Bang For The Buck

  • Saqib Malik
  • Publish Date: Dec 3 2017 8:18PM
  • |
  • Updated Date: Dec 3 2017 8:18PM
Bang For The Buck

More and more people in Kashmir are turning to financial investments

 

In 2008, Syed Ashfaq left his lucrative banking job to undertake “a venture to help people secure their future”. The venture was called Infin Solutions, a financial investment company. But his plans were derailed by that year’s global financial crisis, which hit even established financial planners and stock brokers in Kashmir.

 “The recession cast a doom as people lost huge amounts of money,” Ashfaq, now 40, recalls. “I had to diversify into telecom sector. The stock market bloodbath proved to be a dampener for the emerging financial services companies.”

 The financial services industry in Kashmir has just started to take off when the crash came. “From 2005 to 2008, when stock markets were booming, many sub-brokers, asset management and insurance companies set up operations in Kashmir but the global recession hit them hard,” Ashfaq says.

 It also cooled people’s interestin financial markets. “In Kashmir, people’s interest in stock markets started in 1998 after J&K Bank became a listed entity. That was when the people were exposed to the world of equity markets,” Ashfaq says.

Now, despite the great setback caused by the 2008 recession, the financial investment market according to various stock market experts is valued at around Rs 170 crore. However, these experts say there is ahuge disparity between Jammu and Kashmir regions as the financial market in Jammu region  is estimated at Rs 2000 crore. “The problem is that most of the financial services corporates have set-up offices in Jammu and stayed away from Srinagar which has reduced the employment avenues in Kashmir. We need more of such corporates to foray into the Valley,” said Ashfaq.  The people in Kashmir at present invest mostly in equities via mutual fund route and through stocks largely with help of investment planners like Ashfaq, who deals in stocks, commodities such as gold and silver, even farm commodities. Ashfaq is also a sub-broker for the brokerage Karvy.

“Market literacy has grown in Kashmir over the years. In 2002-03 when J&K Bank stock started yielding good returns, people became enthusiastic about stock markets. As a result, stock brokers and asset management firms came into existence. But there was not much awareness and no regulatory investments until 2008; people were just trying to make a quick buck,” Ashfaq says. “The trends have changed as people are more aware about financial products and stock markets nowadays.”

 

Highs and lows

Sikandar Khursheed ran SK Investments, a sub-brokerageof Emkay Global Financial Services, from 2002 to 2011. He had to wind up the firm,he says, because of huge losses during the recession. He wasn’t alone; a number of sub-brokers had to shut shop in the wake of the 2008 crisis and several of them were even blacklisted. “Say a client had given a sub-broker Rs 1 lakh and the broker had promised to buy him shares worth Rs 10 lakh,” he says. “This was a sort of credit facility the broker provided to the client. When the market went into free fall, the returns were very poor and the client, apart from losing that Rs 1 lakh, was indebted to the sub-broker by Rs 2-3 lakh. This created a lot of mistrust.”

Sikandar says most of the sub-brokers driven out of the business by the global recession have ventured into “completely different sectors from stock markets”. He himself is now into real estate, which he finds less exasperating. Why? “People here have little knowledge about stock trading,” he explains. “I remember how people from even decent financial backgrounds used to visit our office and ask us to open demat and trading accounts. But they were unaware about the nuances and not ready to face the fact that the market could also result in losses for them. It was more of gambling and less of trading here.”

Iftikhar Bashir concurs. “I have worked outside Kashmir and met people who have a culture of investing in stock markets,” says the former banker who runs Capital Gain Consulting in Srinagar. “We lacked this awareness but it is growing now.”

Bashir, who deals in mutual funds, portfolio management and health insurance, has some advice forprospective investors. “The idea behind investing is to not only generate profit, but also create wealth,” he says. “I recommend investors should take the mutual fund route rather than putting their hard earned money in direct stocks. They can graduate to investing in shares directly later.”