Bloomberg Report
Pakistan stocks tumbled for an eighth day on growing concern brokerages may be forced out of business.
Trading was suspended yesterday for 20 firms at risk of defaulting on share transactions after a court ordered the nation's 200 brokerages to provide 50 million rupees ($634,000) each in bank guarantees to keep operating, said Mohammed Shoaib Memon, a board member of the National Clearing Co., 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 in a telephone interview late yesterday. “Then again, what can be worse than current market conditions?”
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 benchmark Karachi 100 index dropped 1.5 percent to 6824.04 as of 11:05 a.m. local time today.
The gauge is down 25 percent in the past month, the steepest drop among 89 equity indexes tracked by Bloomberg after Iceland's. A total 8.4 billion rupees have been erased from the value of Pakistan's market since the trading restrictions, which had prevented the benchmark index from falling below its Aug. 27 level of 9144.93.
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 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.
Trading was suspended yesterday for 20 firms at risk of defaulting on share transactions after a court ordered the nation's 200 brokerages to provide 50 million rupees ($634,000) each in bank guarantees to keep operating, said Mohammed Shoaib Memon, a board member of the National Clearing Co., 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 in a telephone interview late yesterday. “Then again, what can be worse than current market conditions?”
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 benchmark Karachi 100 index dropped 1.5 percent to 6824.04 as of 11:05 a.m. local time today.
The gauge is down 25 percent in the past month, the steepest drop among 89 equity indexes tracked by Bloomberg after Iceland's. A total 8.4 billion rupees have been erased from the value of Pakistan's market since the trading restrictions, which had prevented the benchmark index from falling below its Aug. 27 level of 9144.93.
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 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.
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