KARACHI, Jan 2: After two days of bloodbath at the Karachi Stock Exchange, which wiped out 7.62 per cent of the value of equities and 1,105 points from the KSE-100 index, to the surprise and jubilation of investors, equity markets opened in the green on Wednesday.

For much of the time until noon, the index traded in the positive territory, recovering at one moment as many as 112 points from the earlier day’s dismal closing number. But around noon, the rumour-mongers did it again.

Traders said anticipating an end of the current chaos, they were swarmed with ‘buy’ orders from institutional and deep pocket investors who scrambled to accumulate selective stocks where prices receded to an attractive valuation of 10 times the expected 2008 earnings. That was nearly half the Indian market multiple of 20x.

Calculations forwarded by several stock brokerage firms had earlier revealed the 2007 KSE equity returns at a juicy 40.19 per cent.

The buying euphoria lasted until about 12 on Wednesday when all hell broke lose throwing the index in tailspin, which finally settled at a loss of 313 points. Market capitalisation dipped by Rs134 billion.

At the heart of the panic selling was yet again a rumour and yet again it concerned President Pervaiz Musharraf.

If it was lies about his overthrow last time on Nov 5, 2007, when the market had crashed by record 635 points on that account, the rumour mongers passed the word around on Wednesday that the President had resigned.

Nervous investors on both occasions had started to throw away shares at ridiculously low prices and ought to have lost billions. If there were sellers, there must be buyers, the unscrupulous among them having lined their pockets at the cost of unsuspecting investors.

Those spreading rumours have never known to be traced and identified. On numerous occasions, they have managed to get away with their misdeed and so would they now. Regulators have a simple explanation:

“It is not for us to chase, verify and comment on rumours, for if we were to do that, we would be doing just that and nothing more,” says an official at the KSE. But given the enormous losses that investors suffer on account of false news and information purportedly and methodically passed around at the most opportune moment, it seems regulators cannot absolve themselves of the responsibility to identify the perpetrators and recover from them, their unlawful gains.