Violence erupts over Pakistan stock drop

Investors upset over falling Pakistan share prices smashed windows of the Karachi Stock Exchange on Thursday during a day of protests that led to scuffles between traders and investors demanding the temporary closure of the stock market.

The KSE 100 index dropped by 2.7 per cent to close at 10,212.92 points. The index has plunged 35 per cent from a record high reached on April 21.

“I am upset because I am constantly losing money and there is no one ready to help me,” said Naeem Jehandad, an equity investor in Islamabad. He said the value of his shares had halved in the past four months.

“For me, this is just a murder for my economic future,” said Usman Khan, a lift operator who returned from the Middle East last year and invested his savings of Rps350,000 ($5,000) in the KSE.

Last night a group of large investors and brokers set up an emergency fund to buy shares from small investors, many of whom were at the centre of the violence. The Rp3bn ($43m) fund was mainly aimed at preventing the recurrence of unrest, analysts said.

The slump in investor confidence was accelerated by the weakening rupee, which dropped by 1.3 per cent due to fears of political uncertainty and an economic meltdown during Pakistan’s transition to a civilian-led democracy.

Pakistan’s current account and fiscal deficits are unsustainable, inflation above 21 per cent is at a three-decade high, and foreign currency reserves have fallen to less than $11bn, more than $5.5bn below the record high reached last October.

Analysts said worries were mounting among Pakistanis over the government’s campaign to oust Pervez Musharraf, the president, who has been credited with overseeing a five-year economic recovery that made the KSE one of the fastest-growing emerging markets.