KARA CHI - Amid political uncertainty, currency devaluation, fear of imposition of new taxes on the stock market and monetary tightening, Pakistan equity market has come down sharply. The benchmark KSE-100 index has reached its 9-month low level of 12,235 points in just 28 trading sessions, plunging by a massive 22% from its peak of 15,676 seen on April 18, 2008. KSE market capitalization, from its peak of US$75.4bn seen in Apr 2008, has also come down sharply to US$56bn as of yesterday. This is the biggest ever correction after Mar 2005 that KSE has so far witnessed. CFS (badla) investment has declined by 45% to its 18-month low of Rs30bn (US$445mn), while CFS (badla) rates, amid liquidity issues, have gone up to 19.8% - its highest level after 31 months, A report of JS Global said. Analyzing the major correction on the local bourses in the last 5 years, analysts have observed that the correction has ranged in between 10-34% (average correction 18%). During January 2003, Index fell by 600 points (20%) in 25 trading sessions and then recovered. Later on in September 2003, index underwent correction of 870 points (19%) in 39 trading sessions. Than the famous March 2005 crisis brought the biggest correction of 3,470 points (34%) which lasted for almost 32 trading sessions. The recent ongoing correction is poised to become the biggest correction of the Pakistan Equity Market with the KSE-100 Index so far plunging by 22% (3,441 points) in just 28-trading sessions. With market melting down sharply, investor's confidence has also come down sharply, reflected in average market monthly volumes. In May 2008 to-date average volume is being witnessed at only 185.3mn shares - a 14 month low. Last time it was in March 2007 when such low volumes of around 160mn shares were witnessed at the local bourses. Amid liquidity issues and sharp market fall, CFS investment, at Rs30bn has also reached its lowest level after 18-months (i.e. after Nov 15, 2006 when CFS investment was recorded at Rs29.6bn). Similarly, CFS rate has surged to its highest level after 31-months i.e. to 19.8%. Last time it was in Oct, 11 2005 (rate 27%) when such high rates were witnessed. Following trend in the CFS market, cost of leveraging in the futures market has also risen tremendously. On Thursday, ready future spreads were recorded at 24.4% which were at their 26-months high level. Last time, it was in Feb 28, 2006 (spread 26.3%) when such high future spreads were seen. During last 28 days in which market has plunged by 22%, average future volumes were 31% of the ready market and 48% in terms of value showing rising inclination of the investors and arbitrageurs in the futures market. This huge melt down in equity values during last 28 trading sessions has spawned an attractive buying opportunity for the investors. Pakistan market is now trading at its lowest forward PE of 8.8x after a period of 16-months. Moreover, its dividend yield of 6.3% has also become the most attractive amongst other MSCI Asian Emerging Markets. Furthermore, it is also trading at a huge discount to its historical average PE of 10.6x. On regional perspective, Pakistan equity market is now trading at 35% discount to average MSCI Asian Emerging Markets PE of 13.6x.