The Karachi Stock Exchange is a leading institution of the country playing an important role in the development of the capital market and our Economy. It is Pakistan's oldest and largest exchange with 650 listed companies and nearly $40 million dollars Capitalisation.
The Stock Exchanges play a crucial role in mobilising savings for the most productive investments by channelling excess funds from savers to those industries where these funds are needed for growth and expansion purposes. Moreover, the capital markets provide an efficient and transparent securities market to investors allowing them to diversify their risk across different sectors as well as allow them to benefit from a higher rate of return when compared to depositing funds in banks. To issuers, the capital markets provide an alternative means to raise cheap capital as well as help a company to re-brand itself by conforming to a higher level of integrity, transparency and corporate governance.
The Karachi Stock Exchange has also played a key role in the privatisation process. Over the past several years, the Government of Pakistan has divested from several sectors and companies through the capital market. Divestment through the capital markets is transparent and allows the forces of demand and supply to determine the value of the company being sold rather than relying on artificial or ad-hoc valuations. As the stock market experienced phenomenal growth over the last decade.
The Government of Pakistan has been one of the largest beneficiaries in this boom through strategic investments in several listed companies as well as substantial collections of taxation through tax levied on the capital markets. It is pertinent to point out that the Karachi Stock Exchange has collected and deposited nearly Rs 10 billion in the national exchequer over the last three and half years certainly dispelling the claim that the capital markets remain untaxed. In fact, the capital markets remain one of the most heavily taxed sectors in our economy.
Well-developed "Debt market" is essential for efficient running of the Economy. KSE is playing its part to promote corporate debt market in Pakistan. To achieve this Bond Automated trading system (BATS) has been introduced. And efforts are on the way to develop a facility for accepting all reported deals done in the corporate debt market in Pakistan.
The recent initiative taken by Business Recorder to publish a Special Report on "The Role of Stock Exchange in the Economic Development of Pakistan" is commendable. Such efforts are essential in promoting the capital markets and are an effective means to educate readers throughout the country.