I remember listening to the 9pm Khabarnama on the state owned PTV channel during the 1990s and listened with aplomb when the news caster told that today the Karachi Stock Exchange (KSE) witnessed a mega gain of 35 points and on other days with disdain that the market went down by 20 points. The KSE was range bound in the 500 to 700 points range and the daily market turnover was also low. At that time the political conditions in the country were not stable with each government sent packing within 2 years of taking office. The interest rate at that time was more than 15% and people were content with placing their hard earned income in banks knowing that their investment would be safe and they would receive fixed profit on them. The stock market was always seen by people as a betting place for the rich and filthy rich. All of this changed with the start of the next century.
Come 2000 and with the pro-economic policies of Pervaiz Musharraf and his economic team the stock exchange started to pick up with renewed vigour. The Government wrote off NPLs of banks and encouraged companies to list themselves on the stock exchange. The Government also made amendments which allowed DFIs and other financial institutions to invest and earn in the market and encourage the concept of equity to the person on the street. The KSE rose more than 2000 points in a couple of years. The interest rate was nearly halved to 6% and people started to invest into stocks rather place them in banks at low interest rates. Mega companies such as OGDC, PPL and PSO etc. floated their shares in the stock market through IPOs. News of people gaining profits in the millions started to spread like wildfire and the stock market reached 4000 points in 2004. The market index had increased by 5 times and market capitalisation increased to several hundred billion rupees.
The broker membership fee at the stock exchange which was a paltry hundred thousand rupees or so was a prized asset of over Rs.5 million in just 4 years. The 5 year Bull Run in Karachi Stock Exchange made so many millionaires into billionaires that it gave rise to the exponential rise in the real estate sector of Pakistan.
Tweet