PROFILE ALI ANSARI
COLUMN FOR THE RECORD
POLITICS & POLICY IRAQ WAR AND ITS IMPACT
SCIENCE & TECHNOLOGY INTEL LAUNCHES INTEL® CENTRINO (TM) MOBILE TECHNOLOGY
INFORMATION TECHNOLOGY 1- ERP & DW DEADLY COMBINATION TO SUCCESS
2-
THE DAWN OF DIGITAL DECADE

 

ALI ANSARI

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By SHABBIR H. KAZMI
Mar 24 - 30, 2003
 
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ALI ANSARI took over as the CEO of AKD Securities in March 2000 with vision to turn AKD from a leading brokerage house to a leading financial services firm confirming to the highest international standards. Since then AKD has been at the forefront of innovation with a number of firsts to its names including the first venture capital incubator and fund, the first large domestic M&A deal, the first online trading services and the first securatization transaction. Prior to assuming this responsibility, Ansari was based in London with Credit Lyonnais Securities (CLS) as Chief Operating Officer for Emerging Europe, Middle East and Africa (EEMEA). At CLS Asia headquarters in Hong Kong, he pioneered the highly successful clsa.com, one of the world's first fully functional intranet and extranet delivering company and research information. He also worked as Chief Executive Officer and Head of Research CLSA Pakistan. Ansari did his BA (Hon) from Richmond College in 1985 and got Investment Management Programme Certification from London Business School in 1988.

PAGE: How do you view local equities market?

ALI ANSARI: As compared to some of the regional markets, Pakistan's equities market is of rather smaller size. Though over 700 companies are listed at Karachi Stock Exchange (KSE), the listed capital amounts slightly more than Rs 250 billion only. Most of the listed companies have small capital base and their shares are highly illiquid. The large capital base companies are mostly commercial banks, leasing companies, oil and gas distribution companies, fertilizer manufacturing units, PTCL and HUBCO. Since large cap companies have relatively larger market float, bulk of the daily trading volume pertains to less than two dozen companies only.

PAGE: The average daily trading volume has increased manifold over the last decade. What are the possible reasons for this increase?

 

 

ANSARI: Most of the large cap companies were listed during this period and Central Depository Company (CDC) also became operational. The availability of large market float and facilities for instant transfer of shares encourage investors to take more active part in equities trading. With the constant effort by the SECP, to ensure greater abidance to the code of corporate governance, more and more companies started paying dividend. Lately, after freezing of foreign currency accounts and due to persistent decline in rate of return on bank deposits and NSS, the yield on selected equities also became very attractive. All these factors provide opportunities to the investors to select scrips offering very attractive dividend yield.

PAGE: What has been the impact of introduction of online trading on the average daily trading volume?

ANSARI: The general perception is that investing in equities is the game of big players only. The feeling among the small investors is also that the brokers often do not give them enough time. In order to overcome this syndrome and facilitate active participation of small investors in equities market, we established the AKD Trade, an online trading facility. We estimated that transactions worth Rs 10 billion would be routed through this platform annually. Some of my own colleagues considered it too ambitious a target. However, all of us were surprised when we achieved this target within the first quarter. AKD's online trading facility handled equities trade worth one billion rupees during the first month. In December, volume exceeded Rs 3 billion and in January 2003, volume crossed Rs 6 billion

PAGE: What types of investors use this type of trading facility?

ANSARI: The online trading facility was established mainly to facilitate the small investors. The average daily trading time of local stock exchanges is about four and a half-hour. At an average we handle between 1,500 to 2,000 trades per day. Most of these transactions pertain to small and medium investors. However, the single largest transaction concluded through our facility was as large as Rs 200 million. I would also like to mention that over 2.5 per cent of daily traded volume pertain to online trading.

PAGE: Is the corporate sector really using capital markets as the alternate source, rather than borrowing from banks?

ANSARI: The overall size of debt/bond market has increased very substantially during the last decade, I would term it small. Typically the size of debt market range from five to ten times the size of equities market developed as well as developing countries. As oppose to this the debt market, despite manifold increase, is still a small percentage of equities market in Pakistan. The successful utilization of this option by best of the best companies has encouraged the other companies to exercise this option. The investors have also expressed faith in TFCs, evident from over subscription of almost all the public issues. In the mid-nineties some 100 per cent equity-based companies were also floated. Therefore, one may expect a substantial change the way sponsors exploit the capital market.