Stock brokers propose over Rs20 billion state enterprise fund to support the bourse

KARACHI: The stock brokers at Pakistan Stock Exchange (PSX) have proposed an over Rs20 billion fund under the management of National Investment Trust (NIT) to inject liquidity in the country’s equity market.[the_ad id=”31605″]A meeting of leading stock brokers including Bashir Jan Mohammad, Arif Habib, Aqeel Karim Dhedhi, Chairman Pakistan Stock Exchange (PSX) Sulaiman Mehdi was held with Advisor on Finance Dr. Abdul Hafeez Sheikh and Chairman FBR Syed Shabbar Zaidi here on Friday to discuss the overall macro-economic situation of the country and its impact on the capital markets.

The participants of the meeting highlighted the need for a capital market support fund, which can assist in bringing desired liquidity to the market and restore investor confidence.

In view of attractive values at the PSX, the brokers proposed a market support fund. The meeting discussed that the NIT State Enterprise Fund which was created in 2009 for market support should be reactivated. Since the Fund still exists, it would not take long to be activated.

It was noted that performance of stock market is closely linked with macroeconomic factors and once economic stability measures are in place it is expected that the same would have a positive impact on the capital markets.

The PSX benchmark KSE-100 Index has plunged 21 percent since the start of current fiscal year while market capitalization has eroded 0ver 20 percent year to date.

Considering the present depressed market sentiment, the delegation suggested various measures for strengthening the capital markets including approval of draft of Listed Companies (Buy Back of Shares) Regulations; enhancement of the limit of treasury shares and resolution of the present issue of ready futures transaction at PSX which is also hurting the market volumes.

The participants highlighted the practical problems being faced in executing blank sales in the deliverable futures market, and it was agreed that the regulatory requirements would be reviewed in the light of international practices to resolve any genuine concerns, address practical issues and to ensure more accurate dissemination of relevant information to the stakeholders.

The Finance Minister took note of all the suggestions positively and assured the delegation of the government’s full support and cooperation.

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