KARACHI: About a dozen leading brokerage houses operating on the Karachi Stock Exchange may have more asset wealth than the legendary top 25 but no one among them managed to join the elite club since the industrial boom of the 60s.

This question is now being debated with a big why? Why the industrial and financial giants only qualify for the title, but not the brokers?

There could be more than one explanation for this phenomenon. The most appropriate one among them could be that the Pakistani bourse at that time was in its formative stage and has not attained the title of “best performing markets in the world” when the late Dr Mahbubul Haq coined the title of top 20s.

“How could brokers, with terribly low financial standing join the elite club at that time when the number of listed companies was about 300 and daily volume figures seldom top a million shares,” a leading stock analyst Faisal A. Abass said. “The general investor interest at that time was also low and not that encouraging.”

However, the financial reforms initiated by the Nawaz Sharif government in 1993, gave the needed push to stock trading after the entry of foreign investors.

“The years that followed the 1995 boom during the second Benazir Bhutto regime was the real breakthrough and was confidentially sustained since then,” another leading analyst Zia Javaid said. In between the KSE index has set a new all-time high record both in terms of daily volume over one billion shares, market capital at Rs4 trillion and KSE index at 14,202.00 points (base 1,000 points). The number of listed companies rose to 963, which has now reduced to 657 owing to delisting and mergers.

He said the market crashes of March 2005 and June 2006 proved a windfall for some and total financial losses for the others but they certainly opened the other modes of investment as safe havens for the “moneyed brokers” to opt for industry and financial instruments.

“Among the owners of leading brokerage houses, Arif Habib was perhaps the one who tried to decentralise his investment portfolio from stock trading to industrial and banking sectors, including cement, engineering and fertilizer,” analyst Ahsan Mehanti said.

Some others may follow as the cash-heavy brokers are out to keep their wealth within the country and are not following others who believe in outflow for safe havens elsewhere.

An overview of the corporate sector since late 80s shows that leading brokers are terribly more prosperous than in the martial regimes and are now progressively opting for productive activities to share the benefits of national growth of economy rather than stock trading.

They may not be in a position to play the pioneering role as did the top 25s, but some of them will certainly join the elite club to make top 30 or above when the fresh survey is conducted, another analyst Ashraf Zakaria predicts.

The houses of Adamjees, Dawoods, Valikas, Bawanys, and Habibs had since independence, notably in the 60s certainly played the role of pioneers both in the industrial and financial sectors and in a way made Pakistan self-sufficient in more than one sectors of economy. It was the house of Valikas, Dawoods and the Adamjees who set up textile and jute mills, while Habibs opted for banking.

But the nationalisation of private sector enterprises by the Z. A. Bhutto regime in early 70s halted the process of industrialisation and gave a severe blow to the financial sector.

Late 80s, however, witnessed the revival of industrial and financial activity during the Benazir Bhutto regime owing to financial reforms and incentives given by the government to boost trade and industry.

A record 125 companies were listed on the Karachi Stock Exchange in the maiden year of Benazir Bhutto and other several dozens followed in the subsequent years.