The Karachi Stock Exchange (KSE) is launching an awareness program with an aim to expand the investor base at the equity market up to 0.5 million within next two years. The Investor Awareness Program (IAP) envisages expanding outreach and awareness of financial services industry, enhancing market confidence and reducing the investors’ vulnerability to fraudulent investment schemes. “The program intends to achieve a CDC Investor base of 500,000 by the end of the calendar year 2014,” said Nadeem Naqvi, Managing Director KSE, in a statement issued on Friday. According to Naqvi, country’s overall investor base in capital markets is significantly lower than regional countries.
He said a small investor base not only meant that market volatility was elevated but also that a very large number of savers in Pakistan were not participating in an asset class that had provided real positive returns (after accounting for inflation) over the last two decades whereas, traditional financial asset classes such as National Savings Schemes and 10-years government bonds had barely kept up with inflation while bank deposits have actually provided negative real return thus causing loss of savers’ purchasing power.
A major reason for such a small investor base was clearly insufficient attention to marketing and investor awareness generation by capital market institutions and participants. Furthermore, whatever marketing had traditionally been done, it had focused on specific shares and had had a trading orientation. “The fact of the matter is that most investors are generally risk averse,” Naqvi aded.
Therefore, the investors tend to stay away from investments perceived as having high risk of volatility and loss, he said. Unfortunately, this means that they also miss the opportunity to obtain above inflation return on the investments which could protect the purchasing power of their savings.
In the above context, and under the guidance and active participation of the SECP, Capital Market Institutions i.e. all stock exchanges, CDC, NCCPL, MUFAP and Institute of Capital Markets (ICM) are in the final stages of commencing a nationwide, comprehensive and sustained investor awareness program in the second half of calendar year 2012.
The key characteristic of this program is to focus on personal financial planning (for individual investors) and show how a systematic and dedicated financial planning process can help investors achieve their long term goals whether it be financial independence upon retirement, specific objectives such as children’s higher education, marriage, etc., or saving enough equity for house purchase. The equities play an important but partial role in this scheme of things and the marketing and selling approach needs to focus on the overall savings plan for investors.
To finalize the IAP based on member community input, assessment and support to collaborate activities, the KSE has asked the members for their suggestions to be submitted latest by May 31 along with nominations for the KSE’s “TRAIN A TRAINER” program.
The nominated representatives shall be provided all necessary material, training and coaching to enable them to conduct presentations, seminars and handle questions from prospective investors. The focus will be on personal financial planning, asset allocation and characteristics of various investment vehicles rather than individual brokerage house projection.