‘MSCI upgrade to bear fruits for economy’

KARACHI: The upgrade of the Pakistan Stock Exchange to the emerging market index of Morgan Stanley Capital International (MSCI) will bear fruitful results for the economy in the long-term, said the bourse chairman.

Muneer Kamal, talking to journalists, the reclassification will not eradicate poverty in the short term.

“The country won’t become a heaven after this but the foreign investors will get to know that something is improving in Pakistan,” Kamal said.

He said the performance of the listed companies have improved during the last four to five years.

Nadeem Naqvi, managing director at PSX said emerging market index is a passive investment platform of $1.5 trillion and Pakistan’s meager weigh of around 0.2 percent may attract up to $3 billion in a year after its induction in the index after May 2017.

Naqvi said Pakistan’s listed companies have chances to grow by around 10 percent under the EM Index. Profits of companies listed on the KSE 30-share Index increased Rs1.0 trillion in the last few years. He said retail investors constituted around 80 percent of the investment in the market two decades back.

Now, they hold 40 percent while 30 percent each is shared by the foreign investors and local institutions, he added.

The PSX MD said the bourse would be establishing capital hubs in the big cities with the support of Securities and Exchange Commission of Pakistan (SECP) and first such hub has already been established in Peshawar.

In order to make the market further transparent, brokers would be divided into three categories, he said. The biggest brokerage houses will have full rights of running brokerage, clearing and conducting research. Second category brokers will be conducting research and clearing activities, while small brokers will only have a right of brokerage and they will not be able to have clearing facilities.

Naqvi said investor awareness is the top priority. He said the PSX’s awareness has reached to 30,000 individuals in various cities and towns of the country in last few years. “We are planning to reach many more in the next couple of years,” he said.