HOW YOU CAN INVEST IN PAKISTAN STOCK MARKET

 

With Crude on the decline again, trade wars in full swing, the Pakistani Rupee at an all-time low and perceived political uncertainty. 2020 post pandemic the investors have begun questioning themselves – is this the right time to invest in Pakistan Markets?

My answer to this question is an unequivocal Yes!

Let’s begin by admitting that these are real risks. They are now a part of the daily drill, on the electronic and print media alike. These economic headlines have made it to the front page of the normal daily papers. They are, therefore, discounted. Some of these factors may get worse, but it’s not an issue in the longer run. If you wait for the current crop of problems to get over, a fresh set of problems will crop up. So you will never get a perfect time to invest. You risk missing the wood for the trees.

Things NRP’s should consider while investing in Pakistan. Just as you ponder over the current risks, the Pakistan economy is on the move, each passing minute despite global recession and slows down. Our exports growing steadily & pressure on Current Account has almost reduced substantially. We are the world’s 6th largest population country. Labor cost remained competitive as compare to regional India and China & relatively low wages. We are a young country with an average age of around 25 years. Pakistan offers one of the youngest workforces in the world. Emerging middle class of over 80 million people a large number considering that is already the population of Germany alone. Improved infrastructure after CPEC aiming improved connectivity with the region has made Pakistan in the Centre Stage. Additionally, Pakistan has become one of the world’s fastest growing retail markets. One reason which attracts shoppers in spending is a better security environment.

Many factor that entices NRPs to invest in Pakistan Stock Market for better returns and growth prospects. NRP’s investments are allowed in Pakistan stock market through an entirely digital and online process without any need to visit a bank branch, embassy, or consulate. The customer can choose either foreign currency or rupee dominated account, or both. Funds in these accounts will be fully repatriable, without the need for any regulatory approval.

Non-Resident Individual Pakistani, Pakistan Origin Card holders & Employees or officials of the Federal or Provincial Governments posted abroad are eligible to open Roshan Digital Pakistan Account. NRPs can visit any of the designated bank’s online portal for Roshan Digital Account and submits details for due diligence.  After due process of opening bank account, the bank will provide NRP the option to select “Investment in Stock Market” on your bank’s portal / website /app. With the following three further steps, you can start investing in Pakistan Stock Market through Roshan Digital Account:

1. Click on the ‘Consent’ tab to share Roshan Digital Account details with Central Depository Company (CDC) and other Capital Market entities
2. Click ‘I Agree’ to Terms and Conditions for Investing in Pakistan Capital Market
3. Select broker just like AZEE Securities as your preferred broker.

Subsequently, the brokerage house will perform their own due diligence and confirm to NRP and CDC regarding the opening of the Trading Account (CKO is exempted for all such accounts) within 24 hours/one business day. The acknowledgement mail from CDC and if your information/credentials were found complete and correct, you will receive an Account Opening Package email from CDC, comprising of the following actions and details:

1. Opening of your Trading Account with Stock Broker.
2. Creation and Registration of your Unique Identification Number (UIN).
3. Opening of your Custody Account (CDC Account).
4. Activation of Direct Settlement Service (DSS) in your Investor Account (if you have opted for the same).
5. Creation of your CDC Web Access Login ID and Password

 

Before you initiate your first trade, you have to initiate a Fund Transfer request from your Roshan Digital Account to CDC Bank Account maintained with your bank (details of which were provided with the Account Opening Package). For more details AZEE Securities has the help desk +9221-111-293-293 or drop an email nrp@azeetrade.com . 

The NRP can also make use of online portals to their investment strategy. Learn about share market terminologies, basics of stock market, trading requirements and all you need to know about Pakistan Stock Market at Knowledge Centre for NRPs.

Pakistan Stock Market is very alluring for NRP investors as Pakistan is poised to grow steadily over the next three years. Pakistani market offer good returns as well as give sense of satisfaction for NRP by providing an opportunity to help their homeland grow further. 

NEVER TRADE POSITIONS LARGER THAN YOU CAN AFFORD

 

 If you look at the history of trading disasters in the world, one common thing you will come across is tend to trade much beyond the risk that they could take on. Making mistakes is part of the learning process when it comes to trading or investing. Investors are typically involved in longer-term holdings and will trade in stocks, and other securities. Traders generally buy and sell stocks, hold those positions for shorter periods, and are involved in a greater number of transactions.

RISKS OF TRADING MORE THAN YOU CAN AFFORD:

Every Investor with limited capital and hence capital protection becomes the primary focus of every investor. Do not lose sight of your risk tolerance or your capacity to take on risk. You obviously cannot protect your capital if you recklessly take positions in the market. For example, if you are trading futures market then taking 5-6 times leverage with tight stop losses is understandable. However, if you leverage to the tune of nearly 10 times then you are running a huge risk that you cannot afford. Even a 2% movement can have almost impaired half of your total capital available for trading. Things can get worse in trading if you are also going to add overnight risk to your trading portfolio. When you carry forward positions to the next then there are lots of developments in the US, European and Asian markets that could make the trade go against you. In fact, if you are adding overnight risk to your trading portfolio then you need to get a lot tighter in your risk management. Limit the risk that you take on your positions.

5 WAYS TO KEEP YOU’RE TRADING POSITIONS IN CHECK…

 

1.      Even at the risk of repetition it needed stop losses must for every trade. Not just as an afterthought, but stop losses must be part of your order on the trading screen.

2.      Another method is to keep limits on losses on a daily basis. This can vary based on the size of your capital and how much you can afford to take, but it is the discipline that is important. For example, on a trading capital of Rs.5 lakh, you have a 5% limit of losing maximum of Rs.25,000 in a single day. At that point, you must have the discipline to shut down your trading terminal and stop trading for the rest of the day.

3.      The third discipline pertains to how much capital you are willing to lose. This is important because every trader starts off with limited capital. It does not matter whether the trader is a small trader, or George Soros. Capital is finite, though the quantum may differ. The focus must be on deciding at what point of capital loss you will get back to the drawing board and rethink your strategy.

4.      Always attribute a cost of capital into your trading account. If you keep idle money in your trading cost, it has an opportunity. At least it can earn 7% in a liquid fund. Take that as your opportunity cost and keep that in your calculations when you calculate your capital risk. Your situation becomes a lot clearer.

5.      Base your risk on the profit you make. For example, once you have made profits on your trade, you can classify that into core capital and earned profits. You can take a higher risk on earned profits and lower risk on core capital. This will ensure a more even distribution of risk.

 

If you have the money to invest and are able to avoid these mistakes, you could make your investments pay off; and getting a return could take you closer to your financial goals.

With the stock market's partiality for producing large gains (and losses). As an individual investor, the best thing you can do to keep your portfolio for the long term, that you are comfortable with and willing to stick to.