KARACHI (December 19 2002) : The Karachi Stock Exchange (KSE) this year so far recorded tremendous increment of 92 percent in the shape of share values while the index of the bourses boosted by 96 percent due to the policies by the government uplifting the national economy, offloading of shares of National Bank, withdrawal of tax on bonus shares and reduction of withholding tax on brokerage and commission.
The KSE on Wednesday released the annual report for the year 2002 and Moin Fudda, managing director, said that Pakistan's economy during the year demonstrated greater resilience in the face of numerous shocks suffered in the aftermath of Sept 11, 2001, event.
However, due to Pakistan's alignment with west in the international war against terrorism, followed by restoration of relationship with western governments as well as multilateral donor agencies, brought the economy back on track.
This is reflected by the modest pickup of GDP growth rate, sharp increase in per capita income, low inflation, reduction in trade balance, sharp increase in workers' remittances, stability in the rate of exchange and strong foreign currency reserves.
The KSE-100 index, which was at 1273 points in the beginning of the year, has gone up to 2,501 points on December 18, 2002, showing an increase of 96 percent, while the market capitalisation or the share value improved by 92 percent to Rs 568 billion from Rs 296 billion.
He said that the average daily volume also recorded considerable improvement at 150.90 million shares during the period, as compared to 97 million shares during last year.
However, there has not been any significant improvement in the number of listings during the period and only four companies with a paid up capital of Rs 6,318 million were listed.
He said that as part of its continued efforts to enhance market stability, transparency of the operations and broad-basing equity investments, a number of structural reforms are underway which include: implementation of new trading system capable of handling significantly larger volume of trades at higher speed, to carry out necessary changes in the Regulations Governing Futures Contract for its further promotion, introduction of OTC Regulations to provide for a transparent mode of investment and listing of smaller capital base companies, review of existing KSE-100 index and introduction of a new futures index and introduction of margin financing with the guidance and assistance of Securities & Exchange Commission of Pakistan.
Salim Chamdia in chairman's review said that the rapid recovery was possible due to the policies pursued by the previous government in uplifting the national economy as well as restoring the confidence of the investors in the equity market which, inter alia included resolution of the long-outstanding issue of Hubco.
The overwhelming response to the public offering to the second tranche of five percent of National Bank of Pakistan during the year reflected the confidence of the equity market.
Similarly, the policies on privatisation, liberalisation and deregulation encouraged private investments, which also had a profound effect on the activity of the stock market.
The interest of foreign investors in the market was also visible and is likely to increase day by day.
Chamdia said that the Exchange showed development as the government accepted nearly all proposal forwarded, including withdrawal of tax on bonus shares, reduction of the withholding tax from 10 percent to 5 percent on brokerage and commission received by the stock brokers as well the decision to progressively reduce the tax rates for banking companies. These steps also encouraged investment and prompted capital market formation, which is reflected by the current bullish market sentiment.