Three global financial firms fold up operations in Pakistan

Citigroup has closed its equity research office in Karachi in March. However, the spokesperson of the US-based bank declined to comment on the development.

Switzerland-based Credit Suisse Group also shut down its research operations in the port city earlier this year, and that followed JPMorgan Chase's decision in late 2008 to suspend its brokerage operations in Karachi, the Wall Street Journal reported.

A spokeswoman for Credit Suisse said the bank closed its research division but was covering Pakistan companies from Singapore.

JPMorgan retains a seat on the Karachi exchange but is not active in Pakistan, a spokesman said.

The report described the closures as a "further blow" to Pakistan's financial community at a time when the country's finances are struggling.

Pakistan was forced to call in the International Monetary Fund (IMF) in November 2008 due to a balance of payments crisis sparked by a rising oil import bill.

Responding to Pakistan's request, the IMF earmarked USD 11.3 billion for the country, which has pledged to slash its government deficit and get inflation under control.

The Wall Street banks began operations in Pakistan's equity market in late 2006 after the economy grew by an average of seven per cent for several years, fuelled by liberalisation of the banking sector and a consumer spending boom.

In late 2006, Pakistan's state-owned Oil and Gas Development Company Ltd raised over USD 800 million through a listing of 10 per cent of its shares in London, the largest initial public offering of a Pakistan company in over a decade.

Foreign investors poured USD 2.3 billion into the Karachi Stock Exchange in fiscal year ended June 2007, over six times higher than the previous year.

The report said Pakistan's economy began to unravel in 2008, causing runaway inflation and a growing current account deficit.

The country, reliant on expensive imported oil, started to face regular electricity shortages that further clouded the economic picture.

The resignation of former President Pervez Musharraf in August 2008 further worried investors.

Billions of dollars were wiped off stocks in 2008 as "foreigners headed for the exits," the report said.

In the year ended June 30, 2009, foreign investors pulled out USD 511 million from Pakistan's stock market.

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