For years, Pakistanis have locked their money into ‘safe’ but unproductive assets, avoiding risk like it’s a contagious disease. Whether it’s hoarding real estate, buying gold or parking wealth in bank accounts that pay interest, the mindset has been simple: preserve, don’t grow. But that era is ending. Real-estate speculation is being taxed heavily, inflation eats away at bank savings and businesses are struggling with costly loans.
For years, Pakistanis have locked their money into ‘safe’ but unproductive assets, avoiding risk like it’s a contagious disease. Whether it’s hoarding real estate, buying gold or parking wealth in bank accounts that pay interest, the mindset has been simple: preserve, don’t grow. But that era is ending. Real-estate speculation is being taxed heavily, inflation eats away at bank savings and businesses are struggling with costly loans.
Now, Pakistan’s stock market stands as the single most underutilised vehicle for wealth creation. It’s not just a place to ‘buy stocks’. It’s a gateway to financial independence, business expansion, and a truly Islamic alternative to interest-based banking. The real question is: Why aren’t more Pakistanis in it?
The shocking reality: Only 0.19 per cent of Pakistanis invest in stocks! Let’s talk numbers -- because numbers don’t lie:
Pakistan: Only 0.19 per cent of the population (roughly 400,000 people) invests in the stock market.
India: Over 6.0 per cent of the population (80 million investors) is active in stocks.
Bangladesh: More than three million retail investors participate in their market.
United States: A staggering more than 50 per cent of Americans have stock market exposure.
Now, let’s be honest. Pakistanis love to compare themselves with India, but here’s a hard truth -- when it comes to retail investing, India is 30 times ahead of us. And Bangladesh? Even they are 10 times ahead.
Why the gap? Some say Pakistanis don’t trust the system. Others argue it’s because people think the stock market is not Shariah-compliant. But here’s the twist:
Investing in the stock market is actually more Islamic than keeping money in a savings account. Stock market equals true Islamic ‘hissadari’ (partnership). If you’re worried about Shariah compliance, let’s break it down:
A savings account earns interest, which is a fixed return and prohibited in Islam. Buying shares in a company is ‘hissadari’ -- you share profits and losses, just like Islam promotes in trade. You earn dividends from profitable companies, just like renting out a house and earning monthly income. If your company grows, your stock value increases, and you can sell it for a higher price -- just like selling an appreciated property. This is pure equity financing, which is the foundation of Islamic finance.
Then why aren’t scholars promoting it? Because, unfortunately, Islamic finance experts have spent decades debating ‘Islamic banking’ but haven’t built a fully equity-based financial system. This is why a truly Islamic bank, one that purely deals in equity financing rather than fixed-return structures, still doesn’t exist. So, instead of complaining, it’s time for action.
Want to start a business? IPOs are better than loans. If you’re a businessman in Pakistan, you know the pain of borrowing money. Interest rates are sky-high (real rates in double digits). Bank loans drain your cash flow because you must repay, no matter what. Loans are NOT Shariah-compliant.
It’s time to wake up, Pakistan. Stop hoarding cash in savings accounts. Stop relying on government jobs and handouts. Start owning a stake in Pakistan’s biggest companies. The opportunity is massive. The future is bright. The question is: Who’s ready to lead this change?
But guess what? There’s a better way to raise capital -- and it’s called an Initial Public Offering (IPO). Here are three reasons IPOs beat bank loans every time: one, no repayment stress. When you raise money through an IPO, you never have to pay it back. You use the funds to expand your business, without monthly debt payments choking your cash flow.
Two, Shariah-compliant financing. IPOs are a form of equity financing, meaning profits are shared rather than earning fixed interest. Three, business growth and credibility. A publicly listed company gains instant market credibility, attracts better talent and can scale faster than privately owned businesses.
Is investing in stocks risky? not as much as you think. Now, some people say, “Stock market investing is risky.” Sure, investing in a random startup or a friend’s business can be VERY risky -- because 90 per cent of startups fail.
But investing in an established, blue-chip company on the Pakistan Stock Exchange (PSX)? The success rate is over 90 per cent.
In the long run, all stock markets go up. Look at the Dow Jones, S&P 500, or India’s Sensex. Over decades, they have only grown.
So, instead of gambling on a friend’s startup with a high failure rate, wouldn’t it make sense to own shares of a company that’s already successful?
Why haven’t regulators fixed this yet? Now, let’s talk about the real villains -- our financial institutions, regulators and brokerage firms. Financial literacy? Missing. Investor awareness? Almost nonexistent. Stock market education in universities? Not even on the syllabus.
How can we expect people to invest when even business graduates don’t know how the PSX works?
Here’s what needs to happen: one, expand the retail investor base from 0.19 per cent to at least 2.0 per cent in the next five years. This means four million Pakistanis should be investing in stocks.
Two, encourage more companies to IPO. The government should give tax breaks to companies that choose IPOs over bank loans. Three, introduce stock market education in schools and universities. Just like people learn about engineering, medicine and law, they should learn how to invest and grow wealth.
The stock market isn’t just for the elite. It’s for every Pakistani who wants to grow wealth, be part of national businesses, and build a financially secure future.
So, the next time someone tells you, “The stock market is risky”, remind them: Investing in a friend’s business has a 90 per cent failure rate. Investing in blue-chip stocks has a 90 per cent success rate. Buying stocks = Buying a piece of a company. You earn dividends like rent and can sell at a higher price later -- just like real estate.
It’s time to wake up, Pakistan. Stop hoarding cash in savings accounts. Stop relying on government jobs and handouts. Start owning a stake in Pakistan’s biggest companies.
The opportunity is massive. The future is bright. The question is: Who’s ready to lead this change?
The writer is a graduate of LUMS and holds an MBA in consulting from the UK. He teaches financial markets in Pakistan and can be reached at: hissan3@gmail.com
