Cover Story
An interview
with Khawaja Hamad Saeed, Chairman, LSE
By MUSTAFA KAMAL PASHA
Jan 24 - 30, 2000
Five time elected Chairman of LSE has proved his genius in directing
the Stock Exchange Management during the rainy days of it. In the history of second
largest stock institution in the country (LSE), Khawaja Hamad Saeed has a unique honour of
being elected as its first Chairman after the completion of restructuring of capital
market in Pakistan, under the package of Asian Development Bank. After the restructuring
of LSE Board of Directors, with seven outsider professional directors, the working of LSE
management became more difficult rather complex and stringy. It started taking a real task
to go through the process of getting approvals for the things to do. But Kh. Hamad Saeed
with his administrative acumen, and strength of his knowledge about LSE, has managed the
things to sail smoothly. In his exclusive interview he narrated his views about various
issues of the Economy and capital market in Pakistan.
Question: Would you like to opine on the ongoing economic scenario
after the Military Action on October 12, 1999?
Presently most of the macro and micro economic indicators are moving in
the positive direction. The present Government is trying her level best to achieve the
confidence of international bodies, including World Bank, International Monetary Fund, and
Asian Development Bank. After the partial lifting of economic sanctions by the US
administration, IMF Executive Board is expected to reschedule our payments and release the
2nd tranche of package. Our foreign exchange reserve position is satisfactory enough to
carry on the usual business.
Stock market has been suffering from liquidity crunch for a long time.
Various government policy packages and incentives offered by the previous Govt., to boost
different sectors of the economy could not bear the desired results. Even approval of
relief package by IMF and release of foreign exchange payment under ESAF & EFF titles
had not created any positive impact on the deteriorating stock market situation. The early
and quick solution of the issues of Independent Power Producers (IPP) and freezing of
Foreign Currency Accounts (FCA) must be given due care and proper handling and must be
resolved without any further delay, because it has cast dark shadows on our capital market
sentiments. The illiquidity is prevailing in the market had also affected badly. Due to
that overall situation, market was depressed, but the institutional buying and lowering of
interest rate by the government has given boost to the market.
Question: What is about the overall performance of the capital
market in Pakistan?
The capital market is constantly and continuously facing pressure since
a long time. The freezing of Foreign Currency Accounts, and handling of IPP issue has put
things in a dolldrum. Uncertainty prevailed in the market and whole economic and political
scenario changed due to it. Local and foreign investors have withdrawn their intentions to
invest in Pakistan. Various incentives given and policies announced by the deposed
government to rectify the deteriorating investment climate in Pakistan have not proved
fruitful for the overall expansion of the capital market. Market was under selling
pressure since a long time. The six nuclear detonations on May 28th & 30th, 1998, had
exposed the real economic financial conditions of the country vis-a-vis the capital
market. Presently our economy is passing through an era of panic and uncertainty. The
handling of IPP (Independent Power Producers) issue has also put serious strains on the
capital market performance. After the six nuclear detonations, the handling of delicate
economic matters including financial and monetary affairs, by the deposed Government had
cast deep rooted impact on the financial management of the country.
Although the foreign exchange crunch has not come out suddenly yet
freezing of FCAs had aggravated it and shaked the local and foreign investors' confidence.
Now the government has successfully managed the foreign exchange reserves and the issues
relating to it. The donor agencies are expected to help us in taking our economy to the
right path.
Question: Would you like to suggest how to put the economy on the
right track?
The policies introduced by the deposed Government of Nawaz Sharif were
well thought and good but could not bear fruits due to economic sanctions and various
steps taken by the Government. Stock Exchanges can act as an instrument in streamlining
the foreign exchange issues. If the Spot trading of foreign exchange is made compulsory,
the unauthorized dealing in foreign exchange would be eliminated and unusual fluctuations
would become minimal. The foreign exchange market would come out of the grip of money
launderers. The issuance of dollar bonds was a good step towards the correction of the
damage caused by freezing foreign currency accounts, but new government has again banned
the issuance of new FEBC. Some bankers are creating problems in the encashment of Dollar
bonds which is contrary to the policy announced by the government. The scheme could bring
fruitful results, only if the relevant factors support the scheme.
Question: What are your plans about the development of LSE this
year?
Continuation of information & restructuring of LSE would also take
its final shape during the year 2000. In line with the present Government policies,
capital market would flourish. There are a variety of problems, including, tax issues,
disputes between member-member and member-investor, change of manual trading habits of the
people developed through the practice of decades etc., which are common to any stock
exchange in transition phase. There are a number of procedural problems which we have
planned to resolve through arbitration. We have an in-house arbitration committee which is
responsible for resolving disputes. Most of the problems arise in the market due to
deteriorated law and order situation and bad performance of various sectors of the
national economy. During such bad conditions common people specially jobbers and small
investors start loosing money. Speculators and adventurous people become dissatisfied due
to their financial losses. They are bound to pay their losses to the members and hence
disputes erupt. Real investors rarely loose money in the stock market. We are sure that
proper and adequate measures taken by the government would bring expansion and prosperity
in the national economy. The future of country's capital market is bright. Foreign capital
would definitely flow into Pakistan and bring fortune to the people. LSE is ready to play
a key role in the expansion of capital market in Pakistan.
