Karachi stock market suspends trading


The Karachi Stock Exchange suspended trading Thursday over technical problems

Staff and wires

KARACHI, Pakistan -- The Karachi Stock Exchange (KSE) suspended trading for the day Thursday because of a technical problem with its trading system, an official said.

KSE Managing Director Noman Ahmed said the exchange would try to re-open Friday, Reuters news agency reported.

The Karachi market has lost more than 14 percent in the past three days as war fears with India intensify.

Those fears have also hit India's main stock market in Mumbai, where the benchmark BSE index has lost more than 9 percent in recent days.

The falls come as the Economist Intelligence Unit released new "risk ratings" for India and Pakistan showing their ratings worsened to 59 and 82 respectively in April.

A score of 100 indicates the maximum risk.

High risk

The EIU said it believes the risk of armed conflict between the two South Asian nuclear powers is higher now than at any time since the fighting near Kargil in Kashmir in early 1999.

But it said any war in Kashmir was likely to be contained.

"Although we believe that armed confrontation is a strong possibility in the coming months, the conflict is likely to be limited in its severity, duration and geographical scope," it said.

It said the United States would put "enormous pressure" on Pakistan's General Pervez Musharraf to refrain from responding militarily to a limited Indian attack on suspected militants' bases in Kashimr.

It said economically, Pakistan would be hardest hit by a localized conflict.

Investment deterrent

"War would further deter foreign investment, which the country desperately needs to finance investment and growth," it said.

"For India, the dispute ... would worsen public finances, which are already in a dire strait, as scarce resources are ploughed into defense," it said.

Thursday's problem at the Karachi Stock Exchange affected a system for recording carryover transactions, where investors borrow money to pay for shares with an agreement to pay back the following day.

The fault forced it to record those transactions manually, but a backlog had built up and the decision was taken to stay closed on Thursday to catch up, officials told Reuters.

The KSE had been one of Asia's best performing exchanges this year until an attack last week on an Indian army camp in Kashmir heightened war fears.

On Wednesday, the exchange cut to 2.5 percent from five percent the limit by which individual shares can fall in a single day. It was the second cut this week.