Pakistan’s stock markets have been on a roll. Their stock market indices, KSE 100, being one of them, have gained 40%+ YTD. Ofcourse, general elections held in May 2013 there saw a democratically elected Nawaz Sharif taking charge and this has surely helped the markets there. Another factor has to be the amnesty scheme for stock investments put in place since last year.
Under the scheme, unaccounted for money invested in the stock markets for a period of 4 months (120 days running) is be exemted from tax. The revenue departement (FBR) doesnt question the source. Now, Pakistan, like India, has a parallel economy with a projected size of ~ $ 34 billion, according to Sustainable Development Policy Institute (based in Islamabad) and UNODC.
Anyone who wants to whiten his unaccounted for wealth would simply invest in the market for the requisite period and since he wont be questioned regarding its source by the taxmen, it would thereby become legal. Considering the size of the parallel economy (20 % of the size of the legitimate economy), no wonder markets rising higher as the scheme seems to be attracting decent inflows.
With Indian market in deep coma, may b its time, such a scheme is started in India too. Markets would be boosted and and the billions in unaccounted for money would also be brought back. Killing two birds with one stone !!