Small and medium enterprises (SMEs) can generate handsome revenues by investing in the stock markets which can not only rid them of high interest bank loans but also increase their savings, said Faad Waheed, Senior Vice President of the Islamabad Chamber of Commerce and Industry (ICCI), in an interview with WealthPK. “The SMEs can raise enough funds by trading their shares in the stock market and get good financial governance. The real-time trading trends also act as a mentor for them to trade and invest in the stock exchange. By doing so, the capital is distributed on a far larger scale than concentrating only to a few larger business groups,” he said. Quoting the example of high interest bank loans, the ICCI senior vice president said the policy interest rate of the State Bank of Pakistan (SBP) was 22%, which made it difficult, and sometimes impossible, for SMEs to pay back. “Every business needs capital investment to grow. However, high interest rate is a major factor that discourages entrepreneurs or SMEs. This is worrisome. Owing to this hindrance, SMEs remain deprived of credit facilities. As a result, the overall business growth is stuck in the market. “To cope with the situation, people must be encouraged to invest in the stock market so that they may generate funds without interest and penalty threat in case of non-payment of any loan. In this concern, the Pakistan Stock Exchange (PSX) can play a vital role. The PSX must arrange awareness sessions concerning the importance and need of investing in stocks.

It should also introduce attractive packages for SMEs/entrepreneurs. Once they experiment with its positive effects, the future of investment in the stock exchange will be bright and hopeful. It will also help improve the image of Pakistan globally,” Faad added. Chief Executive Officer (CEO) of Zahid Latif Khan Securities told WealthPK that investing in the stock market is a lucrative business. It is the safest way for business owners to improve their standing and capital generation. He said that in 2023, from July to December, the foreign investment portfolio in Pakistan witnessed an increase in the number of foreign investors. The population in Pakistan is about 240 million, but the number of bank holders is only 75 million. Meanwhile, the stock market has no more than 310,000 investors. It is crucial to educate the general public along with the trade and business sector of Pakistan about the benefits of investing. This would boost both the business capital and the savings rate significantly, said Zahid Latif. In 2020, the stock market of Pakistan was ranked as the 4th best-performing stock market globally and titled as one of the surprising stock markets worldwide that outperformed. If the PSX strategically frames its policy to attract investors from Pakistan at all levels, it can outperform again and the trust of foreign investors will also increase.

Credit: Independent News Pakistan (INP)