KARACHI, March 20: Arif Habib, the chairman, Karachi Stock Exchange said that the market capitalization at KSE, which had peaked to $23 billion, would make Pakistan equity markets eligible for inclusion in the prestigious emerging market index of Morgan Stanley - i.e, the Morgan Stanley Composite Index (MSCI).

The chairman, KSE, was speaking at a press conference arranged by the bourse to celebrate the crossing of the KSE-100 index over the 5,000 mark. He said that if the Index could sustain over the benchmark level of $20 billion for another month or two, the Pakistani bourse would be a part of the MSCI, which would put it on the map of the emerging markets as a destination for foreign investment.

In rupee terms, the KSE market capitalization had reached Rs1.3 trillion mark. He said that in the last 26 months, the KSE-100 index had scaled by 270 per cent, but the market was still attractive in terms of price-to-earnings (p/e) ratio and dividend yields. The chairman KSE said that everyone had benefited from the stock boom; companies had seen their profits soar; government had received larger sums in corporate tax and shareholders had received higher dividends.

Arif Habib observed that three factors would help sustainability of the market: one, the role of Mutual Funds, which would enable investors to be attracted to the market due to their professional management skills; two, that more and more financial institutions would continue to play their major role in the stock market boom and three, facilitating retail investors to enter the market. He said that internet trade would assist in broadening the base of investors. He said that the bourse was working to seek cost effective facility of making transactions through reduction in cost of transaction and CDC and brokerage rates had come down. Tax concessions were also being sought from the Government for listed companies. "The Board of Directors of the KSE has declared 2004 as the year of investor education," said the KSE chairman.

Moin Fudda, managing director of the KSE who gave a presentation on the market performance stated that the credit for the stock market boom could collectively be attributed to the economic reforms; corporate reforms and the capital market reforms.

Mr. Fudda explained those reforms with the help of slides. He also talked about the technological advancements undertaken by the bourse. He said that the average dividend yield of listed companies was still around 10 per cent, which was very attractive compared with other stock exchanges of the world and the domestic Saving Deposit Schemes and T-Bills.

He pointed out the outstanding performance of the KSE compared with other bourses of the world. The KSE MD also identified the challenges ahead, which related to on-line access for internet trading; margin financing; OTC market; attracting new listings; promotion of TFC trade and cross border listing possibilities.