ISLAMABAD, Jan 15: The governor of the State Bank, Dr Ishrat Hussain, during a visit to the Islamabad Stock Exchange here on Wednesday, advised its Board of Directors to get in touch with new prospective investors and try to persuade them to come in Initial Public Offerings (IPOs).
“It is alright that existing stocks are performing very well, but there is a lot of work to be done,” he remarked, stressing the role of stock exchanges in attracting IPOs.
Everywhere the public limited companies provide impetus for capital formation because they have greater disclosure requirements, greater transparency and accountability. In a situation where bank deposit rates were declining, small investors can find these companies attractive propositions for investing their money in, he opined.
In the area of corporate debt market, the State Bank of Pakistan had established new issues of about Rs7 billion during first half of 2002-03. He foresaw almost equal number of companies of same value coming in the second half.
The ISE, the SBP chief proposed, should try to expand its retail investment base to explore the Northern Areas as its catchment area. He also stressed the need to remove apprehensions of the investors regarding operations of the brokerage houses.
In his address of welcome, the chairman of the ISE, Chaudary Muhammad Sharif said ISE maintains highest standards of transparency in its operations, excellent risk management and lowest overall costs of listing.
The ISE management planned to start investors’ education programme, while the investors’ hotline was in the process of installation. After the induction of new trading software on February 1, he stated, the remote access would be available. The internet trading would be available by the end of this year.
The government, Sharif suggested, should consider a comprehensive package for the stock market which may inter alia include special markup rates from the lending institutions/ commercial banks, reduction in taxes and continuation of exemption in gains tax.
In order to facilitate the COT market, he disclosed, the ISE had invited banks and financial institutions to become associate members of its clearing house. It also desired the government’s intervention vis-a-vis the COT rates that were rising continuously.