SHABBIR HAMZA KHANDWALA has
assumed office of the Chief Executive of KASB Securities (Pvt) Limited
on 1st November 2003. KASB Securities is the mirror image of Khadim Ali
Shah Bukhari & Company, which was merged with the KASB Bank in June
2003. KASB Securities is the premier full service securities firm and
affiliated with Merrill Lynch, one of the largest securities and
investment banking firm, in research and investment banking areas. He
has been executive board member of KASB Group since 1995. He has also
held position of Executive Director (Finance) of KASB and Chief
Financial Officer and Company Secretary of KASB Bank. He is member of
various committees of KASB Bank. He has also held the position of Chief
Executive Officer of KASB Premier Fund. He is also a director of KASB
Leasing. He has also worked as Manager (Finance) Attock Cement Pakistan
from December 1990 to January 1995. Shabbir is Fellow of the Institute
of Chartered Accountants of Pakistan.
What is your outlook on Pakistan's economy?
The Government has done a good job till now in managing the economy,
with nearly all economic indicators showing improvement over the
previous years. This was verified by the recent upgrade of Pakistan's
debt rating by Moody's and Standard & Poor's. The only real concern
left, as the State Bank of Pakistan pointed out in its annual report, is
the slow growth in jobs in the country. However, the Government's new
focus on construction should help solve this problem. Particularly, if
the Government manages to resolve outstanding issues and commences
construction of dams, it will go a long way in improving economic
conditions in Pakistan. Overall, we have a positive outlook on the
economy, and expect strong economic growth in the coming years.
Can you explain the causes behind the slump in the stock market? Where
do you see it heading to in the future?
stock markets in Pakistan experienced a major bull run during the past
couple of years. All bull runs are followed by a correction. This holds
true not just for our market, but for all markets in the world, as
witnessed by the movement of the stock market in the US following the
bull run of the last decade. Our market is currently in the correction
phase and is consolidating itself. In the long run, our market has very
encouraging prospects. In addition to the positive impact of a growing
economy, the market is being helped by the Government's efforts to bring
it on the international investors' map. New offerings in the stock
market, as part of the divestment process, are helping the market in
reaching the US $20 billion capitalization mark, which will make it very
difficult for foreign investors to ignore us.
What role is the SECP playing in making the markets more attractive?
establishment of the Central Depository Company (CDC) and the launching
of electronic trading were big steps towards developing Pakistan's stock
market. Taking on a very active role, Securities and Exchange Commission
of Pakistan (SECP) has significantly built upon these improvements.
Introduction of measures such as the T+3 trading system and futures
trading have helped further improve the credibility of the market.
Moreover, a very positive development is the fact that SECP is
developing as a strong independent institution, with newly inducted
professionals, who are looking after the interest of the investors. This
again will help a lot in attracting investors, both local and foreign.
What role is the KSE playing in this regard?
Karachi Stock Exchnage (KSE), like the SECP, has taken a very proactive
role. The introduction of measures such as new exposure rules and
capital adequacy requirements have significantly aided in avoiding any
crisis like situation despite a significant drop in the market over the
last few months. Such measures have improved the integrity of the stock
market and help raise the confidence of investors.
and other international financial institutions have complained in the
past that there is a strong need to improve corporate governance in
Pakistan. Do you feel there have been any development on this front?
issue is currently being addressed, and interestingly, the public sector
organizations have been the key catalyst for improvement in governance.
The managements of some public sector companies have brought about
visible changes, which is reflected by improved operations and earnings
of these companies. While private sector companies easily dominated over
such companies in the past without much effort, they are now being
forced to gear up to face the new challenges. Furthermore, as I
mentioned earlier, the SECP has introduced rules to protect minority
shareholders. These regulations encourage, if not force, companies to
act in a more transparent manner. Moreover, the code of corporate
governance issued by SECP and made part of listing regulation has made
listed companies to follow principles of good governance and improved
corporate governance to a level which is comparable to a progressive