‘More investors needed to transform Pakistan’s capital market’

  • PSX chief says Pakistan will have to bring the capital market into  documented economy.

KARACHI: Pakistan Stock Exchange (PSX) Chief Executive Officer Richard Morin may not predict whether the market will go up tomorrow or next month, but believes that investors at the exchange would get excellent returns in the long run.

“Pakistanis should resist the temptation of thinking about short-term gains. One must always consider long-term profits when it comes to investments in stocks,” he said in an interview on Friday. “If the investors have faith in the economy and in the country, they must invest in shares of the listed companies. They are incredibly attractive buys at these levels.”

The PSX CEO said the transformation of PSX had already commenced and would continue for the next three years. Besides transformation, he added, the objective of the exchange is to bring more Pakistanis to invest in the market.

“This is a fundamental issue to be dealt with. When PSX succeeds in bringing new investors, it would transform the capital market of Pakistan and contribute to its economic success,” he remarked.

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The PSX chief cited the example of Sri Lanka that has a population of 20 million with 700,000 active investors, while Pakistan had only around 250,000 stock market investors.

Similarly, he said, Bangladesh has 2.5 million investors in their stock market, Vietnam with a population of 90 million had 6 million retail investors in the capital market, while India had 25 million stock market investors.

“These numbers give us the measure of two things: the challenge faced in developing the capital market in Pakistan and also the great potential we have to further enhance the capacity of this market,” he opined.

Morin said there were many reasons for lack of investors’ interest in the stock market but one of the fundamental reasons was the size of the undocumented economy in Pakistan, which was seventy percent of the total economy. For more investment in stock markets, he added, Pakistan would have to bring the capital market into the documented economy.

“This was a big challenge but it is not possible to develop Pakistan’s capital market without successfully dealing with it. If Pakistan succeeds in increasing the relative size of the documented economy, it would have a direct impact on the capital market and stock exchange,” he mentioned.

About restructuring of PSX, Morin said when he joined PSX as the managing director in January this year, the first priority for him was to reorganise it and refocus its business development mandate.

“The transformation process is almost complete now. A marketing and business development head was also hired to lead the dedicated teams and get more investors and companies listed at the exchange. These specialized teams would be active in Karachi, Islamabad and Lahore to bring in new investors to the exchange,” he concluded.

 

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