ECC approves Rs20bln stocks’ support fund

ISLAMABAD: The government on Thursday approved Rs20 billion worth of funds to buy selected shares in a bid to bail out the sagging capital market, a move that was much-awaited by the investors to arrest the bourse’s downward trend.

The Economic Coordination Committee (ECC) of the cabinet took the decision during a meeting presided over by the Adviser to Prime Minister on Finance, Revenue and Economic Affairs Hafeez Shaikh.

“In order to stabilise the stock market of the country, the ECC approved the proposal of Finance Division authorising government of Pakistan to issue sovereign guarantee amounting to Rs20 billion for investment in National Investment Trust (NIT) – State Enterprise Fund,” the finance ministry said in a statement.

The government had launched the market support fund with the similar volume in 2008 to underpin the crisis-hit stocks market then through the NIT.

Pakistan Stock Exchange emerged as the worst performing investment avenue among all its peers during 2018 as economic and political challenges caused equities to turn up negative returns of five percent during the period. Brokerage Topline Research said the market continued to post negative returns for the second consecutive year, “posting five percent decline in rupee terms in 2018 versus 15 percent last year, while the decline in dollar terms was 25 percent versus 20 percent”.

The stock market has been facing troubles since after its peak attained in May 2017 when index hit all-time high of 52,647 points. The political noise was created from ouster of former Prime Minister Nawaz Sharif. The index shed 8.4 percent or 3,405 points to close at 37,066 points in 2018 and continued to fall since then to close shy of 36,000 points on Thursday. Stock market closed on negative note for second consecutive year last year with erosion in share values amounting to nearly one trillion rupees.

Hashim Popalzai, secretary of ministry of national food security and research further updated the ECC about the wheat situation in the country. Popalzai said the country is in comfortable position with having 7.257 million tons of wheat available in the stock.

The ministry of maritime affairs advised various proposals to the committee on the revival and development of shipping industry in the country. The ECC advised ministries of petroleum and maritime affairs to jointly come up with a comprehensive proposal in the next ECC meeting for introducing a dynamic shipping policy focusing on expansion and development of local shipping industry.

The committee acceded to the proposal of ministry of states and frontier regions to grant Rs781 million for arranging 20,000 tons of wheat for temporarily displaced persons of erstwhile federally administered tribal areas. The ECC also approved supplementary and technical supplementary grants for various ministries/divisions.