The policymakers at Pakistani stock exchanges have finally shifted their focus from the recession-hit western investors to that of the “high-saving” emerging economies like India, China and Middle Eastern countries.
Also, a KSE delegation is due on September 3 to meet the MSCI Board for convincing the latter on placing Pakistan back into the category of emerging markets from the frontier market.
Further, a Memorandum of Understanding (MoU) is due next week between the front regulators of Karachi and Lahore stock exchanges for the launch of KSE-30 index at the Lahore stocks. This was stated by Karachi Stock Exchange (KSE), MD, Nadeem Naqviwhile declaring the appointment of AKD Securities as a first market-maker for the Stock Index Future Contract (SIFC).
He said KSE, the front regulator of country’s largest share market that has recently been demutualized, was in talks with the stock exchanges of India, Abu Dhabi and Dubai for cross-border listing of each other’s indexes.
“We have always been seeking investment from the west. If we focus on high-saving countries like India and China we would see great liquidity flowing into Pakistani markets,” said Naqvi.
Sensex would be traded at the KSE counter, he said, adding the Abu Dhabi and Dubai stock exchanges were also in contact for the same contract. Naqvi termed the “cross border listing” as his dream. Appreciative of the Reserve Bank of India’s recent announcement to allow Pakistani portfolio and direct investment on the Indian markets, the KSE MD called upon the Pakistani central bank to replicate the same. Also, he said, his side was working with the New York Stock Exchange for the trading of KSE-30 index at the latter.
Further, he said MoU was due next week between the front regulators of Karachi and Lahore stock exchanges for the launch of KSE-30 index at the latter.
Naqvi said the trading of KSE-30 benchmark would start at LSE within next 6-8 weeks. “A MoU is ready for next week,” he added. About the demutualization of the KSE, the managing director said 40 percent of the total shares have already been transferred in the members’ account. Of the remaining 60 percent shares, he said, 40 percent would be offered to offshore investors and 20 percent to general public through Initial Public Offerings.
In his briefing, Sani-e-Mehmood Khan, general manager product development at KSE, said the market-makers would make sure that besides entry point the investors could also have the exit way from the market.
He said at least half a dozen applications were pending with the KSE for market makers job. Naming the Faysal Bank and Topline Securities, the product manager preferred not to name other applicants. Discussion with Faysal Bank, Sani said, was on the advanced stages.
“More market-makers would be appointed in next few days,” said Sani.
To a query, Sani termed the liquidity as a root cause of all the diseases. He said the market was not getting enough liquidity because of the trust deficit created in the wake of 2005 and 2008 market crashes. “The investors’ confidence has to be restored through awareness campaign that is underway countrywide by the SECP with the financing of Asian Development Bank,” he added.
AKD Securities, chief executive officer, Muhammad Farid Alam told the reporters that all the brokers and members of the Exchange would do trading under the SIFC same like the normal share trading.
“We as a market-maker would trade 100 contracts at start and 500 at the end in case no activity is there,” he said.
Quoting the proverb that “a hundred miles journey begins with a single step”, Farid was upbeat that the new product would add more volumes and value to the stock market that if not interrupted would soon regain its past glory. “Volumes have improved to $ 91 million and we can chase the $ 100 million mark,” said the AKD executive who deemed a good operator necessary for the demutualized market.
