October 24, 2008	Friday	Shawwal 24, 1429

ISLAMABAD, Oct 23: Adviser to Prime Minister on Finance Shaukat Tareen has said that putting the ‘floor’ under the Karachi Stock Exchange Index was a ‘wrong decision’ and he wanted its removal as quickly as possible.

He was speaking at a press conference here on Thursday to elaborate upon the Rs20 billion market support fund and Rs30 billion government sovereign guarantee approved in consultation with boards of directors of Lahore, Islamabad and Karachi stock markets and the Securities and Exchange Commission of Pakistan (SECP) on Wednesday night. The decision was taken to avert free fall of the market after the removal of the floor on October 27.

“Markets rise and fall, but it doesn’t mean that you put restrictions on the market,” Mr Tareen said, adding: “Till I occupy this chair (of adviser to the prime minister) I will stand for free stock markets.”

Accompanied by SECP Chairman Raziur Rehman, the adviser said seven to 10 giant state-owned entities would utilise the Rs20 billion market support fund for purchasing their own shares and selling them to Pakistanis living abroad.

The Employees Old Age Benefit (EOBI), National Bank, State Life Insurance Corporation and NIT will contribute Rs5 billion each to the open-end fund. The fund will be used for purchasing shares of the Oil and Gas Development Corporation, Kot Addu Power Company, Pakistan Petroleum Limited, Sui Southern Gas Company, Sui Northern Gas Pipelines Limited, Pakistan State Oil and National Bank.

Mr Tareen said that many expatriate Pakistanis were willing to invest small amounts of dollars in the shares of local companies.

He said the Rs30 billion government guarantee would boost confidence of foreign investors who were worried about falling prices of their shares. It will help them to stay in the market.

“If an investor keeps with him shares for one year and there is any fall in their prices, the government will be there to buy those shares at the floor-level price. The facility is for all shareholders who bought the shares before the floor restriction.”

The adviser said the mutual fund market was serving as an alternative to banking and the government wanted to give it a helping hand and would provide Rs25-30 billion for the redemption of mutual funds and non-bank finance companies.

He said that shares of mutual funds would be declared terms finance certificates (TFCs) and loans against A-rated TFCs would be guaranteed. He said the loans taken by brokers from commercial banks had also been awarded the status of TFC for one year.

Mr Tareen, however, admitted that there was nervousness in the market and investors sold their shares in panic, fearing further decline in their prices. But the two funds were there to check this phenomenon, he added.

In reply to a question, he said the market would not be allowed to be controlled by a “handful of individuals”.