KSE board decides to keep market floor in place

KARACHI: The board of directors of Karachi Stock Exchange (KSE) on Thursday decided to keep the market floor in place, however didn’t give an exact date for its removal or further review as was practiced earlier.A statement issued by KSE after the meeting of board of directors didn’t explicitly mentioned the decision taken on market floor and just stated: “All stakeholders including KSE would like the market to return to normal trading parameters at the earliest.”“We may expect this to happen within month of October and final outcome of the discussion will be reached shortly after Eid,” the meeting observed while reviewing the market floor second time during the current month. Well-informed sources confided that market floor could be lifted sometime in mid of October following introduction of a fresh fund, being worked out by the government to stabilise the stock market.“The size of the fund is yet to be announced, however it has been decided in principle to create this fund and it might be in the range of Rs 20 to Rs 30 billion,” sources disclosed.Dawood Jan Mohammad, Member-Director on KSE board when contacted declined to give further details of the meeting. “Whatever we want to share with media has been mentioned in the official statement,” was the brief response of member about the today’s deliberations of the meeting and said that after Eid, the matters would be taken up for review. The statement further stated that KSE has been in discussions with a wide range of stakeholders on a comprehensive road map to enable the market to return to normal trading parameters. Recent events in the global equity markets have further highlighted the need to develop an integrated package so that the Pakistani capital markets can operate in a stable manner. In this context discussions are going on with the Ministry of Finance, Economic Advisory Council and Securities & Exchange Commission of Pakistan.The KSE has been placed under the floor since August 27, 2008 to prevent it from plummeting after it plunged from its record levels of 15,776 points in mid April this year to below 9000 level.All eyes are now set on the government for a bailout plan for the market which, according to market players, needs the government’s help in this crucial situation. The KSE MD accompanied by three top brokers met Governor SBP few days back to discuss the situation in the market and sought the help with the regard to injection of liquidity in the market.“Government will have to come to rescue the market because it still holds 50 percent of the total equity. If market loses further, it will not be a good omen for the foreign investors and the capital flight may increase further,” Siddique Dalal, a broker said while deploring that least was done so far on the part of the government to stabilise the market.A former member-director on KSE board Haji Ghani said that the creation of new fund of Rs 20 to Rs 30 billion almost looked certain and it will hopefully support the market to a great extent.