The Securities and Exchange Commission of Pakistan (SECP) has turned down the proposal to freeze stock market on Monday's closing level or index 9,500 points.
In an emergency meeting held at the residence of SECP chairman on Monday night, the board of directors of Karachi Stock Exchange (KSE) and Securities and Exchange Commission of Pakistan Chairman Razi-ur-Rehman discussed different suggestions to support the market. Some of the members gave a suggestion to freeze stock market on Monday's closing level or index 9,500 points.
Senior KSE members also attended the meeting and discussed the prevailing situation at the local bourses. However, the final decision is likely to be taken on Tuesday before opening the market as some of the senior members opposed this proposal.
The regulator also expressed its concerns over the proposal to freeze the market. Sources said that another meeting between the SECP and KSE board is likely to be held on Tuesday, which is expected to take a major decision in this regard.
The Karachi Stock Exchange had been witnessing heavy selling pressure for the last three months due to prevailing uncertainty on political front, weakening economic indicators, declining rupee value against dollar and increasing discount rates.
The benchmark KSE-100 index had declined by around 44 percent or 6,823.16 points to close at 23-month low level of 9,853.18 points on August 04, 2008 from its all time high level of 15,676.34 points recorded on April 18, 2008.
The government has taken various measures to support the market. The implementation of Capital Gains Tax (CGT) was extended for further two years till 2010 and Rs 20 billion equity market opportunity fund was launched to support the market, however, the investors' confidence could not be revived and the selling pressure continued.
A huge outflow of portfolio investment was also witnessed in this period as an amount of over 84 million dollars was withdrawn by the foreign investors, only in the month of July while a cumulative outflow of 325.882 million dollars was recorded during January 01 to August 04, 2008.
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