Dark clouds further deepened on Lahore Stock Exchange (LSE) last week as there was no let-up in the crisis, and the market index plunged 18 percent, while volume touched record low in the absence of buyers and sellers due to lower locks in almost all active shares. The losses during the week ended on March 25 surpassed the previous week's losses and the index was down by 18 percent as compared to previous week's 5 percent.
Though only four sessions took place during the week under review, as market was closed on Wednesday on account of Pakistan Day, the size of losses was unprecedented as compared to full five days of the earlier week, which further panicked the worst-hit small investors.
On Monday, the LSE shed 239.41 points; on Tuesday 252.82 points; Thursday 228.68; and on Friday it lost 224.71 points, or five percent, bringing the whole week's loss to 945.62 points or 18 percent.
Likewise, the volume also kept squeezing during the week. It was record low at 11.823 million shares from 108.114 million, registering a net decrease of 96.191 million shares, or 89 percent.
"We are unable to sell our holdings, as there is no buyer in the market in view of lower locks in all key shares," Ejaz Hafeez Khan, a small investor said, adding that "no one can sell unless these locks are open". He said he had lost all his hard earned money in just a few sessions which he had earned in a whole year. "I am ruined, and the credit for it goes courtesy SECP," Khan said sarcastically.
SECP could save poor, small investors by taking timely action, another investor remarked.
According to stock analysts, the market bigwigs who were responsible for the crisis failed to settle their row, which put the market future at high risk.
According to market pundits, the SECP must take immediate action either to force these bigwigs for settlement of their disputes or suspend trading till the situation turns normal. This is the only way to rescue the market.
They said that one of the worst features of the stock market was that badla was very high and it had crossed 500 percent, which was a rare example in the history of the stock exchanges. They said that the KSE did not let the rate exceed 18 percent but the situation has turned worst in LSE where in certain cases it reached 1000 percent.
KSE held a special badla session on Saturday from 11.00 am to 1.00 pm and raised the rate from 18 to 24 percent, but to no avail, as the institutions did not take any interest. However, analysts said that until and unless the tug of war between the stalwarts is stopped, the market would remain under crisis.
LSE Chairman Asim Zafar said that there was no crisis in the market and the situation would turn to normal gradually. However, he had no reply when asked when this 'good time' would come. He said that stock markets always run under a system which depends on market forces, and ups and down are part of this system. But, this time, he added, downward spiral had increased due to which people had panicked.
About unprecedented rise in badla rate in Lahore, LSE chief said, in a panic like situation, people squeeze their funds which gives rise to badla rate.
According to some brokers, the LSE and ISE merge plan into a national stock exchange was also one of the major reasons for the crisis. KSE had opposed this plan and its bigwigs deliberately pushed the market into crisis to force LSE and ISE to do away with their merger plan.
About prospects of recovery, they said that if the market took a turn on Monday and started recovering, the bull-bear fight would come to a halt, and if the situation remained unabated the crisis might prolong. However, they pointed out that the latest SBP move to uncap badla financing limit for banks and DFIs might help ease the situation.
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