Karachi Stock Exchange free essay sample

There are 3 major financial markets in Pakistan. 1. Karachi Stock Exchange Karachi Stock Exchange is the biggest and most liquid exchange and has been declared as the â€Å"Best Performing Stock Market of the World for the Year 2002†. As on October 31,2004 661 companies were listed with the market capitalization of Rs. 1478. 56 billion(US$ 24. 12 billion) having listed capital of Rs. 396. 37 billion(Us$6. 47billion). KSE has been well into the 3rd year of being one of the â€Å"Best Performing Markets of the World† as declared by international magazine â€Å"Business Week†. Similarly the US newspaper, USA today termed KSE as one of the â€Å"Best Performing Bourses of the World. † KSE began with a 50 shares index. As the market grew a representative index was needed. On November 1, 1991 the KSE-100 was introduced and remains to this date the most generally accepted measure of the Exchange . The KSE-100 is a capital weighted index and consists of 100 companies representing about 84% of the market capitalization of the Exchange. We will write a custom essay sample on Karachi Stock Exchange or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page In 1995 the need was felt for an all share index to reconfirm the KSE-100 and also to provide the basis of index trading in future. On August 29, 1995 all share index was constructed and introduced on September 18, 1995. In 1997 for the first time computer based trading was started in KSE in some selected scripts under KATS. 2. Lahore Stock Exchange Lahore Stock Exchange (Guarantee) Limited came into existence in October 1970, under the Securities and Exchange Ordinance, 1969, of the Government of Pakistan in response to the needs of the provincial metropolis of the province of Punjab. It initially had 83 members and was housed in a rented building in the crowded area of Bank Square in Lahore. The number of members has increased from 83 to 650 over a period of 25 years. Lahore Stock Exchange has opened branches in the industrial cities of Faisalabad and Sialkot for trading. 3. Islamabad Stock Exchange Islamabad Stock Exchange is the youngest of the three stock exchanges of Pakistan. It was incorporated on October 25, 1989 and it became fully operational on August 10, 1992. At present there are 104 members out of which 39 are corporate bodies including commercial and investment banks, DFIs and brokerage houses. The other 65 Members are individual persons. At the moment  there are 264 companies/securities listed on the Exchange with an aggregate capital of Rs. 225409. 110 million. The market capitalization stood at  Rs. 476747. 478 million as on 07-08-2003. In comparison with major financial markets around the World, the functioning of capital market in Pakistan is still very much in its infancy and lacks advanced technology. Financial Instruments Being Traded In These Markets There are 11 types of financial instruments being traded in the financial markets in Pakistan:- 1. Term Finance Certificates (TFC’s) 2. Pakistan Investment Bonds (PIB) 3. Treasury Bills 4. Foreign Exchange bearer certificates 5. Defense saving certificates 6. Modaraba certificates 7. Commercial papers 8. Bankers Acceptance 9. Preferred stock 10. Common stock 11. Participation term certificates(PTC) Karachi Stock Exchange o KSE began with a 50 shares index. As the market grew a representative index was needed. On November 1, 1991 the KSE-100 was introduced and remains to this date the most generally accepted measure of the Exchange. The KSE-100 is a capital weighted index and consists of 100 companies representing about 90 percent of market capitalization of the Exchange. o In 1995 the need was felt for an all share index to reconfirm the KSE-100 and also to provide the basis of index trading in future. On August 29, 1995 the KSE all share index was constructed and introduced on September 18, 1995. o Karachi Stock Exchange is the biggest and most liquid exchange in Pakistan and has been declared as the â€Å"Best Performing Stock Market of the World for the year 2002†. As on March 31, 2006, 663 companies were listed with the market capitalization of Rs. ,257. 062 billion (US $ 54. 28) having listed capital of Rs. 486. 489 billion (US $ 8. 11 billion). The KSE 100 Index closed at 11485. 90 on March 31, 2006. o KSE has been well into the 4th year of being one of the Best Performing Markets of the world as declared by the international magazine â€Å"Business Week†. Similarly the US newspaper, USA Tod ay, termed Karachi Stock Exchange as one of the best performing bourses in the world. Decade-wise Progress: | |1950 |1960 |1970 |1980 |1990 |2000 | |Listed Companies (No. |15 |81 |291 |314 |487 |762 | |Listed Capital (Rs. in million) |117. 3 |1007. 7 |3864. 6 |7630. 2 |28056. 0 |236458. 5 | |Market Capitalization (Rs. in million) |NA |1871. 4 |5658. 1 |9767. 3 |61750. 0 |382730. 4 | Growth Progress: Today KSE has emerged as the key institution of the capital formation in Pakistan with: Listed companies 661, securities listed on the exchange 698: ordinary share 661, Preference shares 9 and debt securities (TFC’s) 28. Listed capital Rs. 396365. 67 million (US$ 6464. 94 million. ) Market capitalization Rs. 1478560. 93 million (US$24116. 15 million). Average daily turnover 341. 09 million shares with average daily trade value Rs. 16516. 28 million (US$ 269. 39 million). Membership strength at 200. Corporate Members are 106 out of which 9 are public listed companies. Active Members are 157. Fully automated trading system with T+3 settlement cycle. Deliveries through central depository company. National Clearing and Settlement System in place. KSE-100 Index: The primary objective of the KSE100 index is to have a benchmark by which the stock price performance can be compared to over a period of time. In particular, the KSE 100 is designed to provide investors with a sense of how the Pakistan equity market is performing. Thus, the KSE100 is similar to other indicators that track various sector of the Pakistan economic activity such as the gross national product, consumer price index, etc.