KARACHI, July 16: The stock market crisis is turning into a calamity, reflected by an unstoppable downward drift in share prices for the 15th trading session in a row on Wednesday.The market has lost a whopping 33 per cent of the value or 5,200 points since the current meltdown began two months ago on May 18. And the more worrisome aspect of it all is that nobody really knows how to arrest the decline.

Investors were placing faith on the “Equity Market Opportunity Fund” of a speculated size of Rs50 billion to be subscribed by financial institutions, which could have rescued the market. A marathon meeting, which lasted for over five hours on Wednesday, among the Securities and Exchange Commission of Pakistan, the board of directors of the Karachi Stock Exchange and heads of some of the financial institutions concluded in what looked like an air of ambiguity.

The participants at the meeting were unwilling to go on record as having made a comment, but a brief announcement simultaneously made by the SECP and the KSE in the evening on Wednesday raised more questions than it answered.

The announcement ran thus: “SECP and KSE met with financial institutions to discuss the Equity Market Opportunity Fund. Initial financial commitments were received and the participants are meeting to finalise the structure and mechanics of the fund. Launch date will be intimated in due course.”

Some of the market strategists and analysts were aghast. “There is no mention of the size of fund; the commitments by any of the financial institutions; the modalities or the date of launch of the fund”, said one analyst, and asked: “What good news do the market monitors have to offer to the investors?”

Razi-ur-Rehman, the chairman of SECP, when queried by Dawn on the above points said that things were ‘progressing’, but it was premature to say what the size of the fund might be. He denied that a meeting was in the offing with the government to discuss any plan to salvage the market. And investors wondered that if left to itself where would the market head?

Mr. Razi pointed out that the stocks were trading at exceedingly attractive valuations of 5 to 6 times the forward earnings. He thought that the market could not operate divorced of the political and economic realities and said confidence needed to be created in the minds of investors to return to equity trading.

Aqeel Karim Dhedhi (AKD), the stockbroker, who is widely believed to have his fingers on the pulse of the market, blamed recent monetary tightening measures, as a big culprit. He recommended that the State Bank should cut the discount rates by 2 per cent to release liquidity in the market. He also thought the central bank should have consulted all stakeholders before making an overnight change in the interest rates and other liquidity ratios. He said that inflation was a worldwide phenomenon and attempt to control it here should not have been made by hurting other markets. He said that the SBP should stabilise the inter-bank market rate to a difference of 5 to 10 paisa, instead of the currently prevailing Re 1 to 2.

The SECP chief said that they do hold discussions with the SBP, but determination of monetary measures was the function of the central bank, which it did keeping all things in consideration. He said the SECP had no place to argue on the matter. The apex