KARACHI, Oct 26 (Reuters) – Directors of Pakistan’s main stock exchange decided on Sunday to postpone the removal of a floor that has been propping up its index since August, an exchange official said.
The Karachi Stock Exchange imposed the floor at 9,144 points on Aug. 28, after a 36 percent fall from the beginning of the year on political uncertainty and a sagging economy. The exchange board said on Oct. 14 the floor would be removed on Oct. 27.
No date has been fixed for the removal of the floor.
The exchange’s managing director told a news conference the floor would not be removed until a support fund was in place.
‘It is in our collective interest to return to our normal trading parameters,’ said managing director Adnan Afridi adding that stabilisation measures had to be in place when the floor was removed.
The floor has stifled trade and the index ended flat at 9,182.88 points on Friday.
The stock market regulator said on Wednesday it had approved a 20 billion rupee ($247 million) fund being set up by the government to support share prices when the floor was removed.
Afridi said the fund had been approved but authorities were working out its mechanics.
The fund would invest in nine state-owned entities, an exchange official said on Friday, adding that a special session would be held on Saturday to enable the fund to buy stocks 12.5 percent lower than current prices.
But authorities postponed the special session on Saturday because of what an SEC official described as some differences between the brokers and exchange officials.
Earlier on Sunday, the exchange directors held a meeting with the prime minister’s top adviser on economic affairs, Shaukat Tarin.
Tarin has said he wanted to see the floor removed, but he told Dawn Television earlier on Sunday, if the support fund was not in place, then a postponement of the floor’s removal was an option for exchange directors.
The fund will invest in nine state-owned companies: Oil and Gas Development Co Ltd, Pakistan Petroleum Ltd , National Bank of Pakistan, Pakistan State Oil , Sui Southern Gas Co Ltd, Sui Northen Gas Co Ltd, Kot Addu Power Co Ltd, Pakistan Telecommunication Co Ltd and Habib Bank Ltd.
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