Pakistani Bear Market Has Investors Raging in the Streets
The New York Times
By Jane Perlez

ISLAMABAD, Pakistan — Angry investors stormed out of the Karachi Stock Exchange on Thursday, hurling stones and planters at the building in protest over slumping share prices.

The benchmark index fell for the 15th consecutive trading day, the worst losing run in at least 18 years. Angry investors also protested in Lahore and Islamabad, Pakistani newspapers reported.

“I have lost my life savings in the last 15 days, and no one in the government or regulators came to help us,” said Imran Inayat, 45, a protester and a former broker in Karachi, Bloomberg News reported. He said his loss was $4,175.

Much of the protesters’ anger was directed at the new government, which is perceived as unable to fix an ailing economy plagued by runaway inflation and large budget and trade deficits.

The benchmark index on the Karachi Stock Exchange, the nation’s biggest, declined by nearly 3 percent on Thursday. Investors demanded a temporary halt to trading. When the exchange management refused to stop trading, investors went on a rampage. The index has dropped by 36 percent since reaching a record high in April.

Some of the fury was also directed at the Securities and Exchange Commission of Pakistan, which this week removed a 1 percent daily limit on price declines. The restriction was aimed at halting a slide that has wiped out $30 billion in companies’ combined market value over three months.

“There has been some level of mismanagement by the authorities,” said Habib-ur-Rehman, a manager at Atlas Asset Management Ltd. in Karachi, according to Bloomberg. “This may be due to their misperception that they can prevent the market from falling. Investors have to learn to bear losses as they do gains.”

Volume at the stock exchange fell to the lowest in a decade. In response, regulators eased curbs on trading, including a ban on short-selling. Foreign investors have fled the exchange, according to data compiled by the central bank.

Much of the investor unease stems from the inability of the new civilian government, in power since late March, to stem the economic crisis.

Shortages of wheat, electricity and gasoline have affected all sectors of society. Blackouts have been a fixture of daily life for six months. Long lines are common at stores selling wheat, the staple food, at subsidized prices.
The government has been riven by rivalries between the leader of the major political party, Asif Ali Zardari, and the head of the coalition’s junior partner, Nawaz Sharif, over how to restore 60 judges dismissed last year by President Pervez Musharraf.

A survey of Pakistanis released Thursday by the International Republican Institute in Washington showed widespread discontent with the economy. The survey, in which 3,484 Pakistanis were interviewed between June 1 and 15, showed that 92 percent of respondents saw shortages of wheat, natural gas and electricity as a “serious problem.”

In addition, 71 percent of respondents said that inflation was a major issue, compared with only 55 percent in a similar survey in January. The survey’s margin of sampling error was plus or minus 1.7 percentage points.

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