Home / Interviews / PSX set to see net positive foreign investor’s flows this year; brokerage houses making economy healthier

PSX set to see net positive foreign investor’s flows this year; brokerage houses making economy healthier

Interview with Mohammed Sohail—Chief Executive Officer, Topline Securities

Profile

Mr. Sohail has almost 22 years experience of Pakistan’s capital markets, research and broking. He was awarded ‘Best Analyst’ for two years (2003 and 2004) from the CFA Association. He was the first analyst in Pakistan to get this award. For the first time in Pakistan, Asiamoney awarded Mr. Mohammed Sohail the title of Best Salesperson in Pakistan in its Brokers Poll for sixth consecutive year (2011-2016). He is a Certified Director of Pakistan Institute of Corporate Governance (PICG). Mr. Sohail was also elected as Director of Pakistan Stock Exchange (PSX), Director of Central Depository Company of Pakistan, Director of PMEX (Pakistan’s only commodity exchange) and Director of rating agency JCR-VIS. Mr. Sohail was Chairman of New Product & Market Development Committee of PSX. Mr. Sohail has also served on different committees formed by the SECP, PSX and SB. He attended Technical Assistance Program arranged by US SEC in Washington in 2015 beside that he also attended the International Program on Securities Market Professionals arranged by BSE institute and South Asian Federation of Exchanges (SAFE) in Mumbai in 2015.

PAGE: PLEASE DISCUSS THE ROLE OF THE BROKERAGE HOUSES IN THE ECONOMY OF PAKISTAN.

SOHAIL: Brokerage houses play a key role in the economic health of Pakistan as they are the gate keepers for investors in local equity markets. Thriving equity markets in an economy lead to positive investor perceptions, which results in expanding investment scope in the economy. Rising investment levels in turn lead to higher GDP growth.

PAGE: DO YOU FEEL THAT EMERGING MARKET STATUS GRANTED BY MSCI TO PAKISTAN STOCK EXCHANGE, WILL HELP BROKERS’ BUSINESS IN PAKISTAN?

SOHAIL: Yes. Absolutely. This is because funds tracking emerging markets are much higher (US$1.0-1.5 trillion) than funds tracking frontier markets (US$7-8 billion). We are expecting that during 2017 there will be net positive foreign investor’s flows to local equity markets compared to net selling of around US$700 million during last two years.

PAGE: PSX BENCHMARK KSE-100 IS IN THE LIMELIGHT FOR QUITE SOMETIMES DUE TO EXCEPTIONAL RISE IN THE INDEX. WHAT ARE THE FACTORS TRIGGERING THE INDEX TO ALL-TIME HIGH?

SOHAIL: There is plenty of factors we think that has led to this phenomenal rise in the KSE-100 Index. China-Pakistan Economic Corridor (CPEC) related activities have buoyed investor sentiment. Domestic demand continues to rise and is evident given double-digit growth in auto sales, petroleum products sales etc. There is ample local liquidity with both institutions and individuals given historic low interest rates.

We do not expect interest rates to increase in the near future. Other key triggers include MSCI reclassification, which is expected in May 2017.

PAGE:-DO YOU THINK THAT THE RISING INDEX LEVEL WILL HELP STRENGTHENING OF THE CAPITALIZATION IN THE CAPITAL MARKET OF PAKISTAN?

SOHAIL: Certainly the rising level of the Index is bound to have a positive impact on the capitalization of the market as the higher Index will result in higher capitalization. We expect benchmark KSE-100 Index to continue to rise in December 2017. Resultantly, we expect market capitalization of Pakistan to cross US$100 billion in 2017 (30% of GDP) vs. US$94 billion now.

PAGE: WE WILL APPRECIATE YOUR COMMENTS ON THE ACQUISITION OF 40 PERCENT STAKE BY THE CHINESE CONSORTIUM IN THE PAKISTAN STOCK EXCHANGE, IS IT GOING TO HELP PAKISTAN MARKET IN ATTRACTING FOREIGN INVESTORS?

SOHAIL: We don’t think there will be any major changes in the workings of PSX and its products portfolio for at least a year. Broker community will get some liquidity though.

PAGE: WOULD YOU LIKE TO COMMENT ON REGULATORY MEASURES BEING TAKEN BY SECP, WHAT IS YOUR OPINION REGARDING POSITIVE OR NEGATIVE IMPACT ON THE MARKET MOVEMENT OR BROKERS BUSINESS?

SOHAIL: The regulatory measures taken by the SECP are considered as helpful for the market but at the same there should ideally be products that cater to investor requirements. Lack of products that address investor’s requirements led to current issues of brokers.

Company Profile

Topline Securities is one of the fastest growing brokerage houses in Pakistan. It has strong equity brokerage, economic/equity research, mutual fund distribution, commodity trading and corporate finance & advisory functions. Asiamoney in its Brokers Poll 2014 ranked Topline Securities as Best Local Brokerage House in Pakistan for fourth consecutive year (2011, 2012, 2013 and 2014). Asiamoney also awarded Topline ‘Best Salesperson’ in 2015 Broker Poll. Further, Topline Securities was rated as amongst ‘Top Five Best Brokers’ in Pakistan by CFA Association of Pakistan 2011. Topline Securities also won the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by All World Network. JCR-VIS has assigned initial rating of “A-2” for short term and “A-” for long term to Topline Securities in its report published on March 24, 2016.

Leave a Reply