The Pakistan Stock Exchange (PSX) has evolved into a dynamic financial market, emerging as a top platform for the government and private sector to secure financing for their projects. This was highlighted by PSX’s outgoing Managing Director and CEO, Farrukh H Khan, during a press conference on Tuesday to launch the ‘One-Share Marketable Lot for Regular Market.’
Khan noted that recent infrastructure developments and regulatory changes have strengthened PSX as a robust institution. “The government and private sector both see PSX as a viable option for securing capital,” he stated.
PSX is among the few global exchanges offering Sukuks, Shariah-compliant government debt securities. The sale of these securities has expanded the government’s investor base and allowed it to raise necessary funds at a relatively low cost. During the fiscal year ending June 30, 2024, the government raised Rs650 billion through fortnightly Sukuk auctions at the PSX. In the latest auction, the government borrowed Rs119 billion, surpassing its Rs100 billion target.
In the latest auction held last week, the government borrowed Rs119 billion against the set target of Rs100 billion. The offer of financing 4.5-times higher at Rs451 billion at relatively lower rental cost convinced the government to mobilise more debt in the auction.
Khan pointed out the stock market's role in documenting the economy and supporting national growth, noting that PSX often reflects the economic and political pulse of the country. He proudly mentioned that PSX is preparing to celebrate its 75th anniversary this year and has been recognised as one of the world's best-performing stock markets, including in FY24.
“Economies cannot grow well in the modern world without developed stock markets in their respective countries. PSX has time and again achieved the title of the world best performing stock market including in FY24,” he said.
During Khan’s tenure, PSX listed 17 companies in FY24, the highest in seven years, allowing these firms to raise billions of rupees. This included 13 initial public offerings (IPOs) for equity and four for debt. The total number of listings, including exchange-traded funds (ETFs), new mutual funds, real estate investment trusts (REITs), and reverse listings, reached 28 for the year.
Khan revealed that eight more IPOs are currently in the pipeline, with companies from various sectors at different stages of preparation. These firms are expected to announce their share sale dates soon. The number of investors at PSX, identified by universal identification numbers (UNI), has grown to 330,000 from 235,000 in just four and a half years. Khan acknowledged that while this growth is significant, efforts are needed to further expand the investor base to create greater trading depth in the market. He also mentioned that between 400,000 to 500,000 people indirectly invest in PSX through mutual funds.
The introduction of Sahulat accounts and online account opening has enabled more people from smaller cities and remote areas to trade at PSX. Currently, over 50% of new investors come from these regions, a shift from the past when the majority of investors were from Karachi, Lahore, and Islamabad. Khan advised those unfamiliar with stock trading to invest in mutual funds or take long-term positions in the market rather than engage in daily trading based on tips, which can be risky.
Despite PSX being a well-documented market, it has outperformed other investment avenues like real estate and national savings schemes. PSX’s benchmark KSE 100 Index recently hit an all-time high of 81,940 points, although it closed slightly lower at 77,745.5 points on Tuesday.
One-share marketable lot
Raeda Latif, PSX’s Head of Marketing & Business Development, announced the launch of the one-share marketable lot, enabling small investors to buy even a single share of expensive listed companies. This initiative allows them to diversify their portfolios in the regular market. Previously, the minimum marketable lot sizes ranged from 20 to 500 shares based on prices.
However, she clarified that the one-share lot is not applicable to the futures market, including deliverable future contracts (DFCs) and exchange-traded funds (ETFs).
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