New Pakistani bourse on a roller coaster ride: Daily

Islamabad, Jan 23 (IANS) The roller coaster ride of the newly-formed Pakistan Stock Exchange has left many investors feeling a little nauseous, a leading daily said Saturday, warning against artificial attempts to prop it up through public money available with the government.

An editorial “Stock market gyrations” in Dawn noted that the roller coaster ride seen over the past couple of weeks has left many investors feeling a little nauseous.

The latest trading session saw a little stability, with the index gaining 192 points, but it still closed below 31,000 points. However, the past week has seen the market slide by more than 1,500 points, and the market overall has lost almost 15 percent of its value from its peak.

“Moreover, the volatilities don’t look as if they are going away. For one, the realities belie the claims being made by the stock exchange management that the arrival of an integrated bourse will give the market a boost. That analysis was clearly based on the specious logic that there would be increased liquidity and increased participation in the stock market once the Lahore and Islamabad bourses were integrated with Karachi. The opposite appears to have happened,” it said.

The daily added it would be unfair to blame the entire declines on factors intrinsic to the market. “Corporate fundamentals have not changed nearly as rapidly as valuations on the trade floor have.”

The sustained and ferocious bear run is connected with factors beyond the stock market itself, the editorial said and added: “Capital markets around the world are experiencing a massive and sustained rout that began in the summer of 2015 with a large rout on the Chinese stock market.”

It went on to say that “Pakistan is not immune to trends in the global economy, as the past has made abundantly clear, and as the present is reminding us once again”.

“It is also worth emphasising that public funds should not be used to bail out any brokers or even the market at large, should matters come to that. It would be better to engineer a sustained soft landing for the stock market rather than try artificial attempts to prop it up using pools of public money available with the government.

“The stock market is not a public enterprise, and deserves no public support.”

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