Stock Market in Pakistan

Abstract

This article provides an overview of the main indicators of Pakistan's stock market development and their possible relevance for real economic activity focusing on the post-liberalisation period. The aspects of the market investigated include liberalisation of the market, integration of the market with the global markets, microstructure issues of trading and settlement mechanism and corporate governance issues. A comparison with a selected set of emerging and developed markets reveals that the Pakistani stock market is small in size and a relatively insignificant source of capital mobilisation. These factors limit the role of the stock market in boosting economic activity. Also, the market seems to be excessively volatile owing to noise traders and speculators. On a positive note, the market seems to yield enormous gains to investors which compensate for higher market volatility. Also, the relative segmentation of the market makes it a potential venue for international diversification. JEL Classification: G10, G15 KeywordsStock market development, real activity Article Journal of Emerging Market Finance 11(1) 61-91

Share price behaviour around dividend announcements in Pakistan

“…However, the growth in trading volume on the KSE declined as a result of political unrest in the 1970s leading up to the independence of Bangladesh and the nationalisation of many companies (Iqbal, 2012). 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).…”

Islamic calendar anomalies: Evidence from Pakistani firm-level data

“…This growth was especially pronounced for share trading in the 1990s as barriers to foreign investments were removed and measures to deregulate the economy were adopted (Mirza, 1993). The increase in trading has been associated with a rise in volatility which grew throughout the 1990s (Farid and Ashraf, 1995;Ahmed and Rosser, 1995;Iqbal, 2012).…”

Share price behaviour around dividend announcements in Pakistan

“…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). However, trading declined again at the end of 2009 after the enactment of a new Code of Corporate Governance whose requirements were not satisfied by some firms (Mir and Nishat, 2004;Shaheen and Nishat, 2005;Iqbal, 2012;. During the last 10 years, the KSE achieved tremendous growth rates despite the deteriorating law and order situation in the country (Husain, 2005(Husain, , 2008(Husain, , 2009(Husain, and 2010.…”