KARACHI, March 31: The Mutual Fund Association of Pakistan (MUFAP) and the Association of Mutual Funds in India (AMFI) have discussed the possibility of listing of Indian mutual funds on Karachi and Lahore stock exchanges, said Zaigham Mahmood Rizvi
, chairman of the MUFAP, at a press conference held here on Wednesday.
Mr Rizvi says that Pakistani stock market's current price-to-earning (PE) ratio is at around 10, while the PE ratio of Indian stock market is around 17. Thereby Pakistan's market, being under-valued, seems to be more attractive for Indian investors. It was proposed that initially such investments might be made through the mutual funds of each country to minimize sedimentation.
The MUFAP had also discussed with the AMFI to cooperate and collaborate in education and training to the people involved in the mutual funds industry, he further elaborated. Mr Rizvi disclosed that in India, mutual funds were allowed to invest off-shore of up to 20 per cent of the portfolio or $50 million per fund.
He said that a six-member delegation of MUFAP had attended the 9th Asia Oceania Regional Meeting in New Delhi held from March 3-7, 2004 on the invitation of the AMFI.
The meeting was attended by delegations from Australia, Bangladesh, China, Hong Kong, India, Japan, Korea, Malaysia, Pakistan, Philippines, Singapore, and Taiwan. Pakistani delegates held meeting with delegates from those countries to explore cooperation in the mutual funds sector.
He stated that fund managers in Pakistan were exploring possibilities of technical cooperation with their counterparts in India. He said that the neighbouring country had already developed expertise in training and education as well as funds distribution network.
Mr Rizvi said that such possibility of technical collaboration may cover off-shore fund, pension and annuity funds, real estate and infrastructure fund, and capital guarantee fund.
Pakistan delegation also held meetings with Indian asset management as well as distribution companies, which included Birla Group, Bajaj Capital, and MJ Capital, to explore technical cooperation between the two countries' mutual fund industry.
While MUFAP is relatively a fresh member of the Asia Oceania Group, an investment funds association, it has been honoured to host the 11th Asia Oceania regional meeting to be held in the year 2006, Mr Rizvi said.
MUFAP is proposing to the government to gradually convert the National Savings Organization (NSO) into a distribution centre for various financial products in the country, added Mr Rizvi.
He said that over a period of time a wide network of post offices in the country could also serve as an effective distribution network. The target for MUFAP is to enhance the concept of investment in mutual funds and, thus taking Pakistan's funds industry to the higher level.
Mr Rizvi said that the MUFAP programme would not only substantially enhance saving and investment potential in the country, but would also create employment to the dynamic youths who were properly qualified and, thus created discipline in distribution industry for various financial products.
MUFAP expects that the mutual fund industry will witness an unprecedented growth in 2004 and 2005. While currently in Pakistan the mutual funds sector size is four per cent of the bank deposits, whereas in India it is around 10pc, reflecting a tremendous potential of growth.
Pakistan's mutual fund industry is now receiving global recognition as it has invitations from the Luxembourg Funds Management Association for an active dialogue at its next conference, he added. The MUFAP has also been invited by the Investment Company Institute of the US during May this year to be held in Washington D.C.
Mr Rizvi said the MUFAP was also looking to organize an international seminar for financial products in near future. Also present on the occasion were Pakistani delegates to New Delhi, which included: Tariq Iqbal Khan, managing director, NIT and vice-chairman MUFAP; Nasim Beg, chief executive, Arif Habib Investment Management Ltd; Mohammad Shoaib, CFA, chief executive, Al Meezan Investment Management Ltd; Najam Ali, chief executive officer, ABAMCO Ltd; and Farid Alam, executive vice-president, PICIC Ltd.
