Brokers monitoring the share price movement at the Karachi Stock Exchange. Reuters
The Pakistan Tehreek-e-Insaf (PTI) government has accepted the long outstanding demand of stockbrokers to constitute a fund for stabilising the stock market.
Adviser to Prime Minister on Finance Abdul Hafeez Shaikh accepted the proposal to form the fund at a meeting with the Pakistan Stock Exchange’s (PSX) board of directors and senior stockbrokers.
Although the meeting participants did not discuss as to what should be the size of the fund to prevent a free-fall in the stock market, some of the stockbrokers said the size of the fund would be around Rs20 billion.
“The meeting did not discuss the size of the fund,” a well-informed stockbroker told The Express Tribune at the end of the meeting.
“It all depends on the government assessment as to how (much) funding is required to stabilise the stock market,” he said. “The fund is expected to be set up by early next week, then people would come to know the actual size of the fund.”
State-owned National Investment Trust (NIT) would manage the fund and inject liquidity into the PSX. “The fund would most probably be used to buy shares of state-owned companies listed at the stock market,” he said.
To recall, the then government in 2008 established a similar fund and helped stabilise the stock market. NIT had managed and invested the fund into shares of state-owned companies, he said. “The government had formed a Rs20-billion fund at that time. NIT invested only Rs17 billion out of that and earned a net profit of Rs20 billion in the next four to five years,” he said.
The PSX benchmark KSE-100 index lost over 900 points in intra-day trading during Friday’s session. Late buying helped recover some of the losses.