A Strategic Control of the Capital Markets: Pakistan Perspective

Date : Nov 2006 - Sep 2007

Most countries of world have taken benefits from the concept of Globalization in the form of better living standard; increase in out put levels and access to foreign markets for goods and services. There is such a market forces which inclusively working for the sustainable and human-oriented development. In this regard, the governments, financial organizations, society and private sector have to develop the partnership for the benefit of the poor.Capital Markets perform a key function in the form of inter mediation by mobilizing savings from a large pool of small savers and channelizing these funds into productive investments by a generally much smaller number of borrowers. Trading in securities enables a match between the differing maturity preferences of lenders and borrowers.Functioning of the financial markets, monetary stability and economic growth are closely related, due to the fact that monetary policy transmission signals work through the channels of financial markets and bank-based inter mediation. It is indeed, noteworthy that at current levels, KSE, market capitalization is equivalent to about 44.3 percent of estimated GDP of FY06 whereas 19.6 and 26.08 percent agriculture and manufacturing respectively. Average daily turnover of 294 million shares is remarkable, which makes KSE one of the most liquids markets. Moreover, foreign portfolio investment in capital market has substantially increased from Rs 76.6 billion as on December 31, 2005 to Rs. 97.5 billion on September 23, 2006.