Sometimes, they say, the truth isn’t good enough — sometimes, there is so much more that is left unexplained. Subtract the philosophical aspect of the debate and the more convenient thing to do is look at numbers for a logical explanation. The Karachi Stock Exchange (KSE), on media’s and investors’ radar alike, has been among the top performing markets for a while.
The benchmark-100 index, typically used to assess the equities’ performance in general, has risen close to 210 per cent since the start of 2012. Obviously, companies have posted profits and investors have made money off the KSE. The question, then, is why the sceptisim surrounding the KSE? Are critics not satisfied with market capitalisation — the total value of all shares — that rose from over Rs2.9 trillion to almost Rs7.6 trillion in the same period? Or do sceptics feel the money generated went to a select few who control the market and manipulate it to their advantage? Shouldn’t investors, who have placed their faith — and savings — in the country’s iconic stock exchange be recognised for their resilience and patience?
Okay, so maybe the total number of listed companies went down — 68 of them went off the screen in 2012 — and only 23 decided to raise capital by going public. Mergers and acquisitions, a rare concept and practice in Pakistan, remained low. But does the general public really care about these things? It wants the government to provide affordable fuel and electricity at subsidised rates, while ensuring security and safety of citizens, along with keeping inflation in check — might as well take the dog out for a walk too while it’s at it — and put the little money it gets in taxes to good use.
But there is no denying that Pakistan’s economy, despite all the kinks, because of the aid it receives in the form of falling global crude oil prices and international lenders’ support, has grown in leaps and bounds. The growth rate, still not at the level that would generate jobs, has shown a slight uptick. There is money being generated and being spent — somewhere at least. The rally in the cement sector was primarily due to the development spending programme announced in the budget, together with infrastructure spending the country’s private and public sectors have undertaken. The security situation, while still not at the ‘most secure’ best, has improved considerably. The central bank’s own foreign exchange reserves — on the back of loans and privatisation proceeds — have crossed the $13-billion mark and that is no mean achievement.
All these factors, together with the PML-N government’s pro-business history, have increased the confidence of investors. Even if this may not be seen tangibly, the anticipation that things will get better have taken the market upwards. Investors have attached greater value to the Pakistan market and this combination — where the buyer and seller reach a settlement — has helped the stock exchange.
Hence, a smart player, who has exercised some caution and patience, has been able to make quite a few bucks off the KSE’s rise. Critics can come forward and say that the common man hasn’t benefited, but since when does a stock exchange help a commoner on the street? That, again, is the job of the government isn’t it? The stock exchange rewards investors who have taken a risk. In 2015 — despite the plunge in March — the stock exchange has seen an almost 10 per cent increase in a little over six months. Till July 4, the market continued to attract attention and investors. Some sectors have more than just outperformed the benchmark index. Statements that say only the rich have got richer need to be completed by adding that they did so because they took that risk.
Published in The Express Tribune, July 7th, 2015.
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