PESHAWAR, March 23: Several new investors, who recently stepped into the stock business in the Frontier province, suffered substantial financial losses after they went for speculative buying because of inexperience and lack of knowledge about the business, according to market sources. Fears of losing their principle amount run high among several of the new investors who entered the stock business without caring much about the delicacies involved in it. “It is part of the game and they would learn from their mistakes,” said a broker while referring to investors who suffered losses because of fall in KSE-100 index shedding about 1600 point during the last four sessions.
Thousands of new investors, small and big, in NWFP attracted to the stock business because of growing volume of Karachi Stock Exchange but suffered losses, several among them, said market sources, were thinking to take their investment back to the real state sector because, they added, it involved low risk.
Market sources said that majority of them had little knowledge about the delicacies involved in the business. Most of them, they added, were attracted by newspaper and electronic media reports to make investment in the stock business and hardly any body made the investment after conducting proper research.
Several entered the business on the advice of their friends associated with the private brokerage houses.
Business circles said that several of the new investors run high risk because of their total dependence on brokers in the absence of, even, little knowledge as to how should they proceed with the nerve breaking business.
“Now it is very difficult to stop doing stock trading, as one can not give up once stepping into it,” said a young Pesh Imam of a mosque, who made an investment of Rs80,000 a month ago and lost more than half of it.
“I am hopeful of recovering my investment, but I am not going to take out my money even if I recover the loss,” said the Imam, while resting dejectedly on a sofa at the end of trading on Tuesday.
Shafiq Ahmed, associated with a foreign organization, said that he had planned to make long term investment in the stock business after having suffered substantial losses because of trading.
“Once I recover my losses I would not do trading as it is time-consuming and nerve-breaking,” said Shafiq.
Brokers said that the new investors had not been affected much by downslide of the KSE-100 index.
However, some of the brokers differed with the notion that the new investors suffered losses.
“Majority of them has got their principle investment still intact as it is only the profit, which has wiped out due to reduction in the size of KSE-100 index,” said a broker.
Majority of the new investors, he said, got their principle investment multiplied four and five times after the KSE-100 index touched 10,000 points. Hence, the loss of around 1600 points during the past four days had only affected their profits and not their original investment.
“The new investors have not yet shown panic as, barring a few, they have not withdrawn their investment which shows their patience for the business,” said a broker.
However, another broker said that in some of the cases people had lost whatever they had brought in a month ago. An employee of a brokerage house apprehended that Peshawar’s investors could panic if the KSE-100 index continued with its current downward trend.
Private brokerage houses had got their clientele multiplied manifold in the Frontier province during the last couple of months as a large number of small and big investors stepped into the stock business making huge investment in the KSE.
All the four brokerage houses doing business in Peshawar, with two Karachi-based firms starting their operations in the provincial capital recently, experienced substantial growth in the number of their clients and as a result they also made big profits in a shorter period of time.
“We started operations in Peshawar hardly two months back and the number of our clients has reached to about 400,” said a representative of a Karachi-based brokerage house.
Brokers said that billions of rupees’ investment had been made from Peshawar during the last few weeks as industrialists, businessmen, functionaries of the provincial and federal governments, retired civil and military officers, traders, shopkeepers and in some instance women entrepreneurs stepped into the business.
Market sources said that in several instances people had withdrawn their funds from their fixed deposits and invested in the stock business.
“Peshawar has a lot of potential for the stock business with numerous people having lots of money to invest in the stock exchange,” said Mr Babar Ayaz, managing director of a private firm which organized an investment conference, in Peshawar on March 19, for the Securities and Exchange Commission of Pakistan (SECP).