INTERVIEW WITH LSE DIRECTOR
SECP WAS IN THE PROCESS OF CHANGING ITS APPROACH FROM BEING JUST A REGULATOR TO BECOME A FACILITATOR FOR EXCHANGES & CORPORATE SECTOR
Oct 22 - 28, 2012
Mr. Asif Baig Mirza is Director of the Lahore Stock Exchange (LSE). He is also Chief Executive of ABM Securities (pvt.) Limited.
In ABM Securities (pvt.) Limited, Mr. Mirza said, "We actively deal in sale and purchase of shares and Government securities." He said capital is the requirement of commerce, industry, government and local authorities. The capital market is a medium for the allocation of long term funds usually for the formation of capital assets. These funds come from private investors, insurance companies, banks, pension funds arranged by issuing houses and merchant banks, he added.
In an interview with PAGE, Mr. Mirza shared his views on the prospectus of Pakistan's capital market. He said there is wide scope of growth of capital market in the country that collects funds from surplus sectors and channels it to those who are in need of finance.
According to him, capital market plays an important role in the economic development of economies especially of the developing countries. Well functioning markets ensure that both corporations and investors get or receive fair prices for their securities. This ensures that viable projects will be financed and negative value projects will be rejected. Most importantly, the integration of indigenous financial market into world capital markets does accelerate the growth process.
Acknowledging the role of Securities and Exchange Commission of Pakistan (SECP), Mr. Mirza said the SECP was in the process of changing its approach from being just a regulator to become a facilitator for exchanges & corporate sector as well. He, however, stressed the need for capital market development, restoration of foreign & local investor's confidence and adoption of international standards & best practices as the way forward for the capital markets in Pakistan.
He supported improved trade relations with India and said Pakistan would be real beneficiary in case cooperation in all sectors including capital markets of the two countries. He was of the view that potential shares of companies of two countries could be listed in the stock exchanges of Karachi and Mumbai. "We should find ways and means to bring prosperity and hope to our people," he said, adding, The process of growth and investment should be inclusive.
Mr. Mirza said there are talks of protectionism and adverse effects to various industries on both sides of border but one should find a middle way not the muddle way, he added. He said hat both governments have a role in facilitating business in order to create an investment-friendly environment.
Mr. Mirza said trade and investment go hand in hand in today's global investment scenario. India being the 2nd largest and Pakistan the 6th largest populated country assume immense trade and investment potential as both of them share a long border.
He expressed the hope that trade ties between the two countries would improve further with phasing out of negative list by Pakistan and further facilitation of trade through land route. In this direction, he said, functioning of integrated check post at border would also help a lot in strengthening trade relations. lateral investment treaty between the two countries should also be finalised to fully facilitate foreign direct investment in both the countries.
Talking about country's corporate sector, Mr. Mirza said no country has ever developed without a robust capital market. He said Pakistan is an open economy which is a prerequisite for economic growth. He said investment follows trade and once trade starts, investment cannot wait. He said FDI is vital for Pakistan as the country's saving rate is very low, adding, however, investment in Pakistan need to be meaningful and in sectors where it is urgently required. He said energy is one such sector where investment in coal-based plants of 1000 megawatt or above is needed.
Dr Mirza who recently elected Director of Pakistan Mercantile Exchange (PMEX) said, Pakistan Mercantile Exchange Limited achieved the highest ever monthly trading volume of PKR 129 billion in the month of August 2012 with a total of 325,000 contracts traded. This is a record increase, crossing the previous high of June 2012 of PKR 119 billion.
He said, "This volume record is a testament to the fact that the market continues to grow at a fast pace. It also gives us the assurance that an increasing number of Pakistani investors are accepting commodities as an alternative asset class for portfolio diversification."
Furthermore PMEX is showing continuous improvement and diversification in its product mix.
PMEX will continue to follow the tight risk management procedures and controls that it has pioneered in Pakistan and that have stood it in good stead, especially in recent times of immense volatility in the international markets, he said.
He said, Pakistan Mercantile Exchange Limited is Pakistan's first Demutualised exchange and the first and only Commodities and Futures exchange in the country. It is licensed and regulated by the Securities and Exchange Commission of Pakistan. Its shareholders are National Bank of Pakistan, Pak Kuwait Investment Co, Zarai Taraqiati Bank and the three stock exchanges of the country. PMEX currently lists various contracts for trading in Gold, Silver, Crude Oil, IRRI6 Rice, Palm Olein, Sugar, Wheat and Kibor.