LAHORE - The equity market, which has posted a gain of around 45 per cent so far, is expected to grow by 50 per cent at the end of the current fiscal year of 2013-14, as LSE is trying to ensure institutional investors participation in developing the domestic capital market.
This was stated by the LSE MD Aftab Ch while talking to The Nation. He said though the trend of equity public offerings at Karachi bourse remained depressing, as apart from few technical listings, Pakistan equity market saw only three Initial Public Offerings in the closing calendar year 2013, however, he believed that at least five more IPOs are expected totaling the figure of eight Initial Public Offerings by the end of the current fiscal year, as talks are under way with several companies in this regard. LSE MD said that all three IPOs of outgoing year 2013 took place after the PML (N) government came into power in May 2013. It indicates investors’ confidence and high expectations with the new incumbent government.
He said that listing of companies on the local bourse remained at low levels after the financial crisis of 2008. Strict code of conduct for listed companies, slowdown in industrial growth, absence of government offerings and no incentives between listed and unlisted firms are affecting this trend. Since 2008, an average 4 new companies have offered their shares every year (excluding right shares) to public versus 30 IPOs a year in 1990s and 7 every year between 2000 and 2007. “We may see improvement in IPOs in 2014 as issuers may realize that improving market may be tapped to raise funds. We expect that next year public offering could be triggered by government through privatization of state owned entities to raise the much needed funds.
He stated that in efforts to inject more investment and create variety of funds in the Lahore’s capital market, the Lahore Stock Exchange has been consistent in building an investor friendly environment, both in terms of law and function. In flourishing this objective, the Lahore Stock Exchange invited the institutional investors across the nation to hold a table talk and discuss measures required to enhance the institutional investors’ participation in the domestic capital market. In response to the views expressed by the participants at the event, LSE has learnt that the regulatory and market structure issues require strong working. LSE realized the urge to undertake a framework as part of the Exchange’s duty towards creating optimum demand for the institutional investors.
LSE believes domestic institutional investors are the pillars of domestic capital markets and networking with the institutional investors would assist LSE in exchanging effective ways to boost the capital markets injecting more transparency and secure investments.
He said that LSE had already managed to have the introduction of the institutional delivery settlement (IDS) mechanism on the Broker to Broker (B2B) trades, the LSE brokers now stand ready to offer their intermediary services to the institutional investors without any time or price disadvantages. Furthermore, with the risk management by NCCPL having being made as an integral part of the B2B trades, LSE brokers now have the capacity to ensure trade completion without any added risk to the institutional investors.