ISLAMABAD: 2014 proved to be a year of growth and exuberance for the Pakistani capital market. Throughout the year, the benchmark 100-index of the Karachi Stock Exchange (KSE) exhibited outstanding performance, touching historic levels in terms of value and volume.

Pakistan ranked third in 2014 amongst the top ten best performing markets in the world. The country was able to secure a place in the top ten for the third consecutive year now.

An official statement issued here said in the MSCI Asian Frontier Markets, Pakistan ranked number one – outpacing Sri Lanka, Vietnam and Bangladesh by a big margin.

In 2014, the KSE-100 index gained 6,870 points, generating a handsome return of 27 per cent (31pc return in US$ terms).

The year will also be remembered in the Pakistani capital market history for mega public offerings led by sale of shares by the Government of Pakistan, and in terms of money raised through these offerings.

Total offerings in the year reached 9 as compared to 3 in the previous year. After a gap of seven years, Rs73 billion was raised through offerings as compared to a meager Rs4bn raised in 2013.

Higher foreign inflows during the year can also be counted as a major market impetus. Foreign investors – who hold US$6.1bn worth of Pakistani shares or 33pc of the free-float (9pc of market capitalization) – remained net buyers in 2014.

This positive performance of the capital market could be attributed to a number of favorable factors, both at the political and economic front. Substantial foreign investments in equity markets which captured considerable free float of the market, declining dollar-rupee disparity, and government of Pakistan’s secondary market offerings played a major role.

Other key factors which could be seen as contributing to the market’s bull-run were the government’s business-friendly reforms, improved macro-economic indicators including record forex reserve levels, increased confidence shown by international donor agencies, government’s energy sector initiatives, significant interest shown by China to invest in Pakistan, and the government’s plans and initiatives towards fast-track privatisation.

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Robust reforms agenda

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Newly-appointed chairman of the Securities and Exchange Commission of Pakistan (SECP), Zafar Hijazi feels that Pakistan’s capital market should continue its topper’s position in the new year as well.

The incoming chairman has already embarked on implementing a robust reforms agenda for the capital market primarily focusing on strengthening of the market-monitoring and enforcement regime and introduction of structural reforms for market development and outreach.

Further, the SECP has taken a serious cognizance of the KSE trading halt on January 1, 2015 and has formed a committee, comprising SECP, CDC and NCCPL professionals to probe into the reasons for the systems failure and submit its report within a week’s time.

The appellate bench of the SECP has also expedited the hearing of pending appeals. The commission is determined to reduce the pendency of appeals to zero in the next two months.

In the recent past, the process of the hearing of appeals was a bit slow due to the shortage of commissioners at the SECP.

There were about 162 appeals pending at the appellate bench of the SECP, which the bench has decided to dispose of within two months by hearing them on a daily basis.

Hijazi said that the SECP would launch an e-Appellate Bench by the end of 2015. This will be the first electronic appellate forum in Pakistan, facilitating the corporate sector by enabling them to file appeals online.