The Securities and Exchange Commission of Pakistan (SECP) data revealed that foreign investment in the stock market exhibited a net outflow of $652.09 million during 2016-17, which reflects a negative 154 percent over the last year.
According to the SECP report on Stock market overview (2016-17), the year witnessed a significant and steady rise in the stock market indices with historic and unprecedented levels being reached. The KSE-100 index began the year at 37,966.76 points and reached 46,565.29 on June 30, 2017, ie, an increase of almost 23% since the beginning of the year. KSE-100 touched its lowest level, ie 37,966.76 on July 4, 2016 and reached its highest level of 52,876.46 on May 24, 2017.
Average daily turnover of 350.024 million shares was recorded for the period from July 1, 2016 to June 30, 2017. A total of 560 companies with a paid-up capital of Rs 1,317.220 billion are listed on the Pakistan Stock Exchange, SECP said.
Market capitalization stood at Rs 9,522.358 billion on June 30, 2017, which reflects a significant increase of 24.78% over the last year. Foreign investment in the stock market exhibited a net outflow of $652.09 million during the year, which reflects a negative 154% over the last year. Some of the more important developments that contributed to this exceptional performance of the Pakistani stock market are: induction of Pakistan Stock Exchange into Emerging Market Index (MSCI); book building and IPO of Pakistan Stock Exchange, investment projects backed by China; stable exchange rate against the dollar; improving security and law enforcement situation; steady foreign interest in stocks; increased confidence shown by the multilateral donor agencies such as the IMF, World Bank and Asian Development Bank''s allocation for energy sector development, etc.
During the year, shares of four companies were offered to the public as compared to five companies last year. New capital of Rs 11.651 billion was listed in FY 2017 as compared to Rs 8.13 billion in FY 2016.
The SECP said that the development agenda for the capital markets was primarily based on promoting sustainable and orderly growth of the capital market while maintaining our commitment to implementing a robust regulatory regime. Accordingly, the SECP commenced implementation of various key structural and developmental initiatives under the umbrella of its 3-year Capital Market Development Plan (2016-18) from July 1, 2016. Under the plan, the SECP took a number of initiatives and groundbreaking steps, which will go a long way in creating an ideal environment for attracting foreign investment, energizing the capital markets, creating a level playing field for investors, improving access to finance and promoting ease of doing business. These steps are part of a reform roadmap designed to strengthen the SECP''s regulation and enforcement regime, facilitate quality listings, encourage investment, enhance monitoring and surveillance for timely detection of misconduct and unfair practices and inculcating zero tolerance for market abuses.
Owing to these reforms and initiatives and the positive macroeconomic conditions, the capital market witnessed improved investor confidence and resultantly, Pakistan was able to regain the prestigious status of MSCI''s Emerging Markets Index in 2017- after a gap of nine years- opening its doors to new global investors and institutions.
With commencement of formal trading of the PSX shares on its trading platform, PSX has earned the distinction of becoming the first South Asian self-listed stock exchange. Self-listing of the Exchange is envisaged to curtail conflict of interest, ensure integrity of trading and compliance of the exchange with legal requirements. In order to address systemic risk, the SECP set up the Systemic Risk Department on November 1, 2016. In light of its recommendations, the SECP introduced significant measures to strengthen risk management at the clearinghouse for the securities exchange and for asset management companies. In collaboration with the State Bank of Pakistan and Ministry of Finance, the SECP also started its efforts to establish the Financial Stability Council to holistically address systemic risk and market stability across the financial sector, the SECP added.
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