The year 2014 was a year of growth and exuberance for the Pakistani capital market. Throughout the year, the benchmark KSE-100 Index of the Karachi Stock Exchange Limited (KSE), exhibited outstanding performance and touched historic, unprecedented levels in terms of value and volume.
According to Bloomberg, Pakistan ranked third in 2014 amongst the Top Ten Best Performing Markets in the world. Also, Pakistan has been able to secure a place amongst the Top Ten for the third consecutive year now. Moreover, in the MSCI Asian Frontier Markets, Pakistan ranked number one – outpacing Sri Lanka, Vietnam and Bangladesh by a big margin.
In 2014, the KSE-100 Index gained 6,870 points thereby generating a handsome return of 27% (31% return in US$ terms). The year 2014 will also be remembered in the Pakistani capital market history for mega public offerings led by sale of shares by the Government of Pakistan, and in terms of money raised through these offerings. Total offerings in the year 2014 reached 9 as compared to 3 in the year 2013. After a gap of seven years, Rs73 billion were raised through offerings in 2014 as compared to a meager Rs4 billion raised in 2013. Higher foreign inflows during the year can also be counted as a major market impetus. Foreign investors, that hold US$6.1 billion worth of Pakistani shares – which is 33% of the free-float (9% of market capitalization) – remained net buyers in 2014.
This positive performance of the capital market can be attributed to a number of favourable factors, both at the political and economic front. As enumerated above, substantial foreign investments in the equity markets which captured considerable free float of the market, declining dollar-rupee disparity and Government of Pakistan’s secondary market offerings played a major role. Other key factors which can be seen as contributing to the market’s bull-run are Government’s business friendly reforms, improved macro-economic indicators including record forex reserve levels increased confidence shown by international donor agencies, Government’s energy sector initiatives, significant interest shown by China to invest in Pakistan, and Government’s plans and initiatives towards fast-track privatization.
The newly appointed Chairman of SECP Zafar Hijazi feels that Pakistan’s capital market should continue its topper’s position in the new year as well, nevertheless should also qualify among the world’s most transparent and fair markets, providing the best opportunities to the investors. The incoming Chairman has already embarked on implementing a robust reforms agenda for the capital market primarily focusing on strengthening of the market monitoring and enforcement regime and introduction of structural reforms for market development and its outreach. As one of the first major steps, the Chairman has immediately doubled the human resources and infrastructure strength of Market Monitoring and Surveillance function, enhancing the scope by monitoring of capital market related discussions/programs/news on the print and electronic media including analysts’ recommendations, investing tips/strategies to their clients/general public.
These preliminary actions reflect the apex regulator’s unwavering commitment towards protection of investors’ interest and rebuilding of a fair, efficient and vibrant marketplace which will continue to contribute positively towards the country’s economic growth in the years to come.
Further, the SECP has taken a serious cognizance of the KSE trading halt on Thursday, 1st of January, 2015 and has formed a committee, comprising SECP, CDC and NCCPL professionals to probe into the reasons for the systems failure and submit its report within a week’s time.