Pakistan's Big Chill

The last time the Karachi Stock Exchange made headlines around the world was last month, when investors, upset about tumbling stock prices, threw stones at the exchange building and smashed plant pots in the parking lot.

Their demand? Freeze stocks at their current levels.

Well stocks continued to fall, but the stone throwers have gotten their wish.

In a strange move reminiscent of Soviet-style economic planning, the board of the exchange has decreed that stock prices will not be allowed to trade below their closing levels as of Wednesday.

That's right, a positive market by fiat. And stocks did indeed end up: The benchmark index closed up 0.6 percent today.

For the time being, the exchange has imposed limits on price swings of no more than 5 percent.

Pakistani stocks have been sliding amid political instability, a deteriorating economy, and a resurgence of the Taliban. The market has fallen 41.3 percent in dollar terms since mid-April, according to MarketWatch.

"The continuous sharp decline in share prices can have implications for the wider financial system," the exchange's board of directors said in a statement.

Of course, freezing a market won't help investors who want to get their money out, even at a loss. There may be no buyers at these fixed limits.

Liquidity could dry up, and there will be no market of any sort. Yes, investors in glass houses shouldn't throw stones.

by Jeffrey Cane