KARACHI: The Pakistan Stock Exchange (PSX) on Tuesday has been retreating over uncertainty after “serious reservations on the proposed New Brokers Regime (NBR)” were raised by PSX Stockbrokers Association (PSA), as stated in a letter to the Securities and Exchange Commission of Pakistan (SECP).
The KSE-100 index has remained volatile in the early half of the day amid weak trading interest by investors, recording sharp swings albeit in a narrow range, and dropped to 42,238.09 points after losing 301.14 points or 0.71 percent as of 12.09pm. The Index closed at 42,539.23 points yesterday, and opened at 42,504.69 today.
Meanwhile, the PSX management has convened a meeting on Wednesday to bring brokers on board.
The letter to the regulator added that the regulator seems unaware of progress made by stock brokerage industry over anti-money laundering, countering terror financing and the Financial Action Task Force (AML/CFT/FATF) regimes.
“Moreover, the stock market declined by more than 50pc from May 2017, when it was at 53,500 level to 28,000 without any clearing and settlement default.”
“This clearly reflects that exposure margins, acquired by front-line regulators, have also minimised, if not eroded the existence of clearing and settlement risk,” the letter added.
The situation will not strengthen the capital market nor restore investor’s confidence, and the regulator’s actions will aggravate crises, the letter stated.
The PSA has referred to the Pakistan National Risk Assessment report issued by the Ministry of Economic Affairs in September 2019.
Several traders are of the view that Pakistan is unlikely to exit the grey list of the Financial Action Task Force (FATF) next month despite an active support of its close ally China and tactical support of some Western countries.
Traders had opined that the market was still in search of a direction, which could be provided by the State Bank monetary policy and the herald of corporate results reporting season next week.
Traders were of the view that after a major run-up since August last year, the index was consolidating at the current levels before moving forward. “Early trade has been witnessing much of the volatility and the index has been fluctuating from negatives to positives and vice-versa.”
Earlier, investors’ optimism continued as they saw the market back in the green after two earlier dismal years of negative returns.
From Aug 16, 2019 when the benchmark index had hit the pit at 28,765 points, the market has witnessed a spectacular rally that has carried it up by more than 50pc in fewer than five months.
Improvement on the external front together with stability in the Pakistani Rupee was expected to reassure foreign investors.
