FIN630 GDB Solution

Discussion Question

ABC Fertilizer Company has a high share in KSE 100 Index.  Today, at the end of the business activity, suddenly news was heard that major shareholders of the company are planning to withdraw.

In your opinion, how this news will affect the existing shareholders of company and the potential investors’ response on the next business day?  You are also required to discuss whether it will have an effect on Lahore Stock Exchange (LSE) and Islamabad Stock Exchange (ISE) trading or not?  Give supporting arguments.


Solution:

According to the Situation of ABC Fertilizer Company It will have a Negative impact on the Goodwill of Company that even after a high share rate the major shareholders are planning to withdraw from the company and it will create a problem for existing shareholders to find the Share holders with the same or higher financial or Professional Strength who could invest more to Stabilize their share price in the Market.

            And yes it will effect the LSE and ISE as it will be tend in the Karachi Stock Exchange because they are inter related with each other. 



Solution 2:

The stock markets in Pakistan as well as the world are interrelated with each other. If something happens in USA this also affect the stock markets in Pakistan. The above news will affect all the stock markets in Pakistan as the company occupies a big share in the market.

The investors sell the shares when they do not see any gain in a company or if the market is not worth investing, this will lead to bearish trend in the market. The stock price of the company ABC will fall and will devalue the exiting stock of the company. The other investors may likely to withdraw their money from the stock market also.