1 / 14

Pakistan Capital Markets and the IMF - Friend or Foe? Adnan Afridi Managing Director

Pakistan Capital Markets and the IMF - Friend or Foe? Adnan Afridi Managing Director Karachi Stock Exchange. The Pakistan Economy. Elections meant that key economic decisions were not made. Commodity prices hit all time high –Oil reached $147 per barrel. Inflation hit all time high.

selina
Download Presentation

Pakistan Capital Markets and the IMF - Friend or Foe? Adnan Afridi Managing Director

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Pakistan Capital Markets and the IMF - Friend or Foe? Adnan Afridi Managing Director Karachi Stock Exchange

  2. The Pakistan Economy Electionsmeant that key economic decisions were not made Commodity prices hit all time high –Oil reached $147 per barrel Inflation hit all time high Foreign Investment Outflow Rupee under pressure Capital flight – foreign exchange reserves declined Investor confidence declined

  3. Impact on the Capital Market Exchange was forced to act and impose floor on Aug 27 prices to provide a cooling down period to the market Source: KSE Research • 2008 average daily volumes were around 50% below average daily volumes of 2007 • 2008 average daily values were also around 50% below average daily values of 2007

  4. The KSE 100 Index was one of the worst performing markets of 2008 Source: KSE Analysis Source: KSE Research

  5. Key Reasons for Market Decline • Interest rates registered a 500 basis point increase in 2008 • Fear amongst investors of policy changes that could impact viability of listed companies (media speculation has contributed to these fears). • Last year of previous government, care-taker government and transition period of current government has meant a 18 month period where key decisions with respect to economy were not taken (e.g. removal of subsidies, reduction in govt. borrowing, etc.) Source: KSE Research

  6. Enter the IMF

  7. Key Features of IMF Program • Homegrown package • Pakistan received a US$ 7.7 billion loan from the IMF on November 24, 2008 • Pakistani Government and Finance Officials in consultation with IMF set the main parameters and criteria on which performance would be assessed. • Real GDP growth of 2.5% for 2008-09 and 4% in 2009-10 • Annual average CPI of 20% in 2008-09 and 6% in 2009-10 • Current Account deficit of 6% of GDP in 2008-09 and 4.5% in 2009-10 • Authorities to adopt a tax policy and tax administration plan • Elimination of tariff differential subsidies by end June 2009 • SBP to prepare contingency plan on how to deal with problem banks • Provision of Foreign Exchange by SBP for imports of furnace oil to be ceased Source: KSE Research, IMF Country Report No. 09/123 April 2009

  8. The Day After…

  9. Key Indicators have started to rebound Source: KSE Research

  10. KSE 100 Index has made a recovery from the 5000 point level to close above 7100 points on May 26, 2009 Source: KSE Research • Domestic and Global Investor Confidence has been improving • Oil prices have fallen to US$ 50 per barrel from the US$ 147 mark • Food prices have also registered a steep decline • Liquidity has begun to flow back into the market – average daily volumes for 2009 are 182 million • KSE Market Capitalization has increased by Rs. 269 billion since January 1, 2009

  11. The Market has rebounded in 2009 Source: KSE Research

  12. Opportunities and Challenges that the IMF Program presents to Pakistan

  13. Future Plans of KSE • The following are in process: • Demutualization of the Exchange – publically listed with strategic investor • Promotion of Derivative Products • New Services (Data Vending) • Debt Market Trading Platform • Investors education programs • (road shows, seminars & • online training)

  14. Pakistan’s story: A Resilient Nation, A Resilient Economy Pakistan’s economic and political development Source: BMA Research GDP Growth has averaged over 5% since 1951 on the back of fundamental growth drivers

More Related