Pakistan’s benchmark stock index rose, on course for its highest in almost eight weeks, after the regulator agreed to allow investors to fund transactions with money borrowed from brokers and financial institutions.
The Karachi Stock Exchange 100 Index rose 0.7 percent to 10,118.92 at 10:23 a.m. local time, the highest since Aug. 6. Oil & Gas Development Co., the nation’s biggest explorer of fuels, advanced 0.8 percent to 148.40 rupees. Pakistan Petroleum Ltd., the nation’s biggest producer of natural gas, rose 0.6 percent to 212 rupees. MCB Bank Ltd., the biggest by market value, rose 1.2 percent to 195.80 rupees.
“The news increased investors’ interest in trading,” said Khalid Iqbal Siddiqui, director of research at Invest & Finance Securities Ltd. in Karachi. “If the index keeps rising, investors may sell later in the day to take advantage of the increase.”
Pakistan is struggling to attract investment to support an economy hurt by a war against militants and the deadliest floods in the 63-year history of the country. The Karachi Stock Exchange 100 Index has fallen 1.2 percent since the floods began on July 22 and caused losses estimated by the government at $7 billion.
The ministry of law may take more than a month to complete formalities before the system is introduced, Muhammed Rab Nawaz Awan, a spokesman for the Securities & Exchange Commission of Pakistan, said by telephone from Islamabad yesterday.
The board of the Karachi stock exchange proposed the introduction of margin trading in a report to the commission in July, and met with the regulator on Aug. 31. The practice was abolished when price curbs were imposed in 2008, following the index’s biggest slump in a decade.
Margin trading “will double trading volumes and increase participation,” Atif Malik, the head of equities sales at JS Global Capital Ltd., said in a telephone interview from Karachi.