The ongoing row between brokers and the Securities and Exchange Commission of Pakistan (SECP) over free-float trade limit marred activity on Lahore Stock Exchange (LSE), where share values crashed, with the index losing 190.68 points, or 5.05 percent. The LSE-25 index closed at 3583.68 points as against 3774.36 points of the previous session, while volume retreated to 15.623 million shares as compared to previous 42.452 million shares, registering a drastic decline of 26.828 million shares. According to stock analysts, the market reacted to the news that SECP had rejected the proposal of brokers to raise free-float trade limit from one percent to 5 percent, which caused panic among the players.
Turnover remained very low and brokers were seen sitting idle throughout the session in the absence of buyers. With a few exceptions, almost all key shares were capped at lower levels due to which people were not even able to sell their holdings, resulting in dull volume, they added. However, they pointed out that the market nose-dived because of internal factors and there was nothing negative from political or economic fronts.
The market commenced trading on a bearish note and subsequently stayed in negative zone, with PSO receiving heavy battering, followed by Nishat Mills, banks and fuel and energy sectors.
When the market closed, losers were far ahead of the gainers. According to a broker, the market suffered heavily across the board, as everyone offloaded in initial trading, pushing the shares towards downward circuit breakers.
There were reports that the KSE board of directors was meeting on Monday afternoon to review the situation arising out of the SECP move to reject LSE's recommendations. Brokers said that there was hardly any involvement of general public. General investors were not ready to move into the market till uncertainty over the issue of futures trade and margin financing prevails. Investors have lost their hard earned money in the recent crisis; therefore, they are scared of taking any risk at this stage when there is great panic in the market because of brokers-regulator row over certain issues, a broker remarked.
Massive battering was reflection of contention between brokers and SECP and, except that, there was no negative development from any side, said Javed Iqbal, Chief Executive, Javed Iqbal Securities Ltd. According to him, investors and brokers are now tired of frequent changes in rules and regulations by SECP, and dispute between brokers and SECP is badly hampering the sentiment. "I believe vested interests are out to damage the government's privatisation policy." Nevertheless, the dispute is giving a negative signal to the foreign investors.
Now the SECP and brokers should resolve the issue once for all. If the issue remains unresolved the market could reach at a point of no return, he warned.
Out of a total of 77 traded scrips, 10 improved in worth, 34 showed negative signs, while 33 were intact to overnight positions.
Siemens Pak Engineering Co gained Rs 33.75; Nestle Milk Pakistan Rs 27.50; Millat Tractors Rs 10.50; Al-Ghazi Tractors Rs 07.50; and Sana Industries Rs 2.30.
In negative column, PSO lost Rs 11.60; Nishat Mills Rs 4.25; National Bank Rs 3.35; and Bank of Punjab and Faysal Bank Rs 3.25 each. PTCL was the volume leader with 7.189 million shares, followed by OGDC with 1.664 million shares.
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