A vibrant equity market is a prerequisite for sustainable growth and development of businesses in any economy. As conduits for investments to companies, the capital markets provide companies with access to funds so they may grow and create incremental economic activity. The progress of businesses generates employment, satisfies needs and wants of the people and creates wealth in the economy.
In Pakistan, the stock exchanges have played an important role in allowing companies to raise long-term capital for growth. The total amount of equity capital and debt raised by companies over the past ten years through just the Karachi Stock Exchange is Rs1.160 billion. Of this amount, Rs721 billion have been raised by the private sector while the remainder was raised by the Government of Pakistan by privatisation through public offerings. As such, the capital markets have played a critical role to fulfil a strategic goal for the government to bolster private sector ownership of major industries in the country.
The amalgamation of the three exchanges will create a single, deeper liquidity pool which will further strengthen the country's capital markets' ability to catalyse the growth of industry. On the other hand, the integration holds promise for savers and investors as well.
Over the past ten years, the average annualised return for the benchmark KSE 100 index has been about 25 percent. No other asset class in the country has provided comparable returns to investors. Moreover, the Karachi Stock Exchange has consistently ranked among the best performing stock exchanges globally, in recent years. At present, the benchmark index is near its life-highwhile improved legislation means investors' rights and property are accorded due protection against unfair practices and fraudulent activity.
In the next phase of the continuing capital market reforms, the strategic, partial sale of the Pakistan Stock Exchange to a reputable, international exchange operator shall usher in a new wave of technology to the capital markets. These reforms will further build upon the convenience, transparency and security available to prospective investors.
The rising trend of listings and public offerings is also expected to be further boosted by the advent of these changes. This shall create more bountiful investment opportunities for investors while competition among brokerage firms, asset management companies and other financial institutions will further reduce the cost of investment and quality of analysis and advisory services. In addition to this, the integrated exchange allows investors everywhere to trade on the same market, instead of being restricted to smaller, regional markets. Thus the Pakistan Stock Exchange is poised to better serve the investors and industry of the country to usher in a new era of prosperity and growth.