Daily volume and values changed hands at the Karachi Stock Exchange (KSE) are at par with developed international stock markets because of strict regulatory measures, economic turnaround and good corporate governance.
This was stated by Moin M Fudda, managing director of KSE, at Marketing Congress-2004 on Friday. The topic addressed by him was 'KSE Today, Tomorrow'.
Fudda said that a large number of measures during last two years have helped build up bullish tempo.
The trend has been sustained because KSE, in association with stock market regulator, Securities and Exchange Commission of Pakistan (SECP), introduced a series of measures to protect the interests not only of small investors but all also of companies to deliver quality products.
Fudda sad, "I am using this platform to market the KSE where daily about 3500 people walk in. Of this, 80 percent are day traders. The investors take interest in share market as they have a variety of choices available in the shape of several sectors which are offering good dividend yields."
He said that several companies are offering 10 percent dividend yield which has propelled investment in the capital market.
Institutions and small investors have thronged the stock market as the rate of return on bank deposits ranged from 3 to 4 percent while yield on treasury bills for last couple years pegged below 2 percent, allowing banks and other financial institutions to build positions at the share market.
"Dividend yields in mutual funds, modarabas, investment companies and banks, woollen, jute and telecommunication sectors ranged from 10 to 16 percent while in food and allied, leather, paper, fuel and auto it was about 9.7 percent," Fudda said.
He said that as of Thursday, the listed capital was $ 6.2 billion, market capitalisation $21.782 billion, average daily turnover was 300 million shares and average value of daily business was $ 260 million, at par with nearly all developed capital markets.
The KSE managing director said that three factors spearheaded the gains at the stock market which had registered a growth of 112 percent in 2002. "Termed best performing stock market in the world, its growth was 65 percent in 2003 and is still making inroads in the new year's economic, corporate and capital market reforms."
He said that during President Pervez Musharraf's government several bold steps were taken which boosted the economic activity in the country and now with fiscal breathing space, foreign exchange reserves have climbed to new highs, privatisation process has accelerated, good monetary policy of the State Bank of Pakistan and country's plan to pay overseas debt ahead of schedule to donor agencies amounting to $1 billion are the major signs of economic revival.
The corporate reforms include timely holding of annual general meetings because in the past several companies had skipped holding meetings. Auditors are providing quality monitoring.
Explaining further, the managing director of KSE said that one of the audit companies recently disclosed that one of the directors of a listed company had utilised funds for medical purposes amounting to millions of rupees.
Moreover, the investors have not to spend much time to speculate on the earnings of the companies as now they are reporting their accounts on quarterly basis instead of six monthly or yearly basis.
He said that to face challenges ahead for the KSE to attract more investors towards stock market and boost confidence of the existing ones, the Exchange planned to start on-line access for internet trading, margin financing, making borrowing structure easy for buyers and sellers for the shares. OTC market will help promote TFC trade.
He said a number of new listings are in the offing and the Exchange's demand to list government owned companies has been fulfilled and listing was seen this month of OGDC, the largest entity at the stock market.
The government received a premium of nearly Rs 4 billion through the sale of OGDC and investors from the present price structure have gained a little over Rs 1 billion in the shape of capital gains.
Fudda said the management's main aim is to build up the image of Pakistan through Karachi Stock Exchange functioning so that the regulatory framework, transaction, listing mechanism and transfer of shares are efficient and transparent.
"Our own people are abusing Pakistan, not the foreigners. I have seen that several Pakistanis, in front of foreign dignitaries, abuse Pakistan. The people of the country are not following the rules. We criticise bus drivers but on several occasions, people driving 'Honda City' or 'Mercedes Benz' break signals and do not follow rule," he said.
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