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Trading in Pakistani stocks dries up

Reuters - Saturday, July 5

KARACHI, July 4 - Pakistani stocks ended lower on Friday for the sixth consecutive session, with trade extremely thin as political and economic uncertainties kept investors away, dealers said.

"There is no institutional support, no interest from investors, and this situation does not seem to be changing anytime soon," said Shuja Rizvi, director broking operations at Capital One Equities Ltd.

Dealers said sentiment was also hurt by expectations of an central bank interest rate in the coming weeks.

The central bank had added to the stock market woes in May by increasing its key discount rate to 12.0 percent from 10.5 percent.

Volumes plunged after the Karachi Stock Exchange Board and Securities and Exchange Commission of Pakistan last week introduced measures to stabilise a market that had struck its lowest level in more than 15 months on June 23.

The authorities changed the daily limits in share price moenvements so they could rise up to 10 percent a day, but fall only 1 percent.

Previously there had been a limit of 5 percent, either way, on daily movements.

The authorities also banned short-selling and announced plans for a 30-billion rupee market stabilisation fund. [ID:nSIN108].

Dealers said the measures provided temporary relief, and had artificially propped up the market, but had not restored confidence wrecked by fundamental uncertainties.

Investors had 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.

The KSE-index has fallen 15 percent since the beginning of the year and is 24 percent lower since it set a life high on April 21.

On Friday, the KSE benchmark 100-share index <.KSE> ended 0.61 percent, or 73.55 points, lower at 111961.66.

Volume was very thin with only 4.1 million shares. Shares traded on the all-share index were 5.3 million, the lowest ever in a full trading day.

Turnover was less than a million shares on May 26, 1998. However this was due to a halt in trading after dealers protested against the introduction of a computerised rading system.

Losers led gainers 164 to 30.

The free-float KSE-30 share index <.KSE30> shed 0.87 percent to 13,852.52 points.

Among the most active companies, volume leader, Oil and Gas Development Co Ltd <OGDC.KA> shed 1 percent to 120.72 rupees, National Bank of Pakistan <NBPK.KA> ended flat at 143.13 rupees, and Fauji Cement <FAUC.KA> fell 0.9 percent to 9.74 rupees.

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