KARACHI, June 14: The Karachi Stock Exchange Index of 100 shares collapsed by 548 points on Wednesday, which represented the biggest ever single-day decline in the history of the exchange.

In the first three trading days this week, the index lost 1081 points, while an incredible sum of Rs 980 billion (US$16bn) has been wiped off the market capitalisation since the current bear run began on April 17.

An emergency meeting of the KSE board of directors, held on Wednesday evening, announced several measures in an effort to put a floor under the fall. Member director Abid Ali Habib said that the measures suggested included: holding lower circuit breaker at 5 per cent from Thursday; putting temporary ban on short selling in future contracts; increasing CFS-financed scrips from 14 to 30 and allowing 100 per cent securities exposure in futures trading.

Meanwhile, the market crash has triggered a blame game. Mr Raziur Rehman Khan, Chairman of the Securities & Exchange Commission of Pakistan (SECP), and others have pointed the finger on the management of KSE which, they believe, as front-line regulators failed to monitor ‘blank selling, short selling and wash trades’ that precipitated the current crisis. But the managing director of KSE, M. A. Lodhi insisted that risk management measures were in place and there was no broker default.

“There could be some outside settlement problems of ‘in-house badla’ between brokers and their clients, but the clearing house was safe,” said Mr Arif Habib, a former chairman of KSE. Brokers believed that re-building investors’ confidence and removal of two of the three taxes proposed in the budget, were needed to arrest the decline.

Some market players believed that the landing of the SECP probe team with what they thought ‘a pre-determined notion that market was being manipulated’ accelerated the bearish spell. The team of investigators from the apex regulator is believed to have started scrutinising trading data of some 40 brokerage houses.

The stock prices have dropped to ‘attractive levels’, but would that attract buyers back to the market on Thursday? No one was sure, but everyone hoped that they do.