0
KARACHI, June 6: The listing of the Karachi Stock Exchange (KSE) should be completed by the end of the year, under a plan requiring trading members to sell more than half of their holdings in Pakistan’s main share market, its chairman said.
“Nobody in this country would like to let go of power, but if you see the larger interest of the KSE, then you have to demutualise the market,” Shaukat Tarin, chairman of the Karachi Stock Exchange (KSE), told Reuters in an interview on Wednesday.
Demutualisation separates trading rights from ownership.
The trading members control the 200 seats on the exchange and have yet to agree what percentage of their holdings they should sell.
Deutsche Bank is valuing the exchange and this process will be completed in a month.
“It is going to be good for all stakeholders eventually,” the KSE chairman said.
“If it is not controlled by a few, and controlled by independent people, then there is transparency, and there is trust and faith,” he said adding the target is the end of this year.
The KSE top 100-share index has been on a roll since the start of the year, gaining 31.5 per cent and setting a series of records above 13,000 to become one of Asia's best performing stock markets.
With a market capitalisation of $60 billion, Karachi is dwarfed by the $1 trillion next door in Bombay.
Though nowhere near the size of India's juggernaut economy, Pakistan has also been turning in stellar growth rates for the past few years.
Foreign buyers have emerged in key sectors like banking, the reforms led by Prime Minister Shaukat Aziz have found favour with investors.
NEW LISTINGS: There are 657 firms listed on the KSE, and Tarin said the government should provide incentives to attract more.
“Before 2002, the corporate tax rate used to be 45 per cent for unlisted and 35 per cent for listed companies, now everyone is 35 per cent. So we are saying why you don’t give some incentives for these people to come to the stock market,” he said.
The KSE also hopes to finalise an agreement next month to cross-list firms in Pakistan and the United Arab Emirates, where many wealthy Pakistanis live, and to make it easier for investors in the Gulf to put money in Pakistan. It has yet to be decided, which firms will be cross-listed.
Tarin also said there were also plans for the introduction in September of a new system of funding to help investors borrow to trade.
Under the revised Continuous Funding System, investors will no longer have to go through a broker to get access to funds, and the current overall cap of Rs55 billion ($908 million) on funding will be eliminated, and investors will be able to invest in all stocks that meet, as yet unspecified, criteria. —Reuters
