PBC discussion on capital markets held


KARACHI: The Pakistan Business Council held a discussion on opportunities and challenges of the country’s capital markets on Thursday.

In his welcoming remarks, the chairman of the PBC and president of Bank Alfalah, Atif Aslam Bajwa, said the purpose of the event is to bring together market stakeholders and regulators to shed light on the country’s capital market situation.

Akif Saeed, the commissioner of the Securities and Exchange Commission of Pakistan, gave a detailed presentation, counting a set of initiatives on the chief regulator’s plans for the development of Pakistan’s capital markets.

For promotion of the debt market, he said the SECP has taken several steps, including development of a corporate bond market reporting system, to promote ease of doing business for online reporting of issues of debt securities, revamping of the credit rating framework, formulation of rules for issuance of securities through private placements. Tax credit for investment in Sukuk in the same manner as provided for investment in shares and insurance u/s Section 62 of the IT Ordinance and establishment of an independent bond pricing agency for fair valuation of debt securities.

On operational developments, he said a project is in the pipeline for launch of cash settled derivatives at the Pakistan Stock Exchange, including products such as cash settled futures, options. A framework is also being finalized to enable listing and trading of exchange traded funds. To enhance investor protection, custody of customers is to be moved away from brokers. He said SME board has been established at Pakistan Stock Exchange for listing of small and medium enterprises.

On structural reforms, he referred to the integration of three stock exchanges in January 2016 to form a national trading platform under the mane of Pakistan Stock Exchange. Similarly, divestment of 40 percent shares of the Stock Exchange lying in the blocked account to a consortium comprising the Shanghai Stock Exchange, Shenzhen Stock Exchange, Chan Financial Futures Exchange, Pak-China Investment Co. Ltd and Habib Bank.

Naseem Baig, a representative of Arif Habib Corporation discussed the ‘need for development of Pakistan’s capital market. “Our equity market capitalization is 35 percent of the GDP, while the international benchmark is 100 percent,” he said. The total number of listed companies is 566, of which defaulters are 93 and MNCs are 46. He said that the defaulters probably were listed not because they wanted public subscription but it was mandatory to list them.

He underscored the need for serious competition all around, and help more businesses develop and grow by the capital market providing equity and debt. This will also give the saver a better deal and should positively impact the propensity to save.

Fawaz Valiaani, CEO of the Elixir Securities Pakistan discussed the topic, “Why go Public—a prospective for Shareholder Wealth Creation.”

Kashif Shah, MD of Investment Banking at Arif Habib Limited, also discussed “IPO of Hi-Tech Lubricants Limited” case study: growth capital from equity capital market.

Earlier, PBC CEO Ehsan Malik gave a brief introduction of his council. “To conduct workshops, seminars and field work for carrying out research and raising awareness in regard to matters affecting the country’s businesses are some of the priorities of the council,” he said.

Published in Business Recorder, March 31, 2017