KARACHI, Sept 27: Colony Mills Limited, which begins trading from October 2, would be the tenth security to enter the country's capital market this year.

Nine new listings have come forward in eight months. Interestingly, six of them represent the fast-growing mutual fund industry. Two others adorn the banking sector: Bank of Khyber and Bank Islami Pakistan; and one is on the energy sector: PICIC Energy Fund.

For all its faults and follies, it goes to the credit of the government for having fuelled the fire of investment in stocks among the general public. From just around 50,000 people who dabbled in shares six years ago, the number is estimated to have risen to over a million. It came from the gains they netted in offerings from state-owned equities: PPL and OGDC. Those brought enormous gains to the investors. It is a different matter if both the needy and the greedy lost all that they had earned and more in the crash of 2005.

But for a long time now the government has almost stingily held on to all its holdings in public companies. Excepting Bank of Khyber, none of those promises of divestment of holdings in Habib Bank Limited, Slic and secondary offerings in OGDC, NBP and UBL have materialised.

The private sector listings have also been all too slow. The result is that too much cash is chasing too few shares at the market. On any given day, volumes are almost always generated in as many shares as can be counted on the finger tips of one hand: National Bank, MCB, PPL, POL, Hub Power, PTCL and one or two others.

There is a need for new offerings: both from the public and private sectors. Currently, two new listings of which one is a mutual fund and one TFC are in the process of formal listing; prospectus for sale of four companies have been cleared by the exchange and six are shown on the KSE daily list of quotations to have 'applied for listing'.

Even the financial year 2005-06 saw a handful of new offerings compared to the earlier year. Only nine new companies showed up to make IPOs as compared to 16 companies the year ago.

To satiate the appetite for more stocks and rein in volatility in few actively traded scrips, it is imperative for the government to take the lead in offerings of just a part from its almost wholly-controlled giant companies.

A private company can not be expected to enter the market even if some of the hassles of compliance with complicated code of corporate governance were to be relaxed.

Until June 2002, there was a difference of 10pc in rate of income tax paid by the listed and unlisted companies with the latter having to pay at 45pc against 35 per cent for listed companies. That difference has gradually been eroded and now both are taxed at the same rate of 35pc. If the stock market players are to be believed, that is one of the reason that only 653 of the 40,000 registered companies have sought listing at the stock exchanges.

And even so, out of those 653 listed entities as many as 154 are lame ducks sitting on the 'defaulters' counter'. Another 200 companies are such in which no trading takes place since almost all of the shares are held by sponsors in large frozen blocks. Of what use are they to the small investors, though for the benefit of the exchange, they do add to the total market capitalisation that the bourse is able to display.