FEAS Yearbook FEAS Yearbook 2008 | Page 38

FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2008 LAHORE STOCK EXCHANGE xxxxxxxxx Mian Shakeel Aslam Acting Managing Director Pakistan’s economy shows increasing signs of stress and remained under pressure during the period under review. Envisaged macroeconomic budgetary targets for financial year 2007-08 were missed. The economy is passing through a challenging period and facing problems such as inflation, budget deficit, trade deficit, weakening rupee, rising oil prices, energy crisis and law and order issues. However, despite the deterioration, it is also important to note that as a result of structural reforms and liberalization measures over the last fifteen years, the economy has fundamentally gained resilience. The positive development on political front is expected to catalyze the investor confidence and pave way for a better investment climate in the near future. This will also allow our FUTURE OUTLOOK With the advent of technology; approximately 49% of the trading volume is being generated through remote trading terminals. It is also because of technology that the LSE was able to establish trading floors in other cities as well. The LSE has trading floors in the cities of Faisalabad and Sialkot and is now considering opening trading floors in Multan and Peshawar as well. Introduction of index trading and derivatives products such as options and swaps and other products will increase the products offered by the exchange, giving investors more choices and hence increasing trading activity of the exchange. capital market to offer better returns to investors based on their current price/earnings multiple discounts when compared to other regional market. The market remained unstable during the period under review. LSE-25 Index showed a bullish trend in the first quarter and after touching the bottom at 4212.25 points on 2 January 2008 started to gain momentum to reach the height of 4945.79 points on 26 February 2008. In the second quarter of year 2008 market remain volatile, it started to decline and touch the bottom of 3511.18 points on June 23, 2008. In the third quarter the market remain bearish to as index closed at 3292.99 points on 15 August 2008. Integration of the exchanges is also being considered and is likely after demutualization. Another concept that will help greatly in expanding investor base is cross listings and GDRs. Work is underway in this regard. In 2008 Lahore Stock Exchange plans to: • continue with its strategy of increasing its geographical outreach through the use of information technology in order to attract higher trading volumes; • phase-out of Carry-Over Trading and its replacement with Margin-Trading and other modes of financing; • frame a strategy for the demutualization and integration of the stock exchanges of Pakistan in the interest of the Exchange and capital markets of the country; As of 15 August 2008 the market capitalization of the Lahore Stock Exchange (LSE) was US$ 38.722 billion. The average daily turnover of shares remained 18.968 million shares with an average daily value of shares traded of US$ 29.478 million. The LSE listed 1 company, 6 open-end mutual funds and 2 term finance certificates during the period under review. The LSE is expeditiously working on its corporatization and demutualization. The completion of process of demutualization has been targeted by 31 December 2008. Demutualization will give the Exchange the room to expand and to take up joint ventures which are probably not possible in mutualized exchange. Integration of exchanges is also being considered and is likely after demutualization. • enhance trading in the derivatives market and introduce Stock and Sector Index Futures; • replace existing exposure monitoring system with Value at Risk Margin System in line with global practices; • Market BrokerNet - Broker hosted Internet Stock Trading Solution; • promote and market the indigenously developed trading software i.e. Ultra Trade and related systems to other stock exchanges; • implement a regular timetable for the Broker System Audit, in order to build investors’ confidence; and • strengthen the surveillance function of the Exchange CONTACT INFORMATION Contact Name Mr. Amir Razakhan E-mail [email protected] Website www.lahorestock.com PAGE 38