The Stock Market
Past few years have been outstanding in many ways for the emerging Pakistan's stock markets. Karachi stock exchange (KSE) index witnessed the all time high by crossing the 2661 market, yet deeply plunging back recently, representing erosion of some 40 percent capital worth of the market. There were major inflows of foreign institutional capital. Public listing of a score of new brokerage house with foreign links-up, the privatization of the telecom, laying the foundation for a corporate bond market and huge investment pledges in the private power sector, is some important features in the list.
The shift from straight debt securities to equities, mostly because of the widening gap between deposit rates and mostly because of the widening gap between deposit rates, and prevailing inflation rates, is a welcome move in our money market, as equity investment appears closer to Islamic norms among the available instruments. This positive response to equity market is not confined to Pakistan, other economies have also witnessed an unprecedented growth in this sector.
One can observe that the traditional role of banks as provider of funds is also undergoing a healthy change, as the banks are switching from simple debt business to portfolio management services. More and more corporations examining the possibility of bond issues being a cheaper alternative to commercial borrowing. Most of this convertibility option that will eventually broaden the stock market base.
In the context of Pakistan's economy and its growth potential, all this represents an historic development and healthy change in the forms of business organization and management more importantly it appears that the financial sector has found away to overcome t ...