The Karachi Stock Exchange passed through several ups and downs during 2014,breaking psychological barriers at points while nose-diving on other occasions, but the overall performance of the KSE-100 Index in terms of value and volume recorded a historic growth. According to the Security and Exchange Commission of Pakistan, the benchmark KSE-100 Index exhibited an outstanding performance during the year while the foreign media reports rank Pakistan third in 2014 amongst the top ten best performing markets in the world. The KSE-100 Index has alsobeen now on the list of best performing bourse for the three consecutive years, outperforming Sri Lanka, Vietnam and Bangladesh in the MSCI Asian Frontier Markets.
The KSE-100 Index has gained 6,870 points in 2014, generating a return of 27 percentas the capital market initiated massive public offerings,raising the capital up to Rs 73 billion against Rs 4 billion during the previous year.
Experts attribute the best performance of the capital market to various political and economic factors which include the inflow of foreign investment in the equity markets –that has reached $6.1 billion — business-friendly reforms, improved macroeconomic indicators, rising foreign exchange reserves and energy sector initiatives.
Though the establishment of a promising economy on the basis of foreign loans is not a desirable strategy, but international donor agencies showed confidence on the economic performance of the government and took interests in infrastructure and energy sector projects. The interest of the Chinese government and investors to launch various development and infrastructure projects in Pakistan also supportedthe positive sentiments in the stock market. According to newspaper reports, the SCEP chairman has doubled the human resources and infrastructure to monitor the functioning of the capital market as well as to spread out tips and strategies for the new investors.
The law and order remained a major area of concern in various parts of the country, which adversely affected the capital market and at some point it reached near a breaking point, but bounced back within a week at some occasions. Experts believe that the capital market would sustain its position as one of the top performing market in Asia, and also advocate for strengthening the monitoring and enforcement regime by introducing structural reforms. However, a vibrant economy needs incentives and tax relief for local and foreign investors. Experts fear that the recent move of the government to check the personal bank deposits of the individuals will also affect trading in the stock exchange.