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Pakistan stocks tumble for an eighth day

Pakistan stocks tumble for an eighth day
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First Published: Wed, Dec 24 2008. 10 19 PM IST
Updated: Wed, Dec 24 2008. 10 19 PM IST
Karachi, Pakistan: Pakistan stocks tumbled for an eighth day, extending a 25% drop the past month, on increasing concern brokerages may be forced out of business.
Trading was suspended on Tuesday for 20 firms at risk of defaulting on share transactions after a court ordered the country’s 200 brokerages to provide 5 crore Pakistani rupees (Rs3.2 crore) each in bank guarantees to keep operating, said Mohammed Shoaib Memon, a board member of the National Clearing Co. of Pakistan Ltd, which handles all equity deals in the country.
If defaults happen on that scale, it will worsen sentiment, which is already negative, Dawood Jan Muhammed, one of 10 directors at the exchange, said on Tuesday.
Equities have been falling since the stock exchange—the target of investor protests in July after the worst market tumble in 18 years—ended four-month-old trading curbs on 15 December. The benchmark Karachi 100 index dropped 3.8% to 6,660.18 at the close on Wednesday, the lowest since May 2005.
The gauge is now down 27% in the past month, the steepest drop among 89 equity indexes tracked by Bloomberg after Iceland’s. A total 840 crore Pakistani rupees has been erased from the value of Pakistan’s market since the trading restrictions, which had prevented the benchmark index from falling below its 27 August level of 9,144.93.
The exchange started the limits the month after investors threw stones and smashed windows at the bourse.
The stock market’s latest slump follows a $7.6 billion (Rs37,240 crore) loan agreement with the International Monetary Fund (IMF) to help restore investor confidence and keep the country servicing its foreign debt. Pakistan was forced to seek IMF aid after foreign exchange reserves shrank 75% and a group of donor countries declined to provide funds.
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First Published: Wed, Dec 24 2008. 10 19 PM IST
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