Capital Markets and Foreign Ownership Restrictions: An Empirical Analysis of Emerging Stock Markets

In the 1990s, the hot issue in international finance was the growing interest of portfolio managers in the emerging stock markets. The interest in the emerging markets gained rapid attention, which is evident from the global trends, towards the opening up of economies and financial markets, free capital flow and the privatisation of financial institutions. Earlier the emerging markets were isolated due to several factors that had posed serious problems for international investors. These markets lacked the depth, regulatory framework, and structural safeguards that had characterised the equity markets in the developed world. Capital markets are called integrated, if assets with perfectly correlated rates of returns have the same price regardless of the location in which they are traded. Alternatively, capital market are called segmented, if financial assets traded in different markets “with identical risk characteristics” have different returns due to different investment restrictions.1 Segmentation may be due to individuals’ attitudes, government restrictions over capital movements or irrationality. In the past twenty-five years, modern finance theory has proved to be a major development in finance, which comprises of portfolio theory, capital market theory and efficient market theory. These modern developments can be traced back to the work of Markowitz (1959); Sharpe (1964); Solnik (1974) etc., which assumes that security prices fully reflect all publicly available information. Due to this information, potential investors can gain benefits through international diversification. The major attraction of forming international portfolios lies in the potential for risk reduction through diversification of unsystematic risk.

Capital Markets and Foreign Ownership Restrictions: An Empirical Analysis of Emerging Stock Markets

In the 1990s, the hot issue in international finance was the growing interest of portfolio managers in the emerging stock markets. The interest in the emerging markets gained rapid attention, which is evident from the global trends, towards the opening up of economies and financial markets, free capital flow and the privatisation of financial institutions. Earlier the emerging markets were isolated due to several factors that had posed serious problems for international investors. These markets lacked the depth, regulatory framework, and structural safeguards that had characterised the equity markets in the developed world. Capital markets are called integrated, if assets with perfectly correlated rates of returns have the same price regardless of the location in which they are traded. Alternatively, capital market are called segmented, if financial assets traded in different markets “with identical risk characteristics” have different returns due to different investment restrictions.1 Segmentation may be due to individuals’ attitudes, government restrictions over capital movements or irrationality

Modern Theories and Islamic Concept of Jihad Impacting Pakistan Security Dilemma

Pakistan National Security is directly related to a mix of Islamic precepts and the implications of contemporary real politics. Initially modern theories were a philosophical response to priesthood of the time hedging Christianity for their own predominance. With the advent of Islam the West applied the same antipathy to the faith of Islam and later it impacted Muslim states and Regions. The West however, circumvented religion as historical legacy representing Christianity. Pakistan being part of wider Muslim world is prone to historically prejudiced; direct and indirect threats based on Modern political theories. Modern theories are Euro-centric owing to their war prone regional history. Islamic Security concepts characterize trans-border implication. Modern political and security perspective are based on; personal experience of the people gone through wars and civil chaos whereas Islamic concept of just war is based on faith absolutes and Meta narratives1. Modern theories imply human nature as a pivot to craft response in anticipation of a predetermined threat to justify pre-emption. Modern theories have become the seed of modern state policies. Islam makes it obligatory to prepare and built power to first deter and retaliate only under tyranny, oppression and under the threat of expulsion and extermination. Pakistan military initiative are deemed inspired by Islamic concept of Jihad and have become cause of her Security Dilemma due to prejudiced Western view. Islam emphasis on mankind as one whole universal community called ‘Ummah’. The modern theories divide the world on National identifies and globalizes only trade and transactions. National Interest in modern theories is pivotal to the state policies. This marked difference is sometime purposely confused as a strategy to dub even a legitimate resistance or movement as Terrorism depending on National Interest expediency. The major cause of conflict is embedded in Islamic and modern political connotations of a just war. These polemical perspectives explain Pakistan Security Dilemma as part of the Muslim world and a need for negotiated understanding for peace and stability and interfaith harmony

A Sectoral Analysis of Poverty in Pakistan

Since independence, the problem of mass poverty in Pakistan has been substantial. The number of the destitute has continued to soar. The problem of poverty now looks to be beyond control. The vast masses of the people, particularly in rural areas, are indeed, miserably below the poverty line. Moreover, the socioeconomic and demographic indicators are dismal. Official planning and the market economy system have failed to lessen poverty. The policies formulated to eradicate it have failed to achieve their objectives. The issue of poverty in Pakistan has its significance for sustainable development. Long run development is not possible without protecting the rights of the vulnerable groups and the participation of the entire population in the development process. Although Pakistan’s economic growth has been quite respectable for much of the last four decades but it has failed to trickle down to the masses. The country has experienced poverty and stagnation in 1950s, increasing poverty and growth in the 1960s, stagnation of growth but declining poverty in the 1970s, increasing growth and declining poverty in the 1980s and finally, increasing poverty and falling growth in the 1990s [MHCHD/UNDP (1999)]. The mainstream approach to identifying the poor specifies a cut-off point ‘poverty line’, defining the level of income/expenditure below which people are diagnosed as poor. The conventional measure of poverty, head-count index, has been widely used in Pakistan. However, in practice this absolute threshold usually cannot stand the pressures of changing circumstances and is not as absolute as the term would appear to imply [Zaidi and de Vos (1993)]. To show the true face of poverty this study uses Foster, Greer and Thorbecke (1984) class of additively decomposable measure to estimate the variation in the incidence, intensity and severity of poverty across sectors of employment. This study also determines the relative contribution of the various sectors to aggregate poverty. Location index is also used to measure the concentration of poor in each sector. To evaluate the sources of observed changes in sectoral poverty at the micro level ‘HIES’ data sets are used.

Relationship Between Trading Volume And Stock Exchange Performance: A Case From Karachi Stock Exchange

Over the past fifty years, much work has been done trying to understand the relationship between volume and price changes of individual stocks. In this article, we attempt to introduce and discuss some of these articles and take inference for relationship of traded volume and aggregate stock exchange index performance. This article presents an empirical analysis of the relationship between trading volume and performance of stock exchange index on a given day in the Pakistani market. Just like individual stocks, the relationship between changes in KSE 100 index and trading volume, irrespective of the direction of the index change, is significantly positive across all three alternative measures of daily trading volume (the daily number of shares traded; the daily total monetary value of shares traded; the daily number of equity trades)

Price Integration in Wholesale Maize Markets in Pakistan

Continuing debate concerning the appropriate role of the government in the marketplace and the necessity to some how estimate the effects of agricultural policies on agricultural markets have forced researchers to develop various methods, which would enable them to analyse market efficiency. Government intervention in setting prices, incomes and markets is always controversial. For economists, government intervention may be justified if it does not enhance distortions into the market and, moreover, remedies the existing market imperfections. But how can one observe whether the policy proves to improve market functioning or results in even more inefficiency? One way to throw some light on this long-standing issue is to analyse market performance by studying market integration. Three types of market integration are identified in the literature, which are intertemporal, vertical and spatial. Inter-temporal market integration relates to the arbitrage process across periods. Vertical market integration is concerned with stages in marketing and processing channels. Spatial integration is concerned with the integration of spatially distinct markets i.e. if price changes in one market are fully reflected in alternative market then these markets are said to be spatially integrated. The concept of market integration has normally been applied in studies involving spatial market interrelatedness