Gunfire in Karachi, Stocks Drop on Politician Arrest Report - Businessweek

Gunfire was heard around Karachi and Pakistani stocks slumped after media reports that Altaf Hussain, the leader of the largest political party in the nation’s commercial capital, was arrested in London.

Hussain, 60, gave a statement on a money-laundering case to London police at his home today, Farogh Naseem, a member of Hussain’s Muttahida Qaumi Movement or MQM and also a Pakistani senator, said in an interview with Ary News TV. A London police spokesman said a 60-year-old man had been arrested. He declined to identify the individual.

Fears of violence after the first reports of Hussain’s arrest triggered a 2.2 percent decline in the KSE-100 Index and prompted shops to close, while images of burnt cars appeared on television. The MQM won 17 of the 20 Karachi seats in National Assembly elections last year and Hussain’s photo can be seen on billboards and banners throughout the city that generates about half of Pakistan’s revenue.

“The MQM has an influence in the city, so Karachi shuts down whenever there is a problem as big as the one today,” said Abdul Azeem, a senior analyst at Invest Capital Markets Ltd. “There was panic selling today because of the political chaos. It recovered after things clarified, and investors started feeling confident again.”

The KSE-100 index (KSE) pared its losses and finished the day down 1 percent. MCB Bank, Pakistan’s largest lender by value, dropped as much as 5% and ended 2.3 percent lower.

Medical Appointment

Tomorrow, the stock market is likely to take its direction from Pakistan’s budget for the fiscal year that starts July 1, Azeem said. Finance Minister Ishaq Dar announced the new budget after the close of trading today.

Also after Karachi stock trading ended, London police said the 60-year-old man that they had arrested on suspicion of money laundering was taken to a hospital for a previously scheduled medical appointment.

After the reports of Hussain’s arrest emerged, shops, bazaars and commercial areas closed in Karachi. Geo TV and Ary News reported gunmen fired in the air to scare shopkeepers, forcing them to close their businesses.

The MQM’s supporters are generally people who migrated to Pakistan from what is now India at partition in 1947 or their descendants.

Hussain has been living in the U.K. for the last 22 years, after leaving Pakistan to escape a crackdown in 1992 ordered against criminals by then Prime Minister Nawaz Sharif. Hussain has said that MQM leaders and party members were targeted.

Sharif was elected the nation’s prime minister again last year.

City of Violence

Since the 1970s, Karachi has been racked by violence among armed wings of political parties and criminals linked to weapons suppliers and drug mafias. As many as 10,693 people were killed between 2008 and 2012, according to the Human Rights Commission of Pakistan, more than the number of U.S military forces killed during the Iraq and Afghanistan wars.

Political and communal killings have escalated since a 2008 military offensive against terrorists in the country’s north. Militants, escaping the fighting there, have migrated to the city of 20 million and engaged in extortion, kidnapping and bank robbery to fund their activities.

Business centers in Hyderabad city, Nawabshah and Mirpurkhas, all in southern Sindh province also shut down after reports of Hussain’s arrest emerged, Ary News reported.

To contact the reporters on this story: Khurrum Anis in Karachi at kkhan14@bloomberg.net; Faseeh Mangi in Karachi at fmangi@bloomberg.net

To contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net Dick Schumacher