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Pakistan proposes Rs50 bn equity fund

Pakistan proposes Rs50 bn equity fund
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First Published: Fri, Jul 11 2008. 09 37 AM IST
Updated: Fri, Jul 11 2008. 09 37 AM IST
Reuters
Karachi: Pakistan has proposed setting up an equity market fund of at least Rs50 billion to provide stability to the market and reduce volatility, the Securities and Exchange Commission said.
The Securities and Exchange Commission of Pakistan held a meeting with the Karachi Stock Exchange and institutional investors to discuss the fund on Thursday following a 16.4% fall in the main index this year. Volume has also dried up.
The commission said it hoped participants in the fund would be financial institutions such as banks and state-owned institutions that have large pension and gratuity funds. Dealers said the proposal may slightly boost investor sentiment but it was difficult to say what impact it would have until firm commitments were made.
Investors have retreated because of a fragile political situation and doubts about a new government’s ability to handle widening trade and fiscal deficits and surging inflation.
Security problems, including bomb attacks in Islamabad and Karachi over the past week, have added to investors’ worries. The commission said it would give more information about the proposed fund after a meeting with institutional investors, which is tentatively scheduled for 16July.
Authorities last month introduced measures to stabilize the market after it sank to its lowest level in more than 15 months on 23June. Among the measures was a change to the limits in share price movements so they could rise by up to 10% a day, but fall only 1%. Previously there had been a limit of 5% up or down on daily movements.
They also banned short-selling and initially were aiming to launch a Rs30 billion stabilization fund. The measures had a slight positive impact but proved unable to restore confidence, dealer said. The KSE benchmark 100-share index ended 0.20% or 23.35 points, lower at 11,773.12 on Thursday.
A commission representative said it was scheduled to meet KSE officials on Friday to discuss the measures taken last month.
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First Published: Fri, Jul 11 2008. 09 37 AM IST