KARACHI, Dec 29: The board of directors of Karachi Stock Exchange did not meet in

the three days since the extraordinary event of Thursday evening and the chairman of the board Shaukat Tarin held out a reassurance that the bourse would be able to ride out the challenge.

Mr Tarin admitted that the market would have to bear the impact of events that rocked the nation following the tragedy, but he said: “We will deal with the situation as it presents itself on Monday”.

That should be a cause of some comfort to nervous investors in equities. The KSE chairman said he did not think that the crisis of March 2005 would re-visit the KSE.

”That situation had materialised due to scarcity of funds”, said Mr Tarin and added: “We will provide the liquidity, if and when needed.”

Ironically, the Pakistan’s premier equity market had come under peril, only after a day the KSE-100 index touched its all-time high of 14,814 points on Wednesday.

Mr Iqbal Ismail, a recognised stock strategist and chairman ACE Securities, thought that two measures ought to be taken to stem a possible rot at the market: First, injecting liquidity by the removal of cap of Rs55 billion on the Continuous Funding System (CFS) and second, announcement of extension in exemption of tax on capital gains for a period of three years or more.

He took a dim view about the market for the next week, expecting the KSE-100 index to take a major dip on Monday.

“Things can get worse before they get better.” Mr Ismail also suggested that the regulators should quickly move to raise the lower circuit breaker from five to 10 per cent.

The circuit breaker, both up and down are the maximum amount that a scrip could gain or lose in a day.

A major stock broker and some other analysts brushed aside that suggestion, saying the market performance should not be dictated by artificial means, arguing “price discovery” was the function of a free market. The Continuous Funding System (CFS) investment was already at the allowable limit at Rs54.6 billion at annualised rate of 13.99pc, mirroring huge leverage buying.

Would small investors take the brunt of the blow if the market shows a precipitous fall? An ex-chairman of the KSE said if they did, they also had earned fabulous sums of money since 2002.

The KSE had given an average of 42 to 45 per cent return over the last five years and it was already more than 40 per cent up this year by Friday, the last day of the current calendar year.

It would be too early to say if the grim change in political scenario had shattered the confidence of foreign investors.

A market participant, who had returned from abroad on Saturday, said the ‘goras’ had already factored political risks before investing in the equity market, which was why there was no cause to assume a potential major outflow.

And, in any case, fund managers were too busy with the Christmas and New Year holidays to bother about a pittance of investment in a country that scarcely showed up on their radar screen.

But could it be a tribute to the Pakistani market that the Dow Jones Industrial Average (US) index had closed down 192 points or 1.4 per cent at 13,360 on Thursday, one of the main reasons for which, media worldwide had held the consensus view was: “reaction of nervous investors on Ms Bhutto’s assassination”.

A cause for concern for some market participants was the December Future contracts. Friday was the last day of trading in the Futures and due to the unexpected closure of the market, investors were unable to roll over or square their positions.

In case of lower locks, they could be stuck up, which could rock the bourse’s boat. Analysts, nonetheless, expected the regulators to extend trading for one more day and switch the last trading day to Monday.