KARACHI, Nov 15: The Pakistani equity markets have been ‘floored’ for the past 80 days. That may be the longest ever ‘peace time’ closure of an equity market in the world.

It is impossible to find a parallel. Following 9/11, the New York Stock Exchange stopped trade for four days -- its longest closure since 1929. And how long was that? A mere 21 days after Oct 24, 1929, now known as “Black Thursday” when billions of dollars were lost.

Even otherwise, the reasons for that longest shutdown of NYSE was said to be “to allow member firms to catch up on work.” And what makes the government and regulators keep the Karachi stock market glued to the ‘floor’ of 9,144 points in its 100-share index?

As the market sunk by 41 per cent or 6,500 points in fewer than four months from April 20 to Aug 27, most brokers were left holding dirty-end of the stick. Market grapevine has it that four stock brokers have already fallen and 10 even 20 brokers could default if the planks were pulled from under the floor at this time.

The government, which was thundering some weeks ago that “there shall be no floor and free movement would be allowed”, has now fallen in line with some of the mighty stock brokers.

The change in official line resulted partly from the pull of political strings, but most market participants agree that the government has now itself got scared stiff after peeping down the empty foreign exchange till and looking up to the possibility of an immediate pullout of foreign investors portfolio of an estimated value of $500 million, from their remaining equity investment of around $1.5 billion.

Credible sources believe that the market floor is likely to remain in place until December when the first tranche of the IMF package is received so as to give the government the comfort of handling the situation in case of large outflows.

But from small investors, who broke the window panes in demanding the closure of the market to arrest the loss in July, to the biggest of the big brokers, who dread the heavy margin calls, the reality is dawning that in prolonging the closure of market, the pain, uncertainty and a scare of heavier loss are taking their toll.

As the daily volume of shares traded has sunk from 255 million a day four months ago, to a ridiculous 0.03 million shares now, many count the losers: The KSE of its commission (laga); the government of its CVT; the industries of their cheaper source of funds; the banks and stock brokerage houses of their income.

At the height of their prosperity, following four years of an insistent bull run, awesome buildings sprang up on the skyline of the city. But as the fortunes are diminishing so also are their spendings. Almost the entire financial sector and even industries are in the painful process of cost cutting, at the top of which lies the layoffs.

Parish the thought of Rs30 billion in ‘put option’, which most people realise the foreigners are unlikely to be lured into retain their investment in the country’s equity markets, there is the endless wait for the promised Rs20 billion in market stablisation fund. Two of the four government-controlled institutions, EOBI, State Life, NBP and NIT, which were supposed to contribute Rs5 billion each to the Fund, have pulled their pockets inside out, revealing no cash.

One person said that the delay in the formation of fund had less to do with money and more to do with inter-ministerial squabbling (since the four fell under separate ministries of labour, commerce and finance), which had created legal bottlenecks.

A trader suggested that it was all wrong in the first place to ask Old Age Employees Benefit Institution (EOBI) to put Rs5 billion of the pensioners’ money and the State Life Insurance the policyholders’ bonus in jeopardy.

But almost all market participants and analysts, who were quizzed, admitted that there could be a systemic risk to the market if the floor were removed, until the ground had been first cleared for the market’s soft landing. Proposals abound, from bizzare to brilliant.

One broker even suggested leaving the market to find its own level. Taking cue from off market transactions an stock strategist forwarded the view that the government should pick up all the Rs11 billion worth of shares in the ‘badla’ market at 20 to 25 per cent or even higher discount to the floor price, depending on the quality of the scrip. That he believed would help stave off default by several brokers, who if fail to pay the claims, would pass on a domino effect to the entire market.

At the level of 7,200 points, which most people say they view the market to bottom out, a market strategist calculated that blue chip stocks would be giving out a dividend yield of 16 to 17 per cent. With the global markets in turmoil and in absence of alternative avenues, where else would the investors park their cash?