Could Pakistan be the last global stock market to experience an explosion of interest from retail investors? Ali Farid, the co-founder of KTrade, thinks so. The online broker is today announcing a $ 4.5 million funding round that Farid says will position KTrade perfectly as a new generation of Pakistanis embrace the stock market. “It’s about time people got their money out of their mattresses and got a better return on more formal types of savings,” insists Farid.

KTrade was launched in 2019 and has already accumulated over 200,000 users. Farid founded the company after a stint as CFO of fintech SafeCharge, where he saw the first evidence of the global boom in e-commerce. “Online brokers have become our biggest customer segment,” says Farid of an industry where companies like Robinhood in the US have grown exponentially in recent times.

He believes Pakistan is now on a similar trajectory. Already, the volume of shares traded on the Karachi Stock Exchange has increased sevenfold in the past 18 months, mainly due to growing interest from retail investors. Retail investors, for whom international stocks are banned under Pakistani investment regulations, now account for more than 65% of global trading volume, down from around 45% just two years ago.

This increase in demand reflects the good performance of the Pakistani stock exchange in recent times, but also the growing confidence in the caliber of listed companies in the market and the regulation of investments. Many of the main constituents of Pakistani indices are domestic subsidiaries of well-known multinational companies – Nestlé and BAT, for example – while a consortium of Chinese investors on the Pakistan Stock Exchange has helped guide international corporate governance practices. ‘business. A growing number of new shows from innovative and entrepreneurial small businesses adds to the appeal.

However, it is the potential customer base that gives Farid so much confidence in KTrade’s potential. “Pakistan has a population of 200 million people, many of whom are young and internet savvy,” he explains. “But so far, there hasn’t been much culture of formal savings and investment – about 50% of people keep all of their savings at home where the money doesn’t earn any return.”

In addition to the domestic user base, KTrade also targets 9 million Pakistanis living abroad, especially in the Middle East, Canada and UK. “Many Pakistani expats are very enthusiastic about reinvesting in Pakistan,” says Farid.

By combining these two target markets, KTrade believes it can increase the number of users to 10 million by 2023. It operates through a mobile app that has become Pakistan’s most downloaded investment app, allowing clients to trade stocks, bonds, commodities and mutual funds. The service operates with low-cost commissions in the model of online brokers in markets where price competition has become fierce.

“Covid has been a real inflection point,” adds Farid. “During the lockdown, many people around the world were given more time to explore new ideas and online commerce was one of the beneficiaries of this trend.”

KTrade’s fundraising will support a significant expansion of its marketing activities in a country where regulators and policymakers have traditionally devoted relatively meager resources to public understanding of savings and investments. “We need to invest in education,” says Farid. “We need to persuade people to pull their money out from under the mattress. “

This will mean conventional advertising and marketing campaigns, but KTrade has also invested in e-learning, running online courses to teach people the basics of investing in the stock market. The fantastic title selection contests have also proven to be popular.

The round table brings together a range of global investors and institutions and is led by TT Bond Partners, based in Hong Kong, and HOF Capital of New York. German fintech investor Christian Angermayer, managing partner of German bank Berenberg David Mortlock, also participated in the round.

“Pakistan and South Asia have some of the most exciting market dynamics and demographics in the world, and KTrade is well positioned to take advantage of the democratization of finance in the region,” says Jonathan Bond, Partner director of TT Bond Partners.