The government is holding the stock market hostage as it announces no firm date of re-opening of the market, nor is there a glimmer of hope about the promised stabilisation funds. Brokers, traders and investors waited wearily on Thursday, as the closure of the KSE entered its fourth month—the longest peacetime shutdown of any equity market in the world.There are numerous parties that have contributed to the stock market chaos.
The off-market trade is indicative of the dip in investors’ confidence. But that is just the surface; the undercurrents are scary.Most knowledgeable quarters now lay the blame for an ongoing stalemate squarely at the door of the government.“The situation is now out of control of regulators,” contends one major participant.He explains that it was wrong of the KSE to have done so—and the advisor on finance to the PM, Shaukat Tarin—after taking office did the first thing to express his displeasure at putting the ‘floor’ under the KSE-100 index. But following the meeting of the board of directors of the KSE which lasted several hours on Thursday and even longer the last time it met, members came out of the board room with nothing to offer but the ‘hope that funds would arrive soon’.The structure of the Rs20 billion market fund and Rs30 billion ‘put option’ looks as complicated as can be. If as many as 17 banks are being looked upon to chip in the money, it would require a great leap of faith to believe that all would contribute.
The apex regulator is still talking about ‘completion of documentation’. If that remains incomplete after three months of hard work, it ought to be a very complex transaction indeed. But people wonder how the Wall Street regulators are able to cobble together funds and prepare documents involving hundreds of billions of dollars in matter of days.A market participant drew attention to the fact that in the last two months, as many top men of finance—Mr Naveed Qamar and Mr Shaukat Tarin—had visited the KSE and while leaving left the investors in good cheer with the ‘news’ of the injection of the funds, within three days to one week.
The least that the government and/or the regulators could do for the unfortunate equity investors, many of whom, have lost nearly all of their life-long savings, is to come clean and make a full breast of whatever is happening and what are its plans for the market. Everyone agrees that uncertainty is worse than bad news.
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