Investors take to the streets as they watch their money vanish
Pakistani investors rioted at the Karachi Stock Exchange on Thursday after they were prevented from selling their shares as markets fell. About 400 individual investors threw stones and damaged cars and office windows as they expressed their anger in the courtyard of the exchange.
At the smaller Lahore Stock Exchange, protests included tire burning.
Shares fell heavily in recent days, amid fears economic fundamentals do not justify recent stock market gains.
Protests broke out as the KSE index fell from 10,305 points on 15 March to 8,314 points by Thursday’s close.
Small investors were not able to sell their shares despite watching with horror as their value dropped.
Both exchanges had taken advantage of rules designed to stop shares nosediving. They suspended trading in some of the main blue chip shares after they had dropped 6% or more.
Karachi police told the AFP newswire they had arrested five people and brought the situation under control. They later said the crowd had dispersed.
The Lahore Stock Exchange said it had passed on complaints to the Securities and Exchange Commission but would not be able to end the automatic suspension of trading in certain shares.
Recovery or bubble?
When Pakistani shares broke through the psychologically-important 10,000 level on the Karachi Stock Exchange, it was interpreted as a sign of economic recovery.
But some analysts are now saying the recovery was not justified by economic fundamentals, and that the realisation of this by speculative buyers has caused shares to fall even further.
The KSE has fallen 17.5% over the past six trading days.
It traded as low as 1,401 on 15 March 2001 before Pakistan started to cooperate with the US on “the war on terror” and it received economic benefits in return.
“I’ve lost all my savings,” Mohammad Yaqoob, one investor sitting outside the Karachi Stock Exchange, told Reuters.