Pakistan Stock

Exchange
What is Stock
Stock is a piece of ownership for a company
Sources of finance for a company.
If a company wants to get extra money to grow their businesses, they
can sell some and all ownership of the company in the form of stock.
If a man buys 55% of the company stock. He has decision making
power of the company . Buying stock is very popular form of
investors.
Classification of Stock
Stock Sector:
Group of the companies that belongs to the same industry and provide
same product and services.
Income stock:
Include shares of corporation that gives money back to shareholders in
the form of dividends.
Value Stock:
Stocks of profitable companies that are selling at a reasonable price
compared with their values.
Classification of stock
Growth stock:
Stocks of companies that consistently a lot of money and are expected
to growth faster than the competition.
Penny Stock:
Stock that usually sell for less than a dollar.
Small cap: market cap of 2.5 billion or less. Normally trades are under
$ 10.
Microcap: Markets of 500 million or less. Normally trade under $1.
What is stock market
It is a market in which a securities are bought and sold that is
essential component of developed capital market.
Stock market means any body of individual whether incorporated or
not, constituted for the purpose of assisting, regulating, or controlling
business of buying , selling or dealing in securities.
These days stock market is the most important source for companies
and people to rise money.
What is STOCK EXCHANGE
According to Husband and Dockerary:
Stock exchanges are privately organized market which are used to
facilitate trading in securities.
Indian Securities Contracts, Act of 1956:
Any body of individuals , whether incorporated or not, for the
purpose of assisting, regulating or controlling the business of buying
and selling or dealing in securities.
The world top Stock Exchanges
NEW YORK STOCK EXCHANGE:
Market capitalization
2011, USD billion _ 14,242
TOKYO STOCK EXCHANGE:
MARKET CAPITALIZATION
2011, USD billion _ 3,325
LONDON STOCK EXCHANGE
MARKET CAPITALIZATION
2011, USD billion _ 3,266
Pakistan Stock exchange
Pakistan stock exchange PSE 2016. Pakistan stock exchange is merger
of all three stock exchange(ISE,LSE,KSE) OF Pakistan which started
operation on January 11,2016.Entities which provide trading facilities
of stock brokers and traders, to trade stock and securities.
The Pakistan Stock Exchange(PSE) is the stock exchange with trading
floors in Karachi , Islamabad and Lahore. PSE is due a part of the
MSCI Emerging Market Index in May 2017.
PSX origin where establishment of the Karachi Stock Exchange in
1947.
 The Lahore Stock Exchange in 1970 and Islamabad Stock Exchange
in 1992.As of January 26,2016 there 558 companies listed in PSX and
total Capitalization is Rs 10,003,908,00 million ($95billion).
The investors on the exchange includes 1,886 foreign institution
investors and 883 domestic institution investor along with about 0.22
million retail investors.
There are also about 400 brokerage houses which are members of the
PSX as 21 asset management companies.
 PSX is the among the worlds best performing stock market's between
2009 and 2015 it delivered 26% a year.
In December 2016,PSX sold 40% strategic shares to a Chinese
consortium for $85 million.
 History(KSE)
The Pakistan Stock Exchange(PSE) limited came into inception 2016
when the Government of Pakistan decide to merger the three large
exchange markets of the country into one combined market.
Karachi Stock Exchange establish on September 18, 1947 was
registered in Pakistan.
KSE was a stock exchange located at the stock Exchange on Stock
exchange in the heart of Karachi business District Chundrigar Road
Karachi Sindh province of Pakistan.
 It was Pakistan largest and oldest stock exchange in South Asia. KSE
was also listed among 10 best stock markets in the world 2015.
The Pakistan benchmark stock market index is the third best performer
in the world since 2009. in june 2015 khaleei Times reported Karachi
in the best performing stock exchange in the world.
As on July 10 2015 total markets capitalization reached Rs 7.33
trillion (US$72 billion approximately).
 Lahore Stock Exchange guarantee limited (LSE)was Pakistan's second
largest stock exchange after the Karachi stock exchange. It is located in
Lahore Pakistan.
LSE came into existences in October 1970 under securities and exchange
ordinances of 1969 by the government of Punjab.
Number listed companies has increased to 519 since its inception.
The LSE has 152 member of which 81 corporate, and 54 are individual
Member's was the first stock exchange in Pakistan to use internet
currently 50% transaction are via the internet.
 Islamabad Stock Exchange was the youngest on the three stock
exchange of Pakistan and is located in the capital of Islamabad.
ISE was incorporated as a limited company on 25 October 1989 in
Islamabad .ISE is a 22 storey building which makes it the second
highest building of Islamabad.
Launched on January 11,2016 aimed to help reduce market
fragmentation and create a strong case for strategic partnership
necessary for providing technological expertise and assitances,PSE
was launched.
 PSE is the top virtual online trading and research platform for
financial education and entertainment related to stock market of
Pakistan.
Its also gives you thrill and opportunity to learn and trade by
practicing it.
It provides ready outlet for buying and selling of securities. Stock
exchange also acts as an outlet/counter for the sale of listed securities.
 Mission
To provide state of the art technology and automated trading
operations driven by a team of professionals in accordance with good
corporate governance.
To strive to provide quality and value added service to the capital
market in an efficient, transparent and orderly manner, compatible
with international standards and best practices.
To protect and safeguard and interests of all its shareholder, i.e.
members, listed companies employees and the investors at large.
 Vision
To be a leading financial institution offering efficient, fair and
transparent securities market in the region and enjoying full
confidence of investors and listed securities issuers.
 Objective
To provide tools for young traders and investors for learning, research,
and practicing investment trading techniques and strategies.
To provide a system where everyone can learn from each other by
communicating, sharing and practicing in group activities.
Our workforce consist of combination of youth and experience
perfectly suitable to the organization current and future challenges.
 Role
Stock Exchange have multiple roles in the economy such as.
Raising capital for businesses.
Mobilizing savings for investment.
Facilitating company growth.
Profit sharing.
Opportunities for small investors.
 Functions
1. Continuous and ready market for securities.
Stock exchange provides a ready and continuous market for purchase
and sale of securities. It provides ready outlet for buying and selling of
securities. Stock exchange also acts as an outlet/counter for the sale of
listed securities.
2. Facilitates evaluation of securities.
Stock exchange is useful for the evaluation of industrial securities. This
enables investors to know the true worth of their holdings at any time.
Comparison of companies in the same industry is possible through stock
exchange quotations (i.e price list).
3. Encourages capital formation.
Stock exchange accelerates the process of capital formation. It creates the habit
of saving, investing and risk taking among the investing class and converts their
savings into profitable investment. It acts as an instrument of capital formation.
4. Provides safety and security in dealings.
Stock exchange provides safety, security and equity (justice) in dealings as
transactions are conducted as per well defined rules and regulations. The
managing body of the exchange keeps control on the members. Fraudulent
practices are also checked effectively.
5. Regulates company management.
Listed companies have to comply with rules and regulations of
concerned stock exchange and work under the vigilance (i.e
supervision) of stock exchange authorities .
6. Facilitates public borrowing .
Stock exchange serves as a platform for marketing Government
securities. It enables government to raise public debt easily
and quickly.
7. Provides clearing house facility.
Stock exchange provides a clearing house facility to members. It settles
the transactions among the members quickly and with ease. The
members have to pay or receive only the net dues (balance amounts)
because of the clearing house facility.
8. Facilitates healthy speculation.
Healthy speculation, keeps the exchange active. Normal speculation is
not dangerous but provides more business to the exchange. However,
excessive speculation is undesirable as it is dangerous to investors & the
growth of corporate sector.
9. Serves as Economic Barometer.
Stock exchange indicates the state of health of companies and the
national economy. It acts as a barometer of the economic situation /
conditions .
10. Facilitates Bank Lending.
Banks easily know the prices of quoted securities. They offer loans to
customers against corporate securities. This gives convenience to the
owners of securities.
Major participants of the Market
Issuer
Broker/members
Local investors
Foreign investor
Mutual funds
Institutions
Banks
Investment Ways in PSX
Stocks / shares:
When we participate in the ownership of the business and have an
equitable right in the business to the extent of our share in it , we
become an equity or share holder.
Bonds:
Bonds is a debt instrument represent the promise of a issuer to pay a
fix sum of money at specified maturity date.
Factors Affecting Stock Exchange
Economic Factors
inflation and deflation
Interest rates
Foreign market
Market factors
Demand And supply
News
Earning/price ratio
 Main Activities
To promote the saving and pave the way for the investment.
To provide the liquidity for the investors.
AS Organization:
To guarantee the legal and economic securities.
To provide official information.
To fix the prices of the securities.
 In Favour of Companies
Its supplies them with the obtaining of long term funds that permits
the company to make profitable activities.
The securities quoted in the stock exchange market have more fiscal
purpose advantages for the company.
It offer to the company's free publicity.
 In Favour of Investor
Its permits him the access to the profitable activities of the big
companies.
It offer liquidity to the security investments.
 PSXs Services
Government debt market
Market making
Market indices
Company Service
Data Service
Investor awareness Service
 Company Service
Fully automated trading, clearing and settlement system.
Internet routed trading facility.
Gateway trading (Order Management System).
Investor and fund mangers can also access information through
Display Only Terminal.
Internet trading facilities available.
Brokers connectivity to PSX through VPN(to ensure security of data).
 Data Services
TV channels also display PSX ticker through live feeds for PSX
system.
Investors provided customized data packages for trading and
assessment of their portfolio on real time basis.
PSX Website offers data of markets on real time basis including listed
company portfolio, snap shot of financials, press releases and
summary of market activities on real basis time.
 Listing in PSX
AS on October 4th,2016 there are 576 companies listed in PSX and the
total market capitalization is Rs 8,338.636 billions.
All the listed companies are categorized in various main business
sectors. As on March 25th 2016 there are total 35 sector listed on
Pakistan Stock Exchange.
Rest of the non-contributory sectors are allocated for Indexes, futures
and bond etc.
Eligibility To List in:

Minimum paid up capital must be RS 10 million

Minimum public offering must be 5 million or 25% of the capital
Re_composition:
Company once included do not remain there forever.
They can be dropped, if they fail to meet the criteria.
Re_composition committee holds meetings twice a year.
Companies position is analyzed to exclude or include certain
companies.
Purchasing of shares
Investors
Selection of brokers
Open A/C with members
Order placement
Kinds of order
Information to the operator
Order execution
Confirmation to the office
Delivery of share & money
Stock Prices
Bid Price:
The price to get stock.
Ask Price:
The price you pay.
The spread:
The difference between bid and ask price.
Outstanding Shares:
Total numbers of shares issued by company.
Float:
Shares owned by outside investors.
Choose Order type
BANKERS
Allied Bank of Pakistan Limited
Askari Bank Limited
Bank Al Falah Limited
Bank Al Habib Limited
Bank Islami Pakistan Limited
Bank of Khyber
Dubai Islamic Bank Pakistan Limited
Habib Bank Limited
BANKERS
MCB Bank Limited
National Bank of Pakistan
NIB Bank Limited
Sindh Bank Limited
Soneri Bank Limited
Summit Bank Limited
United Bank Limited
KSE INDICES
PSC in Karachi has two basic indices namely, KSE 100 index and KSE 30
index.
They both possess divers histories and significant variation owing to
their individuals role in PSX.
KSE 30 Index:
The idea of KSE 30 index was first put into practice in mid 2005 as the
indicator of economic development of Pakistan.
It serves to gauge how well Pakistans economy has done over a
period of time.
It was introduced with a base value of 10,000 , which is considerably
higher than KSE 100 index.
30 best companies are part if this index.
It required owing to dividends and right shares.
In the end of 2014 , hit all time high of KSE 30 index 20,830,07.
KSE 100 index
KSE 100 index was first introduced in late 1991 with base value of
1000 points.
Since its establishment , hitting a record breaking 14,814 points in Dec
2007.
Formula for Calculating the KSE 100
index is

(Sum of share outstanding * Current prices Base period value)

*1000
Calculation Methodology

The Base Period Day 1

Stock Share price Number of shares Market Value
(In Pak Rs.) (in Rs)
A. 20 50000000 1,000,000,000

B. 30 100000000 3,000,000,000

C. 40 150000000 6,000,000,000

Total Market 10,000,000,000

Capitalization
Calculation

Stock Share Price Numbers of Shares Market Value

(In Rs) (in RS)
A. 22 50,000,000 1,100,000,000
B. 33 100,000,000 3,300,000,000
C. 44 150,000,000 6,600,000,000
Total market 11,000,000,000
capitalization
Index = 11,000,000,000 / 10,000,000,000

= 1.10 * 1000
= 1100