By M.C. Govardhana Rangan
Pakistan stocks tumbled for a ninth day, extending a 29 percent drop this month, on mounting concern brokers may be forced out of business. Habib Bank Ltd. and Pakistan Petroleum Ltd. led declines.
“Brokers are working on an off-market settlement to avoid default,” said Habib-ur-Rehman, chief executive officer at Atlas Asset Management Ltd. in Karachi. “The saving grace is that at least some transactions took place today compared with none in the past few days.”
The benchmark Karachi 100 index fell 2.1 percent to 6,522.23 at the 12 p.m. midday break. Daily trading in the past five days fell to 0.04 percent of the average for the year, data compiled by Bloomberg showed.
The National Clearing Co., which handles all of the nation’s stock transactions, said in a statement on Dec. 24 it suspended the trading of 32 brokers as of Dec. 23. These include 20 of 200 working on the Karachi Stock Exchange, the country’s biggest bourse, it said.
“A solution to the brokers’ problem and the fact that many stocks are trading at 4 or 5 times their price-to-earnings multiple should stabilize the market at these levels,” Rahman said. Stocks on the benchmark index now trade at an average of 7 times reported earnings, less than half of the 18 times at the year’s peak in April.
Habib Bank, the biggest bank by number of branches, fell 19 percent to 87.30 rupees. Pakistan Petroleum, the biggest gas producer, declined 9.9 percent to 117.34 rupees. Oil & Gas Development Co., the biggest fuels explorer, fell 5 percent to 58.29 rupees.
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 Dec. 15. The gauge is now down 29 percent in the past month since the lifting of trading restrictions, which had prevented the benchmark index from falling below its Aug. 27 level of 9144.93.
The stock market’s latest slump follows a $7.6 billion loan agreement with the International Monetary Fund to help restore investor confidence and keep the nation servicing its foreign debt. The country, a center in the war on terrorism, was forced to seek IMF aid after foreign-exchange reserves shrank 75 percent and a group of donor countries declined to provide funds. (Bloomberg)
Pakistan stocks tumbled for a ninth day, extending a 29 percent drop this month, on mounting concern brokers may be forced out of business. Habib Bank Ltd. and Pakistan Petroleum Ltd. led declines.
“Brokers are working on an off-market settlement to avoid default,” said Habib-ur-Rehman, chief executive officer at Atlas Asset Management Ltd. in Karachi. “The saving grace is that at least some transactions took place today compared with none in the past few days.”
The benchmark Karachi 100 index fell 2.1 percent to 6,522.23 at the 12 p.m. midday break. Daily trading in the past five days fell to 0.04 percent of the average for the year, data compiled by Bloomberg showed.
The National Clearing Co., which handles all of the nation’s stock transactions, said in a statement on Dec. 24 it suspended the trading of 32 brokers as of Dec. 23. These include 20 of 200 working on the Karachi Stock Exchange, the country’s biggest bourse, it said.
“A solution to the brokers’ problem and the fact that many stocks are trading at 4 or 5 times their price-to-earnings multiple should stabilize the market at these levels,” Rahman said. Stocks on the benchmark index now trade at an average of 7 times reported earnings, less than half of the 18 times at the year’s peak in April.
Habib Bank, the biggest bank by number of branches, fell 19 percent to 87.30 rupees. Pakistan Petroleum, the biggest gas producer, declined 9.9 percent to 117.34 rupees. Oil & Gas Development Co., the biggest fuels explorer, fell 5 percent to 58.29 rupees.
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 Dec. 15. The gauge is now down 29 percent in the past month since the lifting of trading restrictions, which had prevented the benchmark index from falling below its Aug. 27 level of 9144.93.
The stock market’s latest slump follows a $7.6 billion loan agreement with the International Monetary Fund to help restore investor confidence and keep the nation servicing its foreign debt. The country, a center in the war on terrorism, was forced to seek IMF aid after foreign-exchange reserves shrank 75 percent and a group of donor countries declined to provide funds. (Bloomberg)
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