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Karachi bourse may end curbs as fund props up stocks
Staff Reporter
Karachi—The Karachi Stock Exchange may end rules barring investors
from selling shares once the government puts in place a $252 million
fund to support share prices and the economy improves, the bourse’s
managing director said. “It would be irresponsible to remove the curbs
without the necessary stabilization measures,” Adnan Afridi, managing
director of the exchange, said in an interview in Karachi. The timing
will become clearer “over the next few days,” he said. The government
is planning a 20 billion-rupee ($252 million) fund to help lift stocks
after the exchange prohibited investors from selling shares below
their Aug. 27 closing prices, a move that effectively kept investors
from pulling out of the market after the benchmark index plunged 35
percent this year.
Pakistan is in a stronger position to start the fund after agreeing to
$7.6 billion of International Monetary Fund loans last week. Nasir
Jamal, spokesman for the finance ministry in Islamabad, declined to
comment on when the fund would start operating. While the Karachi 100
Index rose 11-fold as Pakistan’s economy expanded at least 4.7 percent
a year between the end of 2001 and 2007, the gains diminished as the
global credit freeze sent the rupee to a record low, the balance of
payments deficit to its widest level ever and inflation to a 30-year
high. The benchmark index, which has declined 35 percent this year,
was unchanged at 9,184.09 at the 2:15 p.m. local time close. The
rupee, which has fallen 22.4 percent this year, was little changed at
79.38 to the dollar.
The market has also been rocked by protests as police last month
surrounded Pakistan’s biggest stock exchange to quell violence by
investors angry over the price curbs. Authorities sought to avoid a
repeat of July, when hundreds of investors stoned the bourse and
shouted anti-government slogans. The exchange first imposed the
trading curbs in August then extended them indefinitely on Oct. 27. It
also bailed out individual investors in July and banned short selling
in September, measures aimed at stemming the market’s decline.
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