Structural changes, SOEs’ privatisation: Advisor urges PSX to formulate recommendations

KARACHI: Khurram Schehzad, Advisor to Finance Minister has urged the management of Pakistan Stock Exchange (PSX) to formalise recommendations for structural changes and privatisation of State-Owned Enterprises (SOEs), which could advance governmental goals and boost market capitalization.

He expressed his views, during his meeting with the CEO and senior management of PSX. During the meeting, Khurram Schehzad received a comprehensive overview of PSX’s strategic initiatives aimed at unlocking potential of Pakistan’s capital markets.

Khurram Schehzad was invited to the PSX by CEO, PSX, Farrukh Sabzwari, to discuss strategies for enhancing the depth and performance of the capital market.

The CEO of PSX emphasised that, despite challenges, Pakistan’s capital markets possess immense potential. He expressed confidence that through a well-formulated strategy, PSX could realize this potential and significantly contribute to the economy.

Schehzad reaffirmed the government’s commitment to supporting capital market growth, recognizing its role in stabilising, as well as, underpinning growth in the country’s economy.

To achieve this goal, he urged the management to formalise recommendations for structural changes and privatisation of State-Owned Enterprises (SOEs), which could advance governmental goals and boost market capitalization. Furthermore, he recommended re-branding and repositioning the GEM board to function as a platform for venture capital and startup fundraising.

The Key Initiatives planned and discussed include taking concrete steps for high-value listings to increase market capitalization and attract foreign investment; setting an ambitious target to increase the investor base to 2% of the national population within three years, engaging brokers and mutual funds in the campaign; introduction of new investment products, such as Exchange-Traded Funds (ETFs), options markets, and derivatives, to enhance market attractiveness, and exploring algorithmic trading and robo-advisory services, drawing insights from successful implementations in countries like China.

Schehzad emphasised the need for the PSX and the SECP to collaboratively develop a roadmap aimed at increasing Pakistan’s weight within the MSCI Frontier Markets index, ultimately achieving inclusion in the MSCI Emerging Markets index.

He also endorsed the recommendation to form a formal committee comprising PSX, SECP, and the State Bank of Pakistan (SBP) to leverage each entity’s strengths.

This initiative would aim to foster financial inclusion, enhance public awareness, and promote seamless digitization. Promoting the KSE-100 Index’s remarkable returns was identified as an essential task for brokers and market participants.

Schehzad praised the re-launch of cash-settled futures as a significant step towards developing the country’s derivatives market.

Collaboration with Chinese capital markets is critical to facilitate cross-border investment opportunities, broaden market access, and stimulate investor participation. With these initiatives, Pakistan’s capital market is poised for significant growth, driving economic development and stability.

Copyright Business Recorder, 2024