The Pakistani Equity Market in 50 Years: A Review

Abstract

The equity market plays an important role in the economic development of a country. However, in Pakistan the equity market has not played its due role because of interventionist economic policies and over reliance on debt financing. It was not until the middle of 1980s that thc importance of the equity market was recognised and steps were taken to activate thc market. However. the market actually became active in the beginning of 1991 when it was opened to foreign investors. besides other liberalisation measures. Since then tbe market bas made considerable progress and improved in size and depth. This paper reviews the performance of the Pakistani equity market in the background of Pakistan's'Go!den Jubilee programme. The information was collected li'om thc Corporate Law Authority (the regulatory body), the State Bank of Pakistan (the central bank). and International Finance Corporation (a branch of the World Bank). The paper shows that the Pakistani equity markct gained momentum in the 1960s and made significant progrcss in listings and market capitalisation. However. the market lost its momentum in the 1970, due to political turmoil in the country and the nationalisation policies adopted by the then government. Though the policy of greater reliance on private enterplise restored the markct scntiments in the 1980s, the market actually regained its momcntum in early 1990s when it was opened to international investors. [n terms of its performance. the market was ranked third in 1991 among the emerging markets. Unfortunately, the market could not maintain its peIi'ormance in later years because of economic and political instability. A series of political changes in the country, cthnic vio[ence in Karachi, increasing inllation and unemployment rates, widening budget delicits, etc., proved to be detrimental to business activities.

Islamic Calendar Anomalies: Evidence from Pakistan

“…Nevertheless, the dependence on private companies restored the country's economy and brought international investors during 1990s. Until 1994, the KSE observed bullish trend, economy was growing and stocks were high but 1995 proved to be a disastrous year for Pakistani economy where the KSE crashed about 28% on local index (Hussain & Qasim, 1997). After the 9/11 event, the US granted financial support to the Government of Pakistan being an ally in the war on terror.…”

“…It helps in utilizing the financial resources of national and international investors in various sectors of a market. An equity market is considered as a measuring instrument which shows the general investment in the country (Hussain & Qasim, 1997). Pakistan is an appropriate sample for studying volatility in Islamic calendar as it is a Muslim dominated country with 97 percent of the population having faith in Islam (Halari et al, 2015).…”

Share price behaviour around dividend announcements in Pakistan

“…8 It is also the second oldest stock exchange of the whole of South Asia (Mirza, 1993). The 1960s witnessed a tremendous growth in the trading of shares on the KSE primarily due to the success of a Five-Year Plan (1960-65) implemented by the government (Hussain and Qasim, 1997;.…”

Share price behaviour around dividend announcements in Pakistan

“…In the 1980s, share trading started to increase again as a result of these nationalised companies being privatised and individual investment being encouraged (Hussain and Qasim, 1997). The trading of shares on the KSE has continued to increase in 1990s following the liberalisation policy of 1991 (Kemal et al, 2002;Ahmed and Javid, 2009).…”