KARACHI, Aug 9: A sample of 10 small investors and punters interviewed at the Karachi Stock Exchange on Thursday revealed two things that were common to many. The first that all had panic written large over their faces and the other that none of them had the faintest idea of what ‘emergency’ meant and if and how, if imposed, it would impact the stock market.

Yet they scrambled to sell and initially the KSE-100 index pierced past the floor showing the largest ever intra-day decline of 617 points.

The overwhelming concern of those investors seemed to be the fear that foreign investors would stampede out of the market with flurry of sell orders. That apparently did not happen. At least for the day, foreign investors, who now hold aggregate portfolio of $4 billion, which accounts for 7 per cent of the market capitalisation and 28 per cent of the free float in the country’s main equity market, did not act like a ‘panic prone herd’.

Mohammad Sohail, Director Equity Broking and Research at JS Global says: “Foreigners were not net sellers”. He thought that foreign investors do not mix economics with politics. And as long as economic fundamentals were strong, all that they would do was to raise slightly the political risk perception.

It could not be ignored that Pakistani stocks were trading at attractive multiple of 10 times forward earnings, compared to the regional average of 14 times. Other investment houses who have large overseas clientele agreed but did not want to be named.

Nadeem Naqvi, CEO at AKD Securities, said he could speak for his house, which showed a net, net zero position. He contended that if the foreigners sold, they also bought at dips, which reflected in 100 million more shares traded on Thursday i.e. 263 million shares compared to 177 million shares which changing hands a day earlier.

Another fund manager said that most of the local funds were sitting on mountain of cash and were almost 50 per cent liquid. He maintained that those would be waiting to pick up value stocks at lower prices.

He, however, observed that a mutual fund backed by the largest commercial bank in the public sector was conspicuous by its heavy selling.

The net loss of 3 per cent or 385 points in the index value during the day looked scarcely to have shaken the confidence of institutions and high net worth investors. But a few veterans did not go along with the bullish lot and looked sullen.

Revisiting the bourse’s history in their mind, they said that an extraordinary event such as imposition of emergency could push the KSE many years backwards. By the afternoon, statements coming out of Islamabad were taken as positive and most major market movers looked determined to put the bourse back on the rails on Friday.

Whether they succeed or see more of losses on Friday, would be interesting to watch.