Minimum investment in Pakistan Stock Exchange
The Pakistani stock exchange (PSX) is at its lowest level ever since its inception. This has forced investors to take their investments off the PSX and look for lucrative opportunities elsewhere.
According to data released by the Securities and Exchange Commission of Pakistan, the total value of shares traded on the market was around Rs7.85 trillion ($100 billion), compared to a record high of Rs10.8 trillion in March 2017.
Also in November 2018, the PSX recorded its lowest trading volume of Rs24.9 billion. But what’s really disappointing is how the Pakistan Stock Exchange has been underperforming even after the government’s drastic measures to revitalise the bourse.
Here's what you need to know about the minimum investment in Pakistan Stock Exchange.
One of the major reasons behind the dismal performance of the stock exchange is the lack of liquidity. In September 2017, the Pakistan Stock Exchange introduced an Electronic Trading System (ETS). However, the system was unsuccessful due to a number of technical glitches.
As reported by the Daily Times, the ETS was launched only for 10 days. It failed to generate any interest among traders. The other major factor affecting the PSX is the absence of investors who have no faith in the market.
A recent survey conducted by the State Bank of Pakistan revealed that only 2% of small businesses were willing to invest in stocks despite the fact that the country boasts one of the largest economies in South Asia.
Meanwhile, the stock exchange’s biggest problem is the lack of awareness among investors. Traders are unaware of the various rules and regulations governing the stock market.
Many investors believe they don't need brokers. In reality, brokers are not just intermediaries between buyers and sellers, but also help traders understand the complexities of the capital markets.
“Brokers are absolutely necessary to trade in the capital markets and without them, the exchanges cannot function,” said Dr Qamar-ul-Hassan, CFA, Director General, NSE.
According to him, brokers provide the platform where people buy and sell shares. Investors should learn the basics of the financial markets before investing.
There are many books and resources that can help traders gain insight into the stock market. And while learning about the stock market, investors should bear in mind that the risks always outweigh the rewards.