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Investors rise in protest against stocks meltdown

May 30, 2008

KARACHI, May 29: Investors at the Karachi Stock Exchange rose in protest at mid-day on Thursday against the incessant meltdown in stock prices.

As trading began, the market immediately dived 500 points, losing 4.5 per cent of the value, which marked the second consecutive day of a tight bear hug.

In a mixture of anxiety and exasperation, investors watched most of the stocks open on the ‘lower lock’, representing decline of five per cent — the maximum that a stock can shed during a day. That blocked the exit of shareholders who wanted to dump their stocks.

The protesters who gathered outside the trading hall carried placards and banners demanding closure of the market. The gathering of some 150 to 200 people chanted slogans against the government and the bourse. Inside the trading hall, dealers stood together in groups, worry writ large on their faces.

In 26 trading sessions since April 18, the KSE-100 index had lost 4,000 points or nearly a quarter of the stock values.

KSE managing director Adnan Afridi in reply to queries said that no damage had been caused to the private or bourse’s property. He dismissed the incident as ‘peaceful protest’.

A senior broker, who asked not to be named, said he had little sympathy for those caught on the ‘wrong foot’. “When such speculators and punters are pocketing ‘mark-to-market differences’ in a bull market, they have no worries,” said he, adding that it was only when the market trend turned unfavourable, forcing them to pay out of pocket in margin calls, that they felt the pinch. He thought that the rise and fall of equity values was all a part of the great game of stock investing.

But some of the small investors had their doubts. “It was after the investors lost patience and came out in protest that the market started to rebound,” pointed out one investor.

To the amazement of the market, for a brief moment near the end of the day, the index even entered into green territory and closed only 20 points short of the earlier day’s level.

A senior member said it was unreasonable to connect the recovery of the market with the investor protest.

That the institutional buyers sitting like vultures on the fence for days decided to make a swoop without waiting for more casualties at about the same time of the investor protest was described by an influential market participant as ‘mere coincidence’.