Source: Bloomberg

By Farhan Sharif

Oct. 12 (Bloomberg) — Pakistan plans to set up a fund for expatriates to buy shares of government-controlled companies, before lifting curbs that have shielded investors from a record sell-off in emerging market equities.

The fund will buy stocks including Oil & Gas Development Co., the biggest fuels explorers, National Bank of Pakistan, the largest lender, and Pakistan Petroleum Ltd. the No. 1 gas producer, Shaukat Tarin, the Prime Minster’s finance adviser, said in an interview from Washington D.C. today.

“We are looking at creating a fund for non-resident Pakistanis to consist of government stocks,” Tarin said by telephone. “The values are very good so we want to create a bouquet to offer to non-resident Pakistanis this month.”

The Karachi Stock Exchange will meet tomorrow to review trading restrictions imposed in August after rejecting a request from brokers to shutter the market for two weeks. Since the curbs were imposed Pakistan’s credit rating has been cut to the world’s second-lowest and terrorist attacks have struck in the heart of the capital, deterring investors.

Tarin is in Washington seeking to raise $10 billion in emergency assistance to avoid Pakistan defaulting on its debt. President Asif Ali Zardari appointed Tarin, a 25-year veteran of Citigroup Inc., as adviser on Oct. 8.

The World Bank will provide $1.4 billion this year to help narrow the nation’s budget deficit, which is at a 10-year high, state-run Associated Press of Pakistan reported.

The offer was first made to Zardari last month and reiterated yesterday to Tarin, who met with the World Bank’s Managing Director Ngozi Okonjo-Iweala, APP reported, without saying where it got the information.

Open As Normal

The Karachi Stock Exchange imposed the trading curbs on Aug. 28 after earlier attempts to support a market that had lost a third of its value this year failed. The emergency measures stopped stocks from falling below their Aug. 27 closing price.

The exchange extended the trading restrictions on Sept. 25 after a suicide bomber destroyed the capital’s Islamabad Marriot Hotel and economic conditions deteriorated.

Tarin said he didn’t know about the proposal from brokers to halt trading in stocks.

“The market will open as normal tomorrow,” Adnan Afridi, managing director of the exchange said by telephone from Karachi.

The latest restrictions have prevented Pakistan from following a global sell-off in stocks on concern the escalating credit crisis will push more economies into recession.

The KSE100 index ended little changed on Oct. 10 as the MSCI Emerging Markets Index fell 4 percent, extending the biggest weekly decline in the global benchmark since the index was established in 1987.

Stock-Buying Fund

The exchange banned short-selling Sept. 23, bailed out individual investors in July and announced a 20 billion rupee ($256 million) fund to buy stocks last month.

Pakistan was forced on July 11 to remove the first curbs it imposed after trading in Karachi slumped to the lowest in 10 years. Regulators had banned short-selling and narrowed the limit on declines in measures announced late on June 23.

Hundreds of investors stoned the exchange and shouted anti- government slogans on July 16 after the bourse removed a 1 percent daily limit on price declines.

“There was a proposal to close the market for two weeks till the government resolves the fund issue,” Arif Habib, chairman of Arif Habib Securities, a brokerage firm, said by telephone from Karachi. “Then it was suggested issues should be resolved while the market stays open.”

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Tags: Debt, Finance, Fuel, National Bank, OGDC, Shares, Shaukat Tarin