Karachi Stock Exchange (KSE) is prepared to remove floor mechanism on November 17, subject to provision of Rs 50 billion bailout package announced by the government, sources said on Sunday. It is expected that Rs 20 billion market stabilisation fund and Rs 30 billion government guarantee for put-options for foreign investors would be made available during the current week.
However, analysts link the provision of market stabilisation fund with the availability of IMF bailout package for Pakistan, as also funds from the ''Friends of Pakistan''.
"If the KSE gets signal from the government regarding availability of Rs 20 billion market support fund (MSF) and Rs 30 billion government guarantee for put-option for foreign investors, the exchange would hold a special session on Saturday to sell out shares on 15 percent discounts, before removal of floor", sources said, and added that the KSE was expected to remove the floor on November 17.
Sources said that there were good chances for release of the fund anytime during the week, most likely on Friday, as all work has been completed in this regard.
A two-hour special session will be held on Saturday--when normal trading is closed--in which shares will be offered to investors on discounts to provide them exit before removal of the floor.
"The special session will help reducing pressure on the share market on its opening as majority of ''hurry investors'' would be given a chance to sell out their shares before removal of the price floor", a KSE member said.
The floor mechanism was imposed on the share prices on August 27, 2008 closing level of 9,144 points to avoid further losses in the continuous declining trend of the market, as the benchmark KSE-100 index was declined by 42 percent from its all time high level of 15,676.34 recorded on April 18, 2008.
However, after imposition of price floor, trading activities had been reduced at the share market. The trading volume reached the lowest ever level of 78,500 shares on November 7, 2008, while no trading activity has been seen at the futures counter during last four weeks.
Comments
Comments are closed.