Pakistan Stocks Surge as Exchange Meets With Regulator on Margin Trading
Pakistan stocks rose the most in 10 weeks after the Karachi Stock Exchange said its board will meet a regulator to seek approval for investors to trade shares using money borrowed from brokers.
The Karachi Stock Exchange 100 Index climbed 2.3 percent to 9,776.72 as of 11:53 a.m. local time, set for the biggest advance since June 17. The board will meet officials from the Securities and Exchange Commission of Pakistan today about so- called margin trading, Haroon Askari, the manager of operations at the exchange, said by phone from Karachi today, declining to give the timing or other details.
The board last month proposed the introduction of margin trading in a report to the regulator. The plan may cause “systemic risk,” exchange Chairman Zubyr Soomro said in a letter on Aug. 7 in the Business Recorder, noting that he was absent from the board meeting when the proposal was decided. Margin trading was abolished when price curbs were imposed in 2008, following the biggest slump in a decade.
“The chairman of the exchange had some reservations,” said Shahrukh Naqvi, head of sales at Invest Capital & Securities Ltd., in Karachi. “Now there is talk in the market that the issue is resolved and the system will be approved soon. It will help improve trading activity.”
Introduced “properly,” margin trading will be “very positive” since it will boost trading volume and reduce volatility, said Sajid Bhanji, head of trade at Arif Habib Securities Ltd. in Karachi.