Anyone heard of Pakistan’s city Karachi with its 18 million inhabitants, probably rather think of Taliban and Al-Qaeda – but rarely on one of the most successful stock exchanges in the world.
With a return of 49 percent last year, the Karachi Stock Exchange (KSE) was but one of the five market places with the largest increases. Now the market is looking for a foreign partner who buys and takes over the management.”Pakistan has a lot to offer investors and this is our chance to show it,” says company president Nadeem Naqvi. He wants to advertise in the next few months with potential investors for the financial sector. On his travel itinerary includes Hong Kong, London and Frankfurt.
In the past four years, the stock market prices have tripled in Karachi – fantastic growth rates, albeit at a low level. Government officials emphasize this success reflects the economic potential of the country against the device otherwise mainly by religiously motivated violence, attacks by the radical Islamic Taliban and the fight against extremist organization al-Qaeda in the headlines. If only one of the companies mentioned, then mostly related to the frequent power outages and widespread corruption.
Amnesty for black money
At least a portion of the course plus an insider in Karachi amnesty for black money. Because of the soaring began last year with a government decree that granted stock buyers are not held accountable to the origin of capital. “The politics and dirty money go hand in hand in Pakistan,” criticized Ikramul Haq, lawyer and tax expert. So the money used comes in part from dubious corners. A lawyer Reuters reports over a ten-million dollar purchase of shares.The address of the investor: a notorious for his Taliban followers slum.
However, many companies listed on the KSE offer double-digit earnings growth in a market with about 180 million inhabitants. For foreign investors looking for new markets and high returns, the stock market in Karachi, therefore, something of a secret has become.
This year, however, a devaluation of the Pakistani rupee has broken down the stock market gains of foreigners. Traders and analysts point to another downside: insider trading and price manipulation are obviously on the agenda. “There are a lot of fraud, market manipulation, many, but enough is being done, however,” denounces the former General Counsel to the supervisory authority, Ashraf Tiwana on. The supervisory function should now be outsourced at the KSE. And foreign advice is asked: Because the stock market reform, CFE Chief Naqvi has brought the German bank as a consultant on board.