KARACHI, Sept 25: It would be unfortunate if the 500,000 small investors who had subscribed Rs23,500 for 100 shares in Initial Public Offering (IPO) of Habib Bank Limited (HBL) fail to make money from their investment, or worst still to loose some of it.Understandably, Rs23,500 is big money for people with small means.

On July 25 this year, the government announced offer of 51.75 million shares to the public, to raise Rs12.2 billion, from what the Privatisation Commission boasted as “largest ever offering in Pakistan in terms of both value and number of shares on offer”.

Some 517,000 people from schoolteacher to shopkeeper scrambled to subscribe for the minimum lot of 100 shares at price of Rs235 per share. Their hopes of making profit ran high. Those who made it in the ballot, were jubilant to watch the share price climb as high as Rs375 on the ‘provisional counter’. That meant an immediate gain of around Rs140 per share and a big bounty of Rs14,500. But all that appears now to have been washed away.

The HBL stock was formally listed on the three exchanges on Monday. And the value of the share immediately dived to its ‘lower lock’ of Rs289.75 shedding Rs15.25 per share.

Simply speaking, ‘lower lock’ or ‘lower circuit-breaker’ is five per cent of the price, which is the maximum amount that a share can gain or loose in a single trading day.

The dismal pattern prevailed on the second day of trading on Tuesday, when the share slipped by another five per cent or Rs14.45 to close at Rs275.30.

Subscribers with long drawn faces, still hold a petty premium of Rs40 per share or Rs4000 on 100 shares. But the scare is that three more lower locks and all the gains would be swept away. And unless someone realises the long-term value and starts buying the stock, small subscribers may start to loose money. But the bets are that vultures would wait.

Market participants say that there is no law that could be applied to dodge the ‘lower locks’. There have been complaints also of delay by the Registrar in physical verification of shares, a formality required to be completed before the small investor can sell his shares.

Nothing could discourage new investors more to enter the market. Already the estimated figure of investors in equity is dismally low.

According to the Central Depository Company (CDC), it has just about 42,000 account-holders. Add to that sub-account holders and the figure gets to be around 210000. In percentage terms it works out to 0.1 per cent of the population of 16 million Pakistanis.

CHERAT PAPERSACK: The company has decided to install a fourth line of tuber/bottomer, which would increase its total production capacity from 160 million bags to 265 million bags per annum.