Not surprised to see that there is no longer any business confidence in Pakistan. The current government has no plans or communicated any fiscal policies to boost the confidence. 
FT.com / Markets / Asia-Pacific - Karachi sees day of no trades
No transactions took place for the first time on Pakistan’s stock market on Tuesday as trading ground to a halt in a sign of worsening business confidence and growing uncertainty.
The KSE-100 index of the Karachi Stock Exchange ended the day unchanged at 9,183.14 points, just above the artificial floor of 9,144 established in August to prevent the index from falling further – trading would be automatically suspended at that level.
The move was in response to fears that domestic political turmoil and the global financial crisis could see the Karachi stock market experience steep price falls. But one significant consequence has been a sharp drop in trading volumes since August, with record lows being set as transactions have rapidly dwindled.
Tuesday’s unprecedented lack of trading compares with an average of 300m shares traded a day during the first eight months of 2007.
Muhammad Suhail, a director at Jehangir Siddiqui brokerage house in Karachi, said: “This inactivity is a reflection of an overall weak sentiment.
“Investors are looking at issues ranging from worries over the business climate to exactly how a crucial loan programme from the IMF will come together.”
Trading was also affected by speculation that Pakistan’s central bank was set to increase interest rates.
One leading equity investor said many fellow investors were anxiously awaiting for the floor to be lifted “for a large scale rush out of the stock market – nobody is convinced that investing in this stock market is in their best interest”.
The floor has been criticised by many investors who believe the artificial measure is not dealing with the issues that have damaged confidence.
Shaukat Tarin, de facto finance minister, has said he favours the removal of the floor as early as possible.
The KSE, once a much sought after stock market among the world’s emerging markets, has seen its fortunes slide this year with the benchmark index losing as much as 35 per cent of its value since January.
Government officials, however, said they expected some stability to return when Pakistan formally requested a loan from the IMF this month in an effort to stem a depletion of foreign currency reserves that are forecast to run out by the end of November.
Finance ministry officials say an IMF rescue package could be negotiated in the range of $10bn-$15bn.
However, western economists have warned that the lost confidence might not be recovered even if an IMF rescue was finalised as many investors would still be looking for evidence of the government setting the pace for a series of economic reforms.
“Pakistan is seen by many investors as a very mismanaged country,” added one senior western economist.
