The Karachi Stock Exchange (KSE) 100-Index is the third -best-performing stock market in the world and built the belief of foreign investors and local investors. The year 2014 proved to be a year of escalation and enthusiasm for the capital market as, KSE-100 index gained 6,870 points as compared to same period last year and generated a handsome return of 27%. In 2014, KSE benchmark-100 index increased by 6,645 points year-to-date (December 29, 2014) and closed at 31,906.74 points against 25,261.14 points on December 31, 2013. During the period, Foreign Investors Portfolio Investment (FIPI) was $385.92 million, slightly below $397.50 million over the same period last year. Currently, KSE 100-index has crossed 36,000 points. At this time, KSE 100-index has crossed 36,000 points. This all turn out to be achievable as of the SECP, The Securities and Exchange Commission of Pakistan has taken a strong lead, not only in strengthening the regulatory framework that protects investor's interest, but also in launching initiatives to broaden the reach of the capital market investment products to savers across the nation.
In the financial crises of 2008, KSE 100-index suffered the same as of other developed regional countries stock markets. However, KSE had suffered enormously because of its management's inability and internal frictions that are adding fuel to the fire for its derisory recital. One more reason for collapse of stock market records high inflation of 17.2% in the month of May, 2008 resulted in the unexpected increase in the interest rates 12% in mid 2008 which eventually led to sharp fall in Karachi Stock Exchange then finally finance minister cap the market because of $7.8 billion loan from IMF and he puts KSE 100 index as a guarantor at 9,300 levels with prove to have $55 billion stock market in Pakistan and we are still paying for this till now.
Today we will try to cover some core objectives in Pakistan stock market.
1. The role of Stock Brokers.
2. The role of Mutual Funds.
3. Role of both regulators KSE and SECP.
4. The role of Print/Electronic media to more strengthen KSE 100 Index in the world.
5. Where should we more focus in future?
1. The role of Stock Brokers:
The dynamics of the industry is quite changed and we have learned a lot specially after 2008 world financial crises, Although the investors is quite intelligent, educated and aware about the equity investment and the apex regulator has an eagle eye as compare to before this era but the main point stands about stock brokers as there is least participation in leveraging and proscribe investments in third and fourth tear stocks and maximum avoiding day traders & jobbers with more dependency in fundamental and technical researchers and this is the result we are still far behind as compare to 2008 volumes. Although brokerage houses took huge losses as brokerage income to took these mentioned steps but for strengthen the industry and support Pakistan economy and government they never hesitate to do that, So I believe this is the time to appreciate those brokerage houses and stock brokers who exist in 2008 world financial crises with their proper risk management systems and stand firm with the believe to strengthen KSE 100 index to its current levels with remarkable annual average returns of 25% since three years. I personally witnessed at any level or forum there is big NO appreciation to the people who started after 2008 or exist before and faced the most challenging period from 2008 till 2012 in Pakistan and build industry or contributed at any levels and prove their existence and comply all regulations, taxes and make this industry the most documented in Pakistan. The stock brokers of Pakistan faced many challenges till now from 1998 to 2005 and finally 2008 world financial crises and still facing the challenges as some eyes don't like the growth of Pakistan's most efficient industry.
2. The role of Mutual Funds: "Mutual Funds" The most efficient, regulated and growing sector in Pakistan. This industry is regulated by "MUFAP" mutual funds association of Pakistan and SECP. We have witnessed the most beneficiary of 2005 and 2008 KSE crash was the mutual fund industry as mainly local investors were hit because they were leveraged or stuck in third, fourth and fifth tear stock which rates are far behind on their buying levels till now and most important life is too fast as many of us has no time to contribute on daily basis and spare time than our own jobs or business to understand, listen and study new things, These were the needs to find and build biggest financial industry in Pakistan. Till now the role of MF is quite appreciated and they are increasing gradually and firmly with newly develop Islamic equity investments concept and taken up the major share of direct investment in Pakistan stock market.
3. The role of both regulators KSE and SECP: As mentioned earlier in point 1, Stock brokers taught a lot after 2008 crises so as the regulators too. Pakistan has a very small history of only 68 years and till now we always learn when the ship sinks and the storm dust clear then we think what we should do if it comes next time. Although the role of KSE as apex regulator is much better as they are more active in social media, local road shows and create awareness as the current MD is more vigilant, aggressive and experienced because of many years same industry practice and previously working for top brokerage house of Pakistan as CEO so the moral of the story If you put someone as a regulator from same industry is more beneficiary and result oriented as compare to import from other industry or placed on personal interest. The role of SECP specially is quite different as compare to previous years and now it seems working day & night to strength stock market and more vigilant to see on daily basis transactions and this is the main reason we witnessed more international inflows and interest as their most imported requirement is the regulated market and the role of regulators in developing markets like Pakistan.
4. The role of Print/Electronic media to strengthen KSE 100 Index in the world:Media always played a significant role to strengthen any industry and especially when you talk about financial sector so it is always as many as read, see and listen positive then act accordingly and quickly, we must appreciate the effort made by "Business Recorder" to recognize the hard work and dedication of stock brokers, mutual funds, KSE and SECP. We are facing very short coming to cover this growing and shinning Pakistan industry as compare to 2008 there were many channels, programs, articles and awareness conferences from every media group but unfortunately currently we are more focused on only Politics and missing the road to success of our beloved Pakistan.
5. Where should we more focus in future about Stock Market? We need to more focus if we want stronger and recognize Karachi stock exchange in the world.
a. We need more products as we are far behind to develop new products as compare to regional markets and we cannot survive only in T+2, Future, MTS and Borrowing from banks in very selective stocks and on their mood and decisions. We need products from KSE regulator and specially leverage window to enhance volumes and for confidence building to growing stock brokers for their expansion decisions. Last year KSE provides Rs 10 million intraday exposures to all TREC holders but this year as the index and performance is much better we did not have any facility. In my opinion KSE as a front line regulator have to focus on these issues and put their participation for industry growth.
b. We need more media participation at any level to prove investment based, long term, future oriented, minimum investment and most regulated capital market of the world.
c. The regulator is more focused to regularized industry till now on daily basis and it is the main job to do but currently in the world's most successful markets regulators are one step ahead as they are making markets more big, efficient, easy access and aware to common men through different ideas and products.
d. We need more local road shows in all over Pakistan as the rational between local and foreign trips are quite high, we had many road shows all over the world but unfortunately less focused locally and still not recognize the strength and potential of our own people and their investments.
In last I am very much thankful to this effort of BR to strengthen and create awareness about Stock Market "THE BACK BONE OF PAKISTAN ECONOMY".
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