Paulson to follow Pakistans policy on markets

Discussion in 'Wall St. News' started by otcstockfund, Aug 27, 2008.

  1. Pakistan Exchange Sets Floor on Stock Prices to Stop Plunge

    Aug. 28 (Bloomberg) -- Pakistan's Karachi Stock Exchange set a floor for stocks at yesterday's closing level after the benchmark index slumped to a 26-month low due to political instability.

    The Karachi Stock Exchange 100 index fell for a sixth day yesterday, dropping 3 percent to 9,144.93. That's the lowest since June 27, 2006.

    Individual securities will remain free to trade within the normal daily limits, ``but not below the floor-price level of Aug. 27,'' the exchange said in a statement on its Web site yesterday.
  2. It is the other way around...Pakistan is learning from the US. The PPT is keeping the markets artificially high.
  3. gucci


    I'm wondering, if Soros is planning to play this second stupid attempt to control the market.

    By Dilawar Hussain

    KARACHI, Aug 27: The Karachi Stock Exchange put a floor under individual stock prices prevailing at the close of the market on Wednesday, freezing the index at the 9,000-level it stood at close on Wednesday.

    The mechanism was believed to have been put in place after a nod from the apex regulator — Securities and Exchange Commission of Pakistan.

    “The proposal simply means that stock prices will not be able to slip below the price prevailing at the close on Aug 27,” KSE managing director Adnan Afridi told Dawn.

    He said the price of a stock, say at Rs50 on Wednesday, could be bought at higher price (within the normal circuit-breaker limits i.e. a maximum rise of five per cent) say at Rs52 on Thursday, but not below Rs50. The next day, the scrip could rise further or shed the earlier gain of Rs2, with the floor remaining at Rs50 every day.

    He said that the new mechanism would be effective from Thursday and might remain in place until “normal market forces start to operate”.

    Mr Afridi said that the step had been taken not just to stabilise the stock market, but also to prevent the financial system from collapse as a result of a domino impact.

    The decision to freeze the stock prices came after 121 of the 123 members present at an emergent general body meeting of KSE stock brokers voted in favour and the board of directors endorsed the proposal.

    “The board took all participants, including financial institutions, mutual funds and foreign funds, into confidence before forwarding the proposal to the SECP,” Mr Afridi said.

    Earlier during the day at around noon, all voices drowned amid shrieks and screams of brokers and traders as the KSE-100 index breached the 9,000 level for a short time to touch 8,999 points. The index clawed back to close at 9,144 points.

    But panic was thick in the air. In order to preclude recurrence of a recent violent investors’ protest, the KSE management called in the police, which kept their distance.

    The KSE has been in turmoil for the last four months, witnessing a collapse of almost 55 per cent in stock values as index has dipped by a staggering 5,600 points from its high of 15,760 points on April 20. The stocks are down 33 per cent since the start of the year.

    “The market is starved of liquidity,” said Aqeel Karim Dhedhi, a leading stock broker. He blamed monetary policy, erosion in the rupee value and lack of investors’ confidence for the crisis.

    Analysts said the KSE’s step would provide the market a ‘breathing space’, which, they thought, was required to calm investors’ fears.


    Trend followers likely sold stocks a long time ago.

    I notice the Pakistan Rupee to U.S. Dollar exchange rate decreased about 23 % during the past 6 months.

    I wonder if there will be a Pakistani bank panic soon, maybe next week. Maybe there is already a bank panic.
  5. does anyone know if price ceilings or floors have ever worked?
  6. moo


    Of course not. If price falls to the floor, trading will cease completely, as there are no more buyers at that price. I just want to see how badly the bagholders will then scream!
  7. Sheesh. That's gonna be a mess