bank or an extra cool Rm0.79b before having the shares transfered into its name!

* StarBiz: For information. Latest regional economic data(country, interest rates, inflation) Indonesia 8.5%, 11.03%, Malaysia 3.5%, 3.8%, Philippines 5.25%, 11.4%, Singapore 1.19%, 7.5%, Thailand 3.25%, 8.9%, Vietnam 14%, 26.8%. Wah, no real growth at all!!! Sure die la!!!

* After US markets slips into bear territories(ie a 20% drop from their recent high) a few days ago, the London FTSE 100 is now 20 points away from its bear market territory of 5,383.

* Fannie and Freddie going into "conservatorship" soon, not receivership ah?