Senate Chairman Mohammedmian Soomro has emphasised upon the need to launch a vigorous awareness campaign to promote capital market in the country with a view to yielding maximum possible job opportunities and to attract foreign investors. Inaugurating the Faisalabad trading floor of the Lahore Stock Exchange, here on Wednesday, he criticised some flaws in present system of stock business and said that investors were shy and somewhat reluctant to invest their money because of non-existence of transparent strategy, less rate of profits, etc.
He assured the investors complete security of their money. He said that the mutual funds could play a vital role in investment mobilisation. The main reason why people do not invest in the stock market is that they might not have sufficient knowledge of investment in shares, specifically how to decide which companies to invest in and also when to enter into the market and when to exit.
This is where a mutual fund comes into the picture. Mutual funds serve as a catalyst in the development of the capital market because they can pool savings from thousands of small investors and convert these funds into long-term sources of investment funds.
He appreciated the establishment of Faisalabad Trading Floor and hoped that it would yield positive impact on fresh investment.
Presenting address of welcome, Lahore Stock Exchange Chairman Syed Asim Zafar said that the Faisalabad trading floor brings the Lahore Stock Exchange directly to the doorsteps of Faisalabad investors.
With a rising appetite for investment activity and avenues, the Faisalabad trading floor represents a logical evolutionary step taken by the Lahore Stock Exchange, providing further accessibility to investors of northern Pakistan. This effort is aimed at fostering growth, culture and activity of the Pakistani capital market as a whole, he added.
Presenting a brief overview, the LSE chairman said that on November 12, the LSE-25 stood at a level of 2,684, while at the beginning of the year, it stood at 2,491, representing an increase of 193 points and an average daily turnover of 71 million ready market shares.
He said that this is the second consecutive year of improving financial performance of the Lahore Stock Exchange. The surplus for 2003-04 before taxation was Rs 57.015 million as compared to the last years' surplus before taxation amounting to Rs 53.922 million, showing an increase of 5.7 percent.
The total income of the Lahore Stock Exchange was Rs 127.124 million, which is 15.7 percent higher than the last year's total income of Rs 109.846 million.
The annual listing fee was Rs 20.115 million as compared to Rs 18.584 million of the last year, showing an increase of 8 percent. The automated-trading fee rose from Rs 19.381 million of the last year to Rs 33.355 million for 2003-04, registering an increase of 72 percent due to better market activity, he said.
He said that the proposed demutualisation and integration of the stock exchanges has been outlined. Demutualisation and integration aim at fostering development of the capital market. Importantly, one of the intrinsic objectives of this proposal is to spread investment activity and culture ... yet in a consolidated and sustainable way.
Widening the investor base, accessibility and depth are immensely important in the fulfilment of this objective.
By setting up a trading floor in Faisalabad, he said that the Lahore Stock Exchange is widening the capital market net. This actually increases the depth and widens the base of the market ... this has been a long sought after objective.
One crucial economic contribution of this effort is flexible and diversified access to funding for the economy, ... a diversification of the long-term investor base which will in turn facilitate economic entities with yet another reliable pool of funding.
Punjab has a strong as well as traditional industrial and agricultural base. However, on a corporate front this base remains untapped and unstructured in certain ways. This effort helps in further improving the institution of a corporate structure in the heart of industry and agriculture for future economics, which would prove invaluable in future when the time comes for active foreign investment, he hoped.
He said that 32 Lahore-based members of the bourse are setting up their offices at the Faisalabad Trading Floor premises.
Addressing the participants, Hamid M. Imtiazi, Managing Director, hoped that the trading floor at Faisalabad will jack up the trading volume of the bourse by 10 percent which presently stands at 80 million shares per day. He said that another LSE trading floor was being set up in Sialkot, to be followed by similar trading facilities in towns like Gujranwala and Multan.
Shahid Ghaffar, Commissioner, Securities and Exchange Commission of Pakistan (SECP), also addressed the participants, while Mian Mohammad Idrees, President, Faisalabad Chamber of Commerce and Industry and elite business class attended the meeting.