KARACHI, Aug 4: Fifteen minutes before the close of trading on Friday, investors heard with disbelief as the Karachi Stock Exchange announced over its Public Address System results of Habib Bank Limited for the first half of 2007. Earnings per share (eps) were pronounced at Rs9.54. That was almost half of what almost all the market was expecting. In the resultant panic selling that gripped the market, the bank’s stock listed on the ‘provisional’ counter plunged by Rs17, or the maximum that it could shed in a day, to close at the lower lock at Rs323.15.

But those who got rid of the shares at that throwaway price turned out to be big losers, and for no fault of their own. The KSE announcement was misleading. Earnings per share of Rs9.54 were those of the bank’s ‘consolidated accounts’. The HBL standalone made a profit of Rs12.793 billion which translated into eps at Rs18.54 -— quite in line with expectations. It was not until the close of the market that the investors realised the folly of the bourse. But the damage had been done.

Most major companies listed on the stock exchange draw up both the ‘standalone’ and ‘consolidated’ accounts, the latter incorporating financial figures of subsidiaries and associated companies. But at the exchange, the results are always announced of the company’s own performance, not including those of subsidiaries (consolidated figures). Then why an exception this time in following the beaten track?

The unsuspecting stockholders, who sold at the bottom price and know that the stock is almost certain to hit the ceiling on Monday as it did on Thursday, are understandably sour. Many smell something fishy. Could the error be deliberate? “Everything is possible in such game of high finance,” said investor Mateen Kanchwala, who bemoaned his loss on sale of 7,000 shares.

Some people who may have been in the knowledge of truth scrambled to accumulate shares at low prices and line their pockets with millions of rupees.

It will be difficult to pin blame. Haroon Askari, KSE chief manager (operations), insists that it was an ‘extraordinary event’ that occurred, but argues that the cause was ‘human error’ and not a pre-meditated act. He contends that the announcement was not false, though it was ‘half the truth’. “The standalone earnings of the bank for the half year should also have been announced alongside the consolidated eps,” he adds. He promised to do everything to rectify the error on Monday, though he stammered to tell how the bourse would or could go about doing that.

The cancellation of all deals made in the last 15 minutes after the announcement was a possibility, some analysts think. But the bourse was never known to have taken such a step in its previous faults and follies and it would not like to set a precedent. The bourse, nonetheless, must realise that such error of omission or commission in a market which is now worth Rs4 trillion could scarcely be condoned. Foreign investors are currently holding portfolio of $8 billion in the market. It is unlikely that they will be amused to learn that the KSE has still to learn the difference between ‘standalone’ and ‘consolidated’ accounts.

HBL is in the midst of its IPO, which the government made to raise Rs12.2 billion from the sale of 7.5 per cent shares out of its holding of 49 per cent. The stock has been offered to the public at Rs235 and applicants who win the ballot would immediately reap an enormous gain of Rs100 per share. No wonder that the IPO has been hugely over-subscribed.