KSE-100 INDEX

Azam Ahmad Abbasi Khalid Mansoor

Table of content:
History of KSE100 index.

Selection rules for KSE100 index. Objectives of KSE100 index.

Calculation methodology of KSE100 index. Recomposition of the KSE-100 index

History KSE100 index

Introduced at 1st November 1999 with base value of 1,000 points. 100 companies selected on the basis of sector representation and highest market capitalization.
Captures over 80% of the total market capitalization. Out of the following 35 Sectors, 34 companies are selected i.e. one company from each sector (excluding Open-End Mutual Fund Sector)

LIST OF SECTORS 1. 2. 3. Open-end Mutual Funds Close-end Mutual Funds Modarabas 19. Oil & Gas Marketing Companies 20. Oil & Gas Exploration Companies 21. Engineering

4. 5. 6.
7. 8. 9.

Leasing Companies
Investment Banks/Investment Cos./Securities Cos.

22. Automobile Assembler 23. Automobile Parts & Accessories 24. Cable & Electrical Goods
25. Transport 26. Technology & Communication 27. Fertilizer 28. Pharmaceuticals 29. Chemical 30. Paper & Board 31. Vanaspati & Allied Industries 32. Leather & Tanneries 33. Food & Personal Care Products

Commercial Banks
Insurance Textile Spinning Textile Weaving

10. Textile Composite 11. Woollen 12. Synthetic & Rayon 13. Jute 14. Sugar & Allied Industries 15. Cement

16. Tobacco
17. Refinery 18. Power Generation & Distribution

34. Glass & Ceramics

35. Miscellaneous

STOCK SELECTION RULES

Rule # 1
Largest market capitalization in each of the 34 Karachi Stock Exchange sectors excluding Open-end Mutual Fund Sector;

Rule # 2
The remaining index places (in this case 66) are taken up by the largest market capitalization companies in descending order.

Rule # 3
Company which is on the Defaulters Counter and/or its trading is suspended, declare Non-Tradable (i.e. NT) in preceding 6 months from the date of decomposition shall not be considered in the decomposition of KSE-100 Index.

Objective KSE100 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 sectors of the Pakistan economic activity such as the gross national product, consumer price index, etc.

CALCULATION METHODOLOGY

RECOMPOSITION OF THE KSE-100 INDEX

Semi-annual recomposition process.
Sector Rules Market Capitalization Rules

Time-based rule Value-based rule Time-based rule

Rules for new issues

AN EXAMPLE OF THE RECOMPOSTION OF THE KSE100

All divisor adjustment are made after the close of trading.

REPLACEMENT OF STOCK IN THE INDEX