KARACHI, Sept 14: In a major move the Employees Old-Age Benefits Institution (EOBI) for the first time has diverted its investment towards capital market by investing in dividend yielding shares, official sources said.

The institution, which is entrusted to provide social security to employees, had traditionally been investing most of its funds in the government securities such as PIBs and NSS.

However, when the government has put restriction on institutional investment in Pakistan Investment Bonds and National Saving Schemes the EOBI has to diversify its investment to other sources.

It is learnt from the official sources that the EOBI apart from investing in Term Finance Certificates (TFCs) has also ventured to make investment in stocks.

In order to ensure safety of capital and also maximize gains from share investment, the EOBI has hired the services of a leading brokerage house with international affiliation.

Furthermore, it has set up its own advisory committee comprising members of the board and technical experts from the advisory company.

The EOBI has recently inducted a highly qualified professional to head its investment department so that the laid down investment rules could be followed in letter and spirit.

However, the official source is reluctant to disclose the number of securities and the amount the EOBI has allocated for investment in the capital market.

EOBI chairman Muhammad Shafi Malik told Dawn that his institution was in touch with institutions like SECP, Ministry of Labour, State Bank, NIT and experts on the stock market.

He said the EOBI had entered the capital market on long-term investment basis and would be venturing for those scrips which were yielding dividend and carrying healthy balance sheet.

Shafi Malik said it was now a challenge for investors to come forward and set up profit making and efficient new entities to absorb extra liquidity in the economy.

In the past, he said, 96 per cent of the EOBI’s funds used to be invested in the government securities and some small part in the real estate, but on stopping institutional investment in NSS and PIBs (where interest rates have also come down) the EOBI would have to develop market based investment strategies.

The EOBI chief said that investment funds all over the world were important players in the development of stock markets, but in Pakistan the government had not invested pension funds in the capital market. However, he said recently Sindh government on the directives of Governor Mohammadmian Soomro established a pension fund of over one billion rupees.

The EOBI, which is the federal government institution and established under EOBI Act 1976, is another institution which has ventured to invest in the share market. During its first 25 years of the scheme it remained comfortable and accumulated huge funds, he added.

The EOBI chairman said the institution faced a challenge for finding new avenues of investment after cut in interest rates for NSS and PIB.

Responding to a question, Shafi Malik said the EOBI had devised new policy for the real estate and would be venturing for profitable commercial properties having high rate of return.