KARACHI, July 8: The Securities and Exchange Commission of Pakistan (SECP) and the Karachi Stock Exchange (KSE) would meet on Friday (July 11) to “assess the impact of various market stabilisation measures of temporary nature decided on June 23,” said a spokesman for the SECP on Tuesday.

The other two smaller exchanges at Lahore and Islamabad would also participate in the deliberations, which most market participants thought would centre on the ‘lower lock’ of one per cent, which was changed from five per cent, ostensibly to put a floor under the fast falling market.

“If the intention of the stabilisation measures of June 23 was to lock in stocks, so as to prevent exit, they can be regarded as successful,” said a market participant. But the daily trading session, starting with a big block standing in the way of those who wanted to quit, had created anguish among stockholders.

Interestingly, the market, which had recorded a fall of 4,500 points in a tight bear hug for two months from April 18 to May 23 was showing a six per cent increase in the 10 sessions following ‘stabilisation measures’ since the KSE-100 index had climbed from 11,163 to 11,813 points.

“Nothing could have been more satisfying to regulators and investors, but that the artificial planks put under the market fall had started to crack,” said an analyst. For one, there has been an investor outcry to let the market operate on a ‘free market basis’ with a full access to entry and exit and secondly, the average daily volumes have dipped to just 10 per cent and a 10-year low around 20 million shares a day, from last year’s daily average of 240 million shares.

“That is also causing a pinch to the stock brokers, whose income from trading is quickly drying up,” said a stock broker.

He thought that it would be difficult for his trading house to pay the overheads in case the volume remains that small.

A market pundit said that disallowing a stock to shed more than one per cent of the value in a day, which in most cases amounted to a few paisa, was not the brightest of ideas.

Most analysts and economists pointed to the devastating decline in international stock markets, including that of Mumbai; the rise in interest rates and a scary seven per cent loss in the value of Rupee to a US dollar in just about a week.

“The KSE regulators have in their wisdom managed to ‘cool off’ the heated bear run, but the success of it will come to test as soon as flood gates are opened by unlocking the lower circuit breakers,” said a trader. That test could come as early as next week.

The SECP spokesman said on Tuesday that whatever decisions would be taken at the SECP meeting with the bourses, would “then be disseminated to the market participants along with the date of their implementation.”

Meanwhile, a marathon meeting between the SECP and the board of directors of the KSE took place on Tuesday, which one insider said was basically a “brain storming session.”

The meetings were likely to continue on Wednesday and Thursday.

The principal item on the agenda was creation of a “market stabilisation fund”.

A person in the knowledge of the affairs said that the regulators are putting their heads together in finding a way to create market stabilisation fund of around Rs 30 billion.

An analyst said that the idea of creating such a fund had been afloat for the last two years. But given the urgency, the regulators have re-doubled their efforts to approach financial institutions to spearhead such a fund.

It would have to be seen if institutions are willing to oblige, but many market participants thought that being major players, it appeared in their own interest to lend a helping hand in pulling the stock market out of the mire.