The proactive role by the Securities and Exchange Commission (SECP), the stimulus provided by the federal government, and campaign by the Pakistan Stock Exchange (PSX) has immensely helped the market to increase the pace of listings, said PSX’s Head Marketing & Business Development, PSX, Ms. Raeda Latif in an exclusive interview with The Correspondent.
In the past few months, the Pakistan Stock Exchange (PSX) has been on a high with some record business in terms of volume as well as new company listings. And things are looking great with 10 more companies under the process of getting listed in the ongoing year.
She believes that this trend will continue in 2021 as by looking at the applications she predicts that we can expect around 10 more listings this year.
From a macroeconomic perspective, there were many measures taken by the finance ministry keeping in mind the COVID-19 pandemic that had a positive impact on the companies. The improvement at the bottom lines of the existing listed companies coupled with lower interest rates played a crucial role in improving the corporate sector’s earnings which in turn improved the overall environment.
Regarding the pro-active role played by the Securities and Exchange Commission of Pakistan (SECP), she said unlike in the past, this time around the regulator was not only involved actively in the post-launch but as well as throughout the consultative process. The best part is that SECP is evolving rules and regulations according to the changing modern requirements.
Furthermore, she said that SECP has also been at the forefront with regards to the Initial Public Offering (IPO). The regulatory institution has facilitated PSX and has supported the entire market-making process as well as bringing in banks in it.
While comparing regional stock markets, PSX faces some challenges in terms of investor base expansion. One of the reasons for the lower public interest can be attributed to higher interest rates in Pakistan as compared to other economies of the region which translates into comparatively better returns in fixed income asset classes such as National Savings Schemes offered by the government, fixed income mutual funds, bank term deposits and saving accounts.
Other reasons can be low awareness levels, increased documentation, and disclosure requirements when investing in the stock market vis a vis gold, prize bonds, and real estate which are, to a large extent, undocumented and not fully disclosed. There are approximately 250,000 investors investing directly into PSX and more than 400,000 investors of mutual funds.
