Adil Najam
These pictures are of the violence and mayhem that erupted outside the Karachi, Lahore and Islamabad Stock Exchanges on Thursday after the market plunged yet again, to a 18-month low. Look at them carefully. What is wrong with them?
What are they protesting? Showing anger, you say. But against whom? And what good will any of this bring? To whom? Will burning a tyre today make the market rise again tomorrow? If it could, New York would have been alight all of the last many weeks!
Here, is how the news report in Dawn explains the events:
Investors at the Karachi Stock Exchange resorted to violence on Thursday, ransacking the bourse’s furniture, pelting the glass doors and windows of the trading hall with stones and raising slogans against the government and the KSE management. Two people were slightly injured with glass splinters flying all over. The bourse management called in police and Rangers were also at the scene for a brief period, but the law-enforcement personnel stopped short of using force as the crowd dispersed after over an hour of violent protest.
Investors at the Islamabad and Lahore stock exchanges also went on the rampage, chanting slogans, pelting stones and lighting bonfire. The protesters demanded the end to ‘lower locks,’ which they said had greatly eroded the value of their investments. The investors’ frustration gave way to rioting as they watched the KSE-100 index on an unstoppable downward drift for 16 trading sessions in a row.
The market opened on Thursday with a massive 400 points decline in the KSE-100 index, adding to the earlier loss of 5,200 points that the market has seen in three months since the current meltdown began on April 18. Overall, the index has slipped by 35 per cent, but some of the individual stocks have shed as much as 50 to 70 per cent of their value. “I had invested Rs 2 million in blue chip stocks and almost half of it has been washed away,” said an agitated investor in the mob.
But of greater concern to the small investor was the early clamp of ‘lower locks,’ which blocked investor exit. ‘Upper and lower locks’ are the market mechanism which allows a maximum of five per cent gain or loss in the value of a stock during a single day. The long lingering phenomenon of ‘lower locks’ just at the commencement of the trading in the morning precluded any attempt by an investor to seek an exit from the market, even after taking the loss. A stock broker who asked not to be named said that the SECP had sliced the daily decline from 5 to 1 per cent for 15 days from June 28 to July 15, but that offered little solace to the small investors, many of whom were found on Thursday accusing the regulator of colluding with big brokers in the change of ‘overnight rules’.
Violence never has any logic. But this violence is beyond just illogical. One can understand the arguments about the “lower locks” and from one’s own experience one can sympathize with the helplessness of seeing your hard-earned savings evaporate. But how will breaking a window, burning a tire, ransacking a building going to solve anything?
The culture of angst, anger and violence that we have lamented often and repeatedly is at work again. Whether it is a fanatic killing a woman Minister just because he thinks women have no place in politics, or blackening someone’s face because you do not agree with their point of view, or community members burning a robber alive, or a mob attacking a WAPDA office because of load-shedding, or even the billigerent tone of some of our own commentators (it is never enough to say “I don’t agree with you”, some people have to throw in inflamatory rhetoric and personal attacks, as if just to add spice!), the tendency to self-ignite in violence is always near the surface and ever-ready to break through.
Why? For whose benefit? And what does it say about us as a people and as a society?
In a civilized society, people take their grievances to courts. In our society, courts are nothing more than the means to protect the exploiters, dictators and oppressors. Anger takes this form when the oppressed have no recourse.
Over the past few years many people had questioned why the stock market was going up when the fundamentals of economy and businesses were certainly not improving, despite the claims that the military dictatorship kept making. And of course, we all know what was done to the judiciary when it tried to feebly intervene in the suspected stock market manipulation.
We are living in really weird times in this country. Normally people seek justice from the judicial system. In the last one year, we saw our judicial system looking up to the masses to provide justice to it. The long march was the last glimmer of hope in that direction and with its failure, no act of desperation is unjustified any longer.
Life in Pakistan is hard and just got harder. I understand their anger. Their leaders are corrupt and living in palaces while everyone else is suffering and working like donkeys to make a living.
Speculation ! is it a sosio-financial evil ?
@after observing some excessive remarks contained in
some comments e.g the famous nonsense of blaming
Islam, muslims and Pakistanis, I say,
Speculation is another form of Mafia of financial
thugs when disputed over small ” splits” and patti of
profit margin shared by dealer, but the loss, tossed on
the face of the investors, this circle is crook, exploited
by the crooks of Politics (so called), today a worst kind
of financial corruption protected in open market
EVERY WHERE IN THE ENTIRE WORLD.
WE MUST REPLACE THIS COLONIAL ESTABLISHED
INSTRUMENT WITH AN INTELLEGENT MARKET
WITH STRONG CHECK AND BALANCE.
The wrong with these pictures, is that they depict
unlawfull agitative expressivity of stock market’s
disasterous fall out side the bourse, can we call it a
‘ popular’ agitation or awami dubious reaction???
when stock market become another vehicle to get quick bucks.. we have seen this before;
1. cooperative scandal
2. 20% + interest schemes - remember double shah story from Gujrawala
…and so on so forth.
Adil: And what does it say about us as a people and as a society?
A lot - about a deeply conflicted society. About a society that has been in a state of siege for so long that survival instincts trump all loftier ideals. Sad - for all that unrealized promise - and scary.
Power raises when system fails…
The KSE is a evolving market and it is expected when there is a rapid decline. Portugal is down YTD 40% and Shanghai is like 50% down but we don’t see reactions there because the societies have learned their lessons in previous recessions/declines. I would suggest you to look at 1929 Great Depression and read what happened in US then .
It is not wise to compare KSE with Dow or Nasdaq decline. There has been 36% drop in last 2-3 months for KSE and the point is that people don’t believe in system any more . They think it is manipulated and then you are never sure if these people are not hired by some fund managers[big brokers] to pressurize govt. to add some liquidity in market. They have hedge funds in US (more organized white collar crime) to suck govt to bail Bear Stearns, Fannie Mae etc at cost of tax payers money and in Pakistan we have these riots.
I talked to few friends in Karachi who invested in KSE and every one just wants to get out, of course they are highly educated people but even then they believe the system is manipulated and I don’t doubt them. I am sure there is huge insider trading and govt. new rules are leaked to some people to make huge money. In 2005 few people of Shaukat Aziz Govt made billion dollar by manipulating market. Yeah BILLION dollar. Last Night KSE had special trading session from 7 pm to 830 pm to trade at ask/bid price of closing price and many investors did not know about that, I can imagine who were the people who took exit gate, can you ?
So when there is no trust then these things happen. It wont happen in first world because we know that manipulation don’t exist on mass scale there and then they are good in while collar crimes. Were they Goldman Sachs traders at London desk who were spreading rumors about Bear Stearns in March ? At least that’s what ex CEO of BSC said yesterday ….
I hope that govt does not bail out these investors and let people learn their lesson(I know its cruel for a common man) but you have to understand that Feds and Govt. can’t help beyond one extent and sooner rather than later “Efficient Markets” would prevail.
One may sympathise with the losses the people had to bear but I agree with Eidee Man; these are reactions of ‘gamblers’ who were not blaming the government when they were earning insane profits. With high gains come high risks. They took the risk and now should bear it with grace.
It is our (and human) tendency to go for quick profits and easy money if the opportunity presents itself. We are particularly naive at investing our entire savings on such ventures. All must remember the investment companies scam. If not wholly, GREED is largely to be blamed for this frustration.