March 4, 2003	Tuesday	Zul Hijjah 30, 1423

KARACHI, March 3: Pakistan has allowed state-owned provident funds to invest in local capital markets, but such investments will only be possible when the stock market regulator finalizes the investment rules, a leading fund manager said Monday.

The funds, which may hold as much as Rs100 billion, are awaiting a green light from the Securities and Exchange Commission before deciding what to invest in, Nasim Beg, chief executive of Arif Habib Investments, told a news conference in Karachi.

“We’re looking for Rs100 billion that could potentially come into the capital markets,” Beg said in his office.

Beg said the move by the Ministry of Finance to allow state-owned provident funds to invest could be a shot in the arm for the equity market. He said the exact size of the provident funds in the state-owned sector was difficult to estimate because the government hasn’t fully funded its obligations.

Beg’s firm launched two funds worth Rs500 million a year ago — the Pakistan Stock Market and Pakistan Income funds — which now hold up to Rs2.2 billion worth of investments.

He said the size of the funds more than doubled, helped by a robust recovery in the stock market, which has risen 30pc from day when these funds were launched. The income fund is also linked to the stock market as it funds carryover transactions in the market.

In 2002, the key Karachi Stock Exchange 100-share index gained 112pc in a rally fulled by financial benefits stemming from Pakistan’s alliance with the US in the war against terrorism, falling interest rates and strong earnings by blue chip companies.

The company has also launched a Rs250 million fund with Metropolitan Bank, which will exclusively invest in government securities, he said.

Beg said he was still hopeful for the stock market, despite the recent correction after it hit an all-time high of 2955.50 points in January 16.

“The market should trade at a 10 times earnings multiple, whereas it is currently trading at 6 times multiple. So there is another 40pc more to go where the market should eventually settle,” he said.

The Karachi Stock Exchange 100-share index closed up 121.42, or 5pc, to 2520.57 on Monday.

—Dow Jones Newswires