KSE turmoil

THE Karachi Stock Exchange, the country's primary stock exchange, should have not expected to remain insulated from the shocks hitting the world financial system in the wake of the American financial crisis, in particular its stock markets. But whereas the falls on Friday in the USA's Dow Jones, the UK's FTSE. Germany's Dax and France's CAC-40 indexes, and more relevant, Japan's Nikkei and Hong Kong's Hang Seng indices, were all in line with the world collapse, the KSE has identified that old favourite, the badla mechanism, now renamed the Continuous Funding System, as the root of the problem, and has demanded a cap of 24 percent for the CFS. The CFS has not only risen to record levels, but the KSE members want the exchange closed. It has been virtually closed, since the placing of a cap on how much a stock would be allowed to fall, but the KSE members want it formally closed until the new CFS cap is imposed.