Advice corner: Everything not forbidden is permitted

KARACHI:

My mouth waters when I contemplate the feast. My eyes dissolve into tears when I contemplate what is in store. The market players will waste their time chasing elusive trading profits but will miss out on this incomparable opportunity to make real money.

The doctrine of what is not forbidden is permitted means clearly that the field is open for the market participants to choose their direction.

This makes the position of the market player very evident. He must act on the principle. If he does so, the whole market is available to him to exploit and make profit. He can participate in the IPOs. He can participate in the mergers and acquisitions. He can participate in all the takeovers and recapitalisations. He can participate in all the market action that is taking place everywhere in the world. Particularly in places like China.

What does this require? It requires only that the market participant is able to arrange his finances to take advantage of opportunities.

And here, all that is required is to buy the exchange from authorised dealers and remit. The government is making it very easy by granting exemptions. Let the market participant take advantage.

But let us examine this doctrine of laissez-faire in greater detail. It has interesting implications in the political field. What happens in the political field will affect the market.

Take, for example, what is happening in Musharraf case. He is clear and can leave because the Supreme Court has said it does not need him in any action. He is free to leave. So now, Nawaz Sharif has to provide the justification for stopping him. The laws will be changed because in the event what was permitted could not be prevented from happening unless the laws were changed.

Take, for example, the PPO (Protection of Pakistan Ordinance) widely condemned as an intrusion on civilian liberty and deemed to be violating the Constitution.

Laissez-faire prescribed the citizen was at liberty to choose his line of action within ambit of the Constitution. The laws have to be changed to accommodate the wishes of the prime minister. The market has suffered as a consequence of this arbitrary application of laissez-faire.

Every day we see a decline in market value which is wrongly attributed to correction.

A great feast awaits, the market participant has to be alive to the opportunities. Every time the market seeks to overcome the effects of a steep decline caused by the collapse of the system… there arises new opportunities for those who want to participate in the rebuilding of economies.

Opportunities

Let us now examine the opportunities available. Huge IPOs are in the pipeline notably Alibaba.com (giant name in e-commerce). Huge takeovers are also there such as Pfizer’s offer to AstraZeneca which the target company is resisting. The target believes that the value of synergetic benefits has not been properly accounted for.

The market participants will see this down the line in India, China and even in Pakistan. Takeovers, mergers, recapitalisations and mouth-watering IPOs.

One successful IPO we have already seen. I am referring to Hascol, which generated huge profits for those who participated in bidding.

Privatisation

Also keep a keen watch on the privatisation initiatives of the government. Here also, you will see value not reflected accurately.

PIA, for example, is over-priced and must be sold. OGDC, PTCL, gas companies and all refineries are all under-priced. Banks provide an interesting under-valuation as financing to private sector will have to be encouraged. All these possibilities should provide excellent opportunities for the shrewd investor.

Already, we are seeing that the privatisation programme is being subjected to a review. Listen to what the main person in charge of the programme Mohammad Zubair is saying. He says the focus of the programme is now being revised.

And also bear in mind the concern of the unions and human rights advocates and you will see that much is uncertain opportunities galore await the market participant, who can guess correctly.

In short, a feast awaits him. Let the market participant take full advantage of the opportunities.

The writer is the chairman of Ace Securities

Published in The Express Tribune, May 12^th, 2014.

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