The Finance Ministry has thrown its support behind a comprehensive plan to revamp Pakistan’s capital markets, aiming to increase the representation of Pakistan Stock Exchange (PSX) stocks in the MSCI Frontier Markets Index and eventually secure a position in the MSCI Emerging Markets Index. Khurram Schehzad, Advisor to the Finance Minister, visited PSX at the invitation of its CEO, Farrukh Sabzwari, to discuss strategies for achieving these ambitious goals.
During the meeting, Schehzad was provided with an in-depth overview of PSX’s strategic initiatives, which are designed to unlock the full potential of the country’s capital markets. He emphasized the need for PSX and the Securities and Exchange Commission of Pakistan (SECP) to work collaboratively in developing a comprehensive roadmap. A key component of this plan involves forming a formal committee comprising representatives from PSX, SECP, and the State Bank of Pakistan (SBP). This committee would focus on leveraging the strengths of each entity to enhance financial inclusion, increase public awareness, and accelerate the digitalization of the market.
Schehzad underscored the importance of promoting the KSE-100 Index, which has demonstrated remarkable returns, as a way to attract both local and international investors. He urged brokers and market participants to take an active role in showcasing the index’s performance to build investor confidence and drive participation.
Farrukh Sabzwari highlighted the immense potential of Pakistan’s capital markets despite the challenges they face. He expressed optimism that with a carefully structured strategy, PSX could play a pivotal role in strengthening the economy and achieving sustainable growth.
The government’s commitment to supporting the capital markets was reaffirmed by Schehzad, who recognized their critical role in stabilizing the economy and underpinning long-term growth. He called for structural reforms, including the privatization of State-Owned Enterprises (SOEs), to increase market capitalization and align with broader government objectives. Additionally, he proposed rebranding the PSX’s GEM Board to better position it as a platform for venture capital and startup fundraising, thereby fostering innovation and attracting global investment into Pakistan’s entrepreneurial ecosystem.
The discussions also focused on introducing new investment products to make the market more attractive and competitive. Plans include the development of Exchange-Traded Funds (ETFs), options markets, and derivatives. Modern trading strategies, such as algorithmic trading and robo-advisory services, were also explored, drawing inspiration from successful implementations in countries like China.
Another key initiative is the ambitious goal of expanding the investor base to 2% of Pakistan’s national population within three years. This would involve a coordinated effort with brokers and mutual funds to engage with potential investors and create awareness about the benefits of capital market participation.
Schehzad also praised the recent relaunch of cash-settled futures, describing it as a significant step forward for the country’s derivatives market. He highlighted the importance of fostering collaboration with Chinese capital markets to create cross-border investment opportunities, expand access, and stimulate investor participation.
These initiatives collectively aim to position Pakistan’s capital markets as a dynamic and resilient force, capable of driving economic stability and development. Through a combination of innovation, structural reforms, and strategic partnerships, the PSX is poised to play a transformative role in shaping the country’s financial future.