January 5, 2003	Sunday	Ziqa’ad 1, 1423

KARACHI, Jan 4: Shaukat Aziz has said that turnaround in the country’s economy resulting from the economic reforms of the government and the ground-breaking regulatory measures in the capital markets, were the reasons for unprecedented boom at the Karachi Stock Exchange, that gave it the distinction of being “the best performing market in the world.”

The adviser to the Prime Minister on Finance & Economic Affairs was speaking at a ‘press briefing’ on Saturday to mark the historic occasion of Pakistan’s markets’ outstanding performance.

Mr. Aziz congratulated the members of the exchanges, the brokerage community and the management of all stock exchanges as well as the SECP and said that as the KSE index had shot up to its all- time high of 2701.4 points at the close of the year 2002, it was a time to celebrate, resolve and reflect.

Shaukat Aziz said that in 2002, KSE had registered a rise of 112.2 per cent while its market capitalization had surged 101 per cent, which translated to 108.2 per cent in dollar terms (from $4.9 billion to $10.2 billion). He also said that in terms of GDP, the market capitalization had risen from 7.9 to 14.6 per cent during the year. The adviser said that stabilization and structural reform measures undertaken during the last three years had now brought the economy at the stage of take-off. He said that regulatory measures had resulted in a market of visible integrity and transparency in terms of price discovery and trade settlement, which had increased investor confidence.

He said it was a collective responsibility of the exchange and the broker community to market the exchanges and attract retail investors as well as seek new listings. About listing of government controlled banks and corporations, he said that NBP experience was an encouraging one and the government would hope for more such listings. He did not agree with a questioner that Section 12(9)(a) be restored in the Income Tax Ordinance, forcing companies to pay a certain percentage of the profit in dividends. The advisor passed the question over to the SECP chairman, Khalid Mirza, who said that it was best left to each company’s board of directors. In regard to the inadequacy of the “Takeover Law”, Shaukat Aziz stated that though there was room for improvement, at least something had been put on the table. As he tossed the question over to the SECP chairman, Mr. Mirza decided to hold back the criticism the he had previously made public. Aziz said that for the growth of the market it was necessary to educate investors and for mutual funds to market their products.

Earlier, Mr.Moin M.Fudda, managing director KSE presented the address of welcome saying that it was a historic occasion when both Mr. Aziz and Mr. Mirza were present at a briefing. Mr. Fudda presented comparative statistics on the Pakistan markets compared to other world markets which showed the KSE having gained 112 per cent; the Lahore Stock Exchange gaining 76 per cent and the Islamabad Stock Exchange having gained 51 per cent. He pointed out that among the world bourses, the closest competitor was Colombo with a 31.25 per cent gain, while most other world markets had suffered varying degrees of decline.

Mr.Fudda appreciated the regulatory reforms initiated by the SECP and the bourses and praised the members of the broker community for their extensive cooperation in the implementation of those reforms.

In reply to a question on risk management, the KSE MD said that the management of the bourse was monitoring exposures not on daily, but hourly basis. “In the 100 days since I have assumed office, there have been three difficult moments in respect of settlement and all those were quickly and amicably resolved,” said KSE MD, adding that since all stock market risk management reforms were in place, the management did not foresee any crisis of settlement.

Also present on the occasion were Shahid Ghaffar, Commissioner SECP, Aftab Chowdry, MD Islamabad Stock Exchange and Siddique Dalal, acting chairman KSE and a large number of stock brokers and investment bankers.