PESHAWAR, March 19: Securities and Exchange Commission of Pakistan (SECP) and Central Depository Company (CDC), here on Saturday, persuaded potential investors from the Frontier province to make investment into the stock business as the market fundamentals were good enough for making long term investment. Senior functionaries of the SECP, CDC, managing director of the Islamabad stock exchange and representatives of private brokerage houses, in their separate presentations during an investment conference here on Saturday, explained basics of the stock business to investors from the Frontier province and prospects it entailed for investors across the country. The investors were apprised that investment in the stock business ensures highest return even when the business was going through a difficult time before experiencing boom. They said that a recent study of last 10 years’ performance of the stock business revealed that investment in the stock exchange yielded 20 per cent return per annum, much higher than other investment avenues including Defence Saving Certificates, National Saving Schemes, profits offered by banks, etc. The speakers apprised a sizable audience, comprising industrialists, traders, bankers, professionals and government functionaries, about the regulatory framework governing the stock business, the role of and mechanism running the stock exchanges, risks confronted by the investors and safe practices to mitigate the risk factor in addition to prevalent market fundamentals.
“There is still time to make millions, but one should not be in hurry,” said Mohammed Basheer Janmohammed, chairman of the CDC in his address of welcome.
He said that market fundamentals were good enough to invest in the stock business and an effective regulatory framework was in place to protect the interest and rights of investors.
He, however, advised the investors to exercise caution while making investment in the stock business even though the market was performing well.
Though the SECP, he maintained, had evolved an effective regulatory mechanism, which guaranteed no room for risks of default or manipulation, the investors needed to be careful for which they should know the role of CDC and should have investors’ account with the company.
“Investors should be vigilant and careful while making investments in stocks,” said Mr Janmohammed.
He claimed that the stock market was stable enough and it was not going to crash as, he added, “Pakistan is economically much better country now, industrial sector is progressing, deposits’ rates have come down and cement and oil sectors, like a couple of others are booming.”
The organizers of the conference also displayed a documentary on the CDC, its history, functions, role, regulatory framework put in place to monitor the stock market, etc.
Mohammed Sohail, director of a private brokerage house, making presentation on “an overview of opportunities and risks in Pakistan’s capital market with a futuristic outlook for potential investors”, explained stock exchange’s features, merits of making investment in it, KSE-100 index, and different types of financial ratios and techniques to carry out the business by mitigating the risk factor.
He said that the Karachi Stock Exchange was the most liquid market in Asia at present and that being a well regulated market. It was safe to invest there. He allayed investors’ apprehensions that the market could be manipulated easily by a strong lobby of brokers.
“Paid-up capital of the KSE has reached Rs400bn whereas market capitalization has touched $45 billion from $5 billion seven years back,” said Mr Sohail, adding that “investors should be very careful in selecting a broker and must not forget to open up an account with the CDC.”
He said that the market was ripe for making long term investment as the number of high free float of companies was on the increase and it had become difficult to manipulate the market because of the extent to which the KSE volume and market capitalization had grown.
He urged the investors to make investment in a particular company only after proper research, going through its balance sheet and annual report and that after having made investment the investor(s) should constantly judge the performance of the company.
Mohammed Shoaib, chief executive of a private firm dealing in mutual funds, in his presentation on ‘mutual funds and its benefits’ explained different aspects of the funds and merits to investment in open-end and closed-end funds.
Aftab Ahmed Chaudhry, managing director of the Islamabad Stock Exchange, on this occasion, explained the role of an stock exchange, mechanism behinds its functioning and the regulatory framework the government had put in place to protect the market.
