The KSE-100 index rose to 28,913 points in April 2014 from 11,348 points in January 2012 - a rise of over 17,565 points or an increase of 155 percent. According to the Economic Survey (2013-14) issued here on Monday, Pakistan's capital market has two important elements as an equity market, which is composed of three stock exchanges and a transitional financial system extensively influenced by Non-Banking Financial Institutions (NBFIs).
Pakistan's capital and stock markets have witnessed impressive growth on account of market-friendly and investment-friendly policies pursued by the government. Similarly, aggregate market capitalisation has increased from Rs 2,961 billion ($32.9billion) in January 2012 to Rs 7,116 billion ($72.2 billion) in April, 2014, showing a rise of over Rs 4155 billion ($39.3 billion) or an increase of 140 percent in rupee term. The listed capital at KSE has increased from Rs 1,048.44 billion as on end-December, 2011 to Rs 1,153.18 billion in April, 2014.
The survey said that during fiscal year 14 (July-April), KSE-100 Index increased by 38 percent and closed at 28913 points on April 30, 2014. The huge rally in the stock market is an indication that the market participants expect the economy in general and the listed companies especially will perform well over the next few years. The market rally since the General Elections held on the May 11, 2013 is primarily driven due to the change of government in the country resulted in taking control of the present government of PML(N). Consequently, the post-election market increased by more than 45 percent till April, 2014. Other reasons that pushed the market into an uncharted territory include robust foreign interest, the healthy earnings growth and improvement in business sentiments. Another reason is the investor moratorium applied in January, 2013 by the Securities and Exchange Commission of Pakistan.
The (SECP), in collaboration with the KSE which allows foreign investors to bring investments to Pakistan with no questions asked about the money's origin and sources. As many as 559 companies were listed at Karachi Stock Exchange with the listed capital of Rs 1,153 billion (US $11.77 billion) with the market capitalisation of Rs 7,116 billion (US $72.2 billion) as at end-April, 2014. KSE 100 Index opened at 21,006 points on July 1, 2013 and closed at 25,261 points at the end of calendar year 2013, showing a gain of 20 percent over this period. The bullish trend in KSE is also continuing in 2014 with further gains. The KSE 100 index closed at 28,913 points level as on end April, showing a cumulative gain of 38 percent during first ten months of current fiscal year. The benchmark index touched historical high of 29,458 points on April 16, 2014. The total traded volume in the Ready market for the July-April period was more than 48 billion shares. The average daily volume has been recorded at 237 million shares as against the average daily turnover of 221 million shares in FY13.
To strengthen and deepen the money market in line with the international best practices, KSE requested government to allow trading of government securities through stock exchanges. Government has accepted the proposal and the trading of government securities have been started through stock exchanges. This will attract retail and international fixed income funds to invest in government securities. Presently retail investors have little direct ownership of government bonds and bills. Federal Minister of Finance and Economic Affairs has launched the trading of government debt securities at stock exchange on February 18, 2014.
KSE is actively working on the development of Small and Medium Enterprises (SME) trading counter at stock exchange. The Small and Medium size segment constitute nearly 90 percent of all the enterprises in Pakistan; employ 80 percent of the non-agricultural labour force; and its share in the annual GDP is 40 percent, approximately. The small and medium enterprise is constrained by lack of financial resources and requires a mechanism through which flow of funds can be observed into a small company or new start-up in the form of an investment rather than a loan. Small and Medium Enterprises (SMEs) play a catalytic role in the development process of most economies as they constitute a major part of the industrial activity in these economies, the Economic Survey added.
Comments
Comments are closed.