Pakistan Stock Exchange (PSX), once renowned as one of the top-performing bourses in the region, is currently facing a concerning downturn. Finance Minister Ishaq Dar, during a meeting with representatives from PSX and Mutual Funds Association of Pakistan (MFAP), expressed his apprehension over the poor performance of the stock exchange. In an effort to address these concerns, the minister assured the delegation that the upcoming budget would prioritize resolving the lack of investors and implement measures to encourage investment in the country.
1. Addressing Investor Concerns in the Upcoming Budget
The finance minister, accompanied by key officials from the Ministry of Finance and Revenue Division, acknowledged the importance of addressing the concerns raised by PSX and MFAP. In the upcoming budget, comprehensive steps will be taken to ensure a favorable environment for investors, ultimately stimulating economic growth. By identifying and tackling the barriers hindering investment, the government aims to restore confidence in the stock market.
2. Promoting Investment and Encouraging Mutual Funds
To reinvigorate the stock market and promote investment, specific measures will be implemented. The MFAP representatives highlighted the growth of Shariah-compliant mutual funds and proposed the launch of short-term Shariah-compliant sukuk. These initiatives will provide alternative investment avenues and attract a wider pool of investors.
3. Overcoming the Erosion of Market Capitalization
Representatives from PSX shed light on the erosion of market capitalization over the past six years. Recognizing the significance of the stock market as a major contributor to the national exchequer, the government is determined to reverse the current trend. The PSX delegation also presented proposals to encourage people to invest in the stock market, emphasizing the need for proactive measures to restore investor confidence.
4. PSX’s Golden Run and Subsequent Challenges
The PSX’s KSE-100 Index, once Asia’s top-performing index in 2016, experienced a significant downturn in the subsequent years. Following an impressive 45% return in dollar terms for the average investor, the stock market faced a challenging period in 2017. Equity-based funds recorded negative returns ranging from 10% to 20%, leading to low volumes and impacting brokerage houses’ earnings. The KSE-100 Index posted an absolute negative return of 15.34% during the year, translating to a negative return of 20% in dollar terms.
With the commitment of Finance Minister Ishaq Dar and the collaboration of PSX, MFAP, and government officials, there is a renewed sense of optimism for the future of Pakistan Stock Exchange. The upcoming budget will focus on addressing investor concerns, promoting investment through mutual funds, and implementing strategic measures to restore the stock market’s former glory. By nurturing a conducive environment for investors, Pakistan can pave the way for economic growth and secure its position as a leading player in the regional stock market.