Bloomberg reports on July 17, 2008:
"Pakistan investors stormed out of the Karachi Stock Exchange, smashed windows and cursed regulators after the benchmark index fell for a 15th day, the worst losing streak in at least 18 years...
...Police surrounded the exchange after hundreds of investors stoned the building and shouted anti-government slogans. They directed their ire at the government and Securities and Exchange Commission of Pakistan, which this week removed a 1 percent daily limit on price declines. The measure was aimed at halting a slide that wiped out $30 billion of Pakistan's market value in three months, threatening to undo a 14-fold rally since 2001...
... Investors were also protesting outside the Lahore and Islamabad stock exchanges, Geo Television reported.
``We demand that all stock prices be frozen at current levels,'' said Kauser Javed, who heads the Small Investors Association. ``People have sold their assets in the last 15 days to meet payments and if things continue this way, you will start hearing of suicides. The regulators always favor big brokers and investors.''
"
I think India is prone to bubbles of all kinds. Fixed deposit schemes of many NBFC's, stock markets from time to time, real estate, plantation companies, pyramid/ ponzi schemes, certain medical treatments, godmen, astrologers, coaching classes, film-stars, ideologies…
However currently for Indian stock markets it’s like February 1637 in Holland . In that one month prices of tulips fell by approximately 90 per cent, bursting tulipmania.
Likes of Daniel Gross have argued that bubbles are good for us.
“The bigger the bubble, the more useful soapsuds it leaves behind when it bursts.”
“Gross believes that America is prone to investment bubbles partly because its government tends to have a laisser faire attitude to innovation, preferring to let private investors fund new technologies, rather than the state. “
I am not sure about the reasons in case of India and Pakistan.
Possibly here is one…
Artist: Helen E. Hokinson The New Yorker 7 August 1948
Angry Pakistani stock brokers demonstrate at the Stock Exchange to protest the decline of stock market in Karachi Photographer: Fareed Khan/AP Photo via Bloomberg News Thursday, July 17, 2008.
p.s. “The final myth is that the crash put the Dutch off tulips. In fact, a form of tulipmania never died…Today the Netherlands has 90 per cent of the international flower trade. Fortunes really are made in tulips.”