KSE-100 POISED TO ACHIEVE 20000 LAND MARK

DANISH LUTFI
(feedback@pgeconomist.com)

Oct 22 - 28, 20
12

Capital market has achieved the land mark of breaking the KSE INDEX high of 15789, achieved in year 2008 after four years of roller coaster ride with all ups and down under very un-favorable economic, security and political conditions.

The market players have really played very positive role and followed rational approach under the worst scenario, came out after 2008 crisis, whereas theKarachi stock exchange was virtually closed down and Mutual funds stopped the redemptions of claims. Investment climate was worst and lot of members of stock exchanges of Pakistan were expelled or force to exit due to crash in the market, which generated lot of investors claims, unfortunately not fulfilled satisfactorily. There was acute shortage of equity investment from domestic and foreign players and all stock exchanges faced the circumstances, which were not at all optimistic and trading volumes were so low that even brokerage house cannot meet there daily expenses. Generally, the investors were so scared and were not ready to enter into the arena to buy the stocks at life time lows, but the investment climate in stock exchanges was so low, at that time it was a merely dream to achieve again the 2008 high. I would congratulate all key stake holders and players for their great efforts and on this achievement, which they achieved by their sheer determination and honest struggle again under almost same unfavorable circumstances.

This is the right time, for all the stake holders of Equity market to promote joint efforts as a team to create and sustain positive sentiments among the investors, especially the retail investors and bring them again to equity market investment and stock exchanges should welcome them with better products and systems to protect and enhance the growth of their valuable investments. The De-mutualization of stock exchanges is on the way of implementation with its benefits and SECP is actively concentrating on investors education and awareness campaigns and brokers have learned from their past mistakes will help in sustaining the positivity in the market with sincere team work in right direction.

As a student of capital market and an investor in equity market, I would like to place my sincere request to all the key stake holders to capitalize this golden opportunity to take our KSE INDEX to the level of 20000 with same dedication and determination and team efforts with better products, systems, education, trainings, investors protection laws, financing options and honesty and hard work. I am humbly submitting my suggestions to all the key stake holders with hope that they have the capacity, resources and personnel to achieve this land mark and boost the Capital market size of Pakistan with the massive entry of retail investors to provide volume, depth, sustainability and stable growth with less cartels and insiders trading.

First of all, every stake holder should sincerely and honestly admits that they have made mistakes in past and learned a lesson.

SECP should adopt proactive approach in dealing the investor issues and properly regulates & monitor stock exchanges and the working of Central Depository Company (CDC).

SECP should bring all the stake holder to common platform to increase the reach of equity market by providing investor education, developing new segments of investors, reaching new geographical markets with better servicing standards and investor protection reforms.

CDC is not fully playing its role as the custodian of the interests of the investors and even the investors are not aware of role and functions of CDC .CDC should be on board in the investor training and awareness campaigns, so that investors should know the role of CDC in their investment portfolio.

Since SECP has actively taking keen interest in the training and investor education, in this effort they have fully activated the efforts of Institute of Capital Market (ICM) and ICM is working on introducing new certifications and conducting investor education training sessions. The role of ICM is very important in the development of professionals to cater the future market demands. All key players should support ICM Programs.

This is the responsibility of the Brokerage houses and Mutual Funds to hire only those professionals, who have passed the required ICM Certification exams. Unfortunately, the Brokerage houses are not seriously taking this issue and very few candidates appeared in certification exams for Stock Broker Agents.

All the stake holders should jointly launch media campaign to highlight this great achievement of breaking the high after four years against all the odds among the masses to generate positive sentiments among the general public and to diffuse the misconceptions about the investment in stock markets and to generate positive image as the viable option to invest their money. Positive vibes should generate to fetch the entry of new entrants.

Stock Brokers should introduce online trading platforms to the retail investors and hold training sessions to demonstrate the capabilities of online trading to the retail investors to increase the reach and volume of the market. SECP should make it compulsory part in investor training sessions to introduce the online trading options to the investors.

A joint promotion campaign should be launch to cater the foreign investors, especially the overseas Pakistanis, considering the dollar parity rate, where it is very viable to invest in Pakistan stock markets for capital gain and dividend payout and easy repatriation of capital in dollar terms.

Since the Mutual Fund industry is the direct beneficiary of improving stock markets, therefore it is the equal responsibility of Asset Management Companies to pool their resources in the promotion of retail investor education and training and should be a part of every investor awareness campaign.

Comprehensive Investor training and awareness program should be launched on permanent basis with short & long term targets with the concurrence of all the stake holders on board with clear role and contribution. Without increasing the numbers of retail investors, we cannot provide volume, depth and sustainability to our Equity market.

I personally think, if we put our efforts as a team and sincerely share common goal to take our KSE INDEX to the level of 20000, we can achieve this land mark by all means, if we play our due role sincerely and share our resources effectively to generate results with less effort and resources, but with better team work and coordination. Well done my comrades ,Keep it up!

(Author of the article is the Head of Training & Wealth Management ISMAR Financial)