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Real estate investors pushed Pakistan stock exchange index to current level

Published on 31st Oct, Edition 44, 2016

 

Interview with Aqeel Karim Dhedhi

Profile

Aqeel Karim Dhedhi is a highly regarded member of the Karachi Stock Exchange KSE (now corporate) with over thirty years of mainstream experience in stock-broking.

He became a member of the KSE in 1986. Prior to this, he spent 13 years managing his father’s brokerage business. He is a prominent broker and has been on the board of the KSE in 1996, 1997, 1999 and 2001.

Mr. Dhedhi is also a major force in Pakistan’s real estate market with extensive interests in a variety of residential and commercial real estate projects all across the country.

Mr. Dhedhi is a well-known philanthropist and is active in a large number of social projects, including health services, women empowerment, community based assistance and leadership development of deserving younger generation.

 

Pakistan Stock Exchange is said to be amongst the ten top bourses in the region reflected from its KSE-100 Index which recently jumped above 41,000 levels; however, there were factors behind this unusual growth, which include the diversion of the investors from the real estate industry towards the capital market.

While commenting on the eye catching growth of the KSE-100 Index, Aqeel Karim Dhedhi generally known as AKD, in an interview, said that one of the major reasons for unusual growth of the Index in Pakistan was diversion of the real estate sector, which is the biggest contributors towards the economy was badly hit in the federal budget for 2015-16.

PAGE: Do you think that it was the diversion of the real estate investors towards stock exchange which lifted the index to an all-time high level?

AKD: Certainly the real estate investors played a major role in lifting up the trade level at Pakistan Stock Exchange because after the budget there was not attraction left for the builders and property development because they had the liquidity but have no attraction left in the property business because of adverse policies adopted in the budget, hence they had no choice but to invest their money in the capital market.

PAGE: Would you like to comment on the current trend of decline in the index, which has witnessed a steep decline plunging by over 3.37 percent during last week?

AKD: The drastic cut in the Index upward movement was stemmed from the volatile political conditions as the heightening of political noise disrupted the confidence of the investors soon after the so called dharna (sit-in) called by Imran Khan the Chief of PTI. Prior to this dharna or sit-in called by PTI, there was another issue of Panama Papers and that issue was not properly handled by the government. The people sitting at the top of the government should have taken the issue seriously because this scandal also needed to be addressed to the satisfaction of the stake holders in the political arena. Actually, setting up of the off-shore companies is not an unusual thing because it is done elsewhere in the world but unfortunately a major chunk of financing in most of the off-shore companies is sent through illegal means, which raises questions and doubts in the mind of the people, the wisdom calls for tackling this issue like many other countries. Such issues not handled properly and are not in the interest of the country and the economy. The opposition parties have made it a bone of contention and staging demonstrations shattering the confidence of the people, which is not good for the economic health of the country.

 

PAGE: In your opinion what would you suggest, how the government should handle such issues because it has already moved to the courts?

AKD: Actually, there is a need of self-assessment by everyone and if he finds any discrepancy it should be accepted, you know the innocent population in Pakistan always accepts the grey areas open heartedly if one accepts them publically.

PAGE: Do you think that the index may go down further in the coming days?

AKD: It looks like that and the correction spell could claim a correction of 4-5 percent going forwards. Actually, the growth in Index level is not so significant for the economy until and unless it contributes towards growth in capitalization while there is no significant growth in the market capitalization.

The real indicator of growth in the economy is strengthening of the capitalization and if the capitalization grows that will be the real indication that the economy is moving in the right direction.

The arrival of portfolio investment makes no impact on the growth of the economy.

PAGE: It is said that Pakistan stock exchange has been included in the morgan stanley index, is it not a positive sign? Your comments:

AKD: I don’t think that inclusion of PSX is a big achievement because a number of countries much smaller to Pakistan economy are on that index. The criterion of including any bourses on MSCI index is the growth in capitalization, which is unfortunately missing in our case, the increase in market volume may be exciting to some extent but the fact remains that we have improve our market capitalization.

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