Karachi Stock Exchange (G) Limited

Welcome To The Presentation On KSE
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Karachi Stock Exchange (G) Limited

The Premier Stock Exchange of the Country
• Established in September 18, 1947 - Incorporated as Company Limited by Guarantee • Initially 5 companies with a paid-up capital of Rs.37 million

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KARACHI STOCK EXCHANGE
• Membership of KSE is presently fixed at 200 as per Articles

• Prospective members have to purchase a seat from the existing members • The price of the membership seat is freely negotiable between the buyers and sellers • Since June 1990, membership is open to corporate entities. Presently there are 156 corporate members of whom 10 are listed companies • Foreign investors are allowed to hold up to 100 percent shareholding in corporate brokerage houses

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Company Limited by Guarantee ? • A Company Limited by Guarantee has the following significant features: • Company is without share capital • Number of members is fixed by the articles • Membership is transferable subject to the membership criteria as laid
down by the Board • Surplus funds are not distributable to the members in any manner • The funds are used only for the purpose of promoting the objectives of the company

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MANAGEMENT AFTER RESTRUCTURING in 2003 Board of Directors • Consist of 10 Members • 5 elected member directors • 4 Non Member Directors are appointed by SECP • MD is ex-officio member of the Board Chairman of the Board • Elected by the Board out of the Non-Member Directors Management of the Exchange • As per Article. MD is responsible for the operational & administrative matters of the Exchange 5 .

77 50. 2007 6 655 US$ in billion US$ in billion 8.KSE – Key Facts Number of companies Listed Capital Market Capitalization KSE 100 Index Average Daily Turnover (T+3) Average Value Daily Turnover (T+3) Average Daily Turnover (Future) Average Daily Turnover (Future) As of March 21.28 174.32 391.55 11296.78 .62 70.62 Shares in million US$ in Million Shares in million US$ in Million 219.

• KSE 30 In line with the international best practices recently KSE introduced. In addition to other criteria the companies included which have minimum free-float shares of 5% of the total outstanding shares and securities traded for 75% of the total trading days. • KSE All Share Index : It is a capital-weighted index and consists of all companies. The scrip should be in the top companies. It is a capital-weighted index and consists of 100 companies representing about 88% of total market capitalization of the Exchange. ranked on the basis of liquidity i. 7 . 2006.KSE – Indices Presently three indices are maintained: • KSE 100 Index KSE 100 is widely reported and has representation of all sectors listed on the exchange. trade value of shares.e.. KSE-30 Index using the “Free-Float Market Capitalization” methodology and is live from September 1.

Trading System & Servers were Upgraded • In-house Developed Trading System • • • • In 2002.000 Trades a Day Peaks Of 1.000 Trades Sustainable For 10-15 Minutes 2000 Plus TWS 8 . Efficient & Cost-Effective Trading • By 1999 & 2000. Transparent. Implemented Home Grown TS Capability of Executing 500.000.KSE – Key Facts • Automation Started • In September 1997 with Computer Based Trading started in Selective Scrip under KATS • In May 1998. Open-Out-Cry System was Completely Abolished .For Fair.

639 71.503 84.271 134.470 124.345 9 .KSE – Key Facts Average Daily Trade 160000 140000 120000 100000 80000 60000 40000 20000 0 2001 2002 2003 2004 2005 2006 24862 40.

Daily Turnover T+3 Avg. Daily Turnover Future 400 350 300 250 200 150 100 50 0 2001 2002 2003 2004 97 15 35 54 70 171 344 309 366 262 117 83 2005 2006 10 .KSE – Key Facts Average Daily Turnover T+3 & Future Avg.

• KATS (Karachi Automated Trading System) can handle over 500. Live display boards are also available at major places like Airport. 11 . clearing and settlement system.000 trades daily • Internet-routed trading facility • Market information available on a real-time basis nationally as well as internationally via satellite • Investors and fund managers can also access information through (Display Only Terminal).KSE – A Modern Electronic Exchange • Fully automated trading. • Few T.V channels also display KSE ticker.

KSE – Key Facts • Foreign investors are at par with local investors. 100% foreign shareholding is allowed • No permission required for setting up of any industry except alcohol. arms and ammunition • Free repatriation of profits and principal • No capital gains tax on purchase and sale of listed securities up to 2008 • Dividend is taxed as a separate block of income @ 10% 12 .

Visitors / Investors • Around 4000-5000 people visit the Exchange for trading purposes 13 .

regulatory body for the securities market. Setup in pursuance of the SECP Act 1997 • The Act provides administrative authority. operational and financial autonomy in carrying out regulatory and statutory responsibilities and at the same time an accountability mechanism through its Policy Board • The Policy Board is answerable to the Parliament 14 .Legal Framework The Regulator: • Securities and Exchange Commission of Pakistan (SECP) .

KSE’s Performance is Attributable to: 15 .

Market Development and Operational Efficiency • Appropriate regulatory framework and enforcement (protection of minority shareholders) Efficient Clearing & Settlement system (NCCPL) Availability of live market data and instant disclosure of information in general Electronic settlement of deliveries (CDC) • • • 16 .

KSE’s Performance is Attributable to (cont.): Corporate Reforms • Code of Corporate Governance • Timely holding of AGMs • Responsibilities of Directors enhanced • Quality audits • Quarterly financial results • Enhanced disclosure requirements 17 .

): Capital Market Reforms & Initiatives • Implementation Of T+3 Settlement System Since September 2001 • • • Trades executed on a trading day are to be Settled on third day Else it either goes to settlement Delivery Vs Payment (DVP) Or is to be financed under CFS • Risk Management • • • • • • • • Introduction of Client Level Netting from March 5.KSE’s Performance is Attributable to (cont. 2006 UIN Registration Capital Adequacy Pre-Trade Verification Exposure Monitoring Market Surveillance & Control Circuit Breakers 18 . 2007 New VaR based Margin regime implemented from Dec-04.

Billion) 19 . Billion) Dividend Amount (Rs. Billion) Profit After Tax (Rs. Billion) Taxation (Rs.Listed Companies Performance 2001 (Rs. Billion) 1112 1169 62 29 33 41 93 36 57 57 1538 1805 227 61 166 100 326 93 233 140 Profit Before Tax (Rs. Billion) 2002 2003 2004 2005 % INC. 226 277 300 1329 138 47 91 63 375 473 109 62 425 222 606 242 Sales (Rs. Paid-up Cap.

96 11.): SECTOR-WISE DIVIDEND YIELD – 5% & above SECTORS Close End Mutual Fund Investment Banks & Sec.15 5.53 6.93 5.59 9.00 20 .29 5.KSE’s Performance is Attributable to (cont.74 6.94 6.60 7. Companies Leasing Companies Fertilizer Modarbas Power Generation Engineering Tobacco Cable & Electrical Goods Oil & Gas Exploration Oil & Gas Marketing Automobile Assembler DIVIDEND YIELD 2005 13.24 8.22 5.

the Exchange was also amongst the Top 10 Best Performing Markets of the World and the Index increased by 65% and 39% respectively. registering an increase of 112% in the KSE 100 Index. 21 .Best Performing Market of the World The Karachi Stock Exchange was declared as “The Best Performing Market of the World” in the year 2002. In years 2003 and 2004.

56 660.07 52.87) (2310.52 (5.00) (282.40) 22 .57) 3.KSE 100 VS Other World Markets As On December 31.40 194.25) (7.20 77.15) (11.32 Mumbai New Zealand Kuala Lumpur Australia NYSE Brazil Singapore BSE 30 NZSX 40 Composite AORD Dowjones BVSP Straits Time 114.01) (17.35 229.63 31.25 17.87) (49.44) (16.76) (17.77) (384.71 38.63 112.95 (107.40) (1679. 2002 EXCHANGE INDEX Increase in Points % KSE Argentina Kuwait Colombo Bangkok KSE100 MerVal KSE Index All Share Set 1428.

05) (2267.48) (36.67) (1277.32) (43.00) (184.32) (2075.94) 23 .47) % China Hong Kong Tokyo London Amsterdam Frankfurt Shanghai Comp.52) (18. Hang Seng Nikkei FTSE AEX General Dax (17. 2002 EXCHANGE INDEX Increase in Points (288.21) (18.92) (1963.KSE 100 VS Other World Markets As On December 31.63) (24.

2 13.3 40.21 2795.70 281.7 16.2 16.6 27.75 655.20 306.KSE 100 VS Other World Markets As On December 31.07 53.07 804.4 16.67 415. 2005 EXCHANGE Seoul INDEX Composite Increase in Points 483.5 23.32 1152.24 4622.1 25.7 42.0 24 .2 27.0 KSE Mumbai Tokyo Colombo Frankfurt Amsterdam Paris London Jakarta Australia Singapore New Zealand KSE 100 BSE 30 Nikkei All Share Dax AEX General CAC 40 FTSE Composite AORD Strait Times NZSX 50 3338.6 10.50 161.70 894.45 % 54.18 88.

44 6.KSE 100 VS Other World Markets As On December 31.7 4.5 1.4 -0.3 25 .65 646. 2005 EXCHANGE INDEX INCREASE IN POINTS % Bangkok Taiwan Hong Kong NYSE Kuala Lumpur China SET T.8 -8.29 29.8 6.64 -105.Weighted Hang Seng NASDAQ Composite Shanghai Composite 45.88 -7.63 408.

Weighted Increase in Points 1514.20 33.45 34.48 26 KSE KSE 100 483.60 11018 638.15 5088.29 46.66 196.KSE 100 VS Other World Markets As On December 31.66 547.88 4388.98 6818.34 32. 2006 EXCHANGE China Jakarta Mumbai J ’ Burg Argentina Hong Kong Norway Brazil Singapore Frankfurt Kaula Lumpur Taiwan INDEX Composite Composite BSE 30 All Share MerVal Hang Seng OSLO BVSP Strait Times Dax Composite T.20 21.93 27.38 % 130.06 .89 5.68 35.41 642.29 125.98 21.43 55.83 19.49 1188.45 1275.7 37.

75 Since January 01.KSE 100 VS Other World Markets As On December 31. 2007 the KSE – 100 Index increased by 1256 points (13%) 27 .99 -1.09 -41.89 3.25 -33. 2006 EXCHANGE INDEX INCREASE IN POINTS % Seoul New Zealand BangKok Composite NZSX 50 Set 55.22 -4.

00 8.00 1.000.00 6.00 2.000.000.000.00 4.000.500.500.00 10.500.00 9.00 9.00 5.00 Change of Regime Nuclear Tests Terrorists Attack in US (9/11) S&P Upgrades Pakistan’s Rating 1-Mar-05 20-May-03 18-Nov-98 23-Nov-00 28-Feb-02 17-Dec-02 31-Dec-04 10-Sep-99 28-Sep-01 18-Sep-03 20-Apr-99 30-Apr-01 28 15-Mar-06 9-Feb-00 14-Jan-98 26-Jun-98 4-Jul-00 30-Jan-04 30-Jun-05 23-Jul-02 .500.00 10.500.000.000.00 5.00 500.00 4.00 1.00 3.000.500.00 2.00 7.500.000.500.500.500.00 3.000.00 8.00 7.Crash & Surge CFS facility Implemented Indo-Pak Tension New Economic Agenda Improvement in Indo-Pak Settlement Relations Crisis Improving Economy CVT Levy 11.00 6.000.

90) 29 . Jones Index Average Declines & Subsequent Performance EVENT Exchange closes WW1 German invades France Korean War Eisenhower heart attack JFK Assassination REACTION DATES 22 July 1914 to 24 Dec 1914 9 May 1940 to 22 June 1940 23 June 1950 to 13 July 1950 23 Sep 1955 to 26 Sep 1955 21 Nov 1963 to 22 Nov 1963 % LOSS (10.Crisis. D.10) (12.50) (2.00) (6.20) (17.

60) (34.20) 30 . D.Crisis. Jones Index Average Declines & Subsequent Performance EVENT US Bombs Cambodia Arab Oil Embargo Nixon Resigns Financial panic 1987 REACTION DATES 29 Apr 1970 to 26 May 1970 16 Oct 1973 to 5 Dec 1973 7 Aug 1974 to 29 Aug 1974 2 Oct 1987 to 19 Oct 1987 % LOSS (14.50) (17.40) (18.

30) (12. D.30) 31 .Crisis. Jones Index Average Declines & Subsequent Performance EVENT Iraq invades Kuwait Asian stock market crisis WTC & Pentagon attacks REACTION DATES 2 Aug 1990 to 23 Aug 1990 7 Oct 1997 to 27 Oct 1997 11 Sep 2001 to 21 Sep 2001 % LOSS (13.40) (14.

Associated Companies 32 .

KSE investment (As of June 2006) Rs.06% 33 .81% National Clearing Company of Pakistan Limited As a part of Capital Market Development programme of Asian Development Bank (ADB) in Pakistan.) mandated to develop recommendations for a National Clearing & Settlement System (NCSS) to replace the separate and individual Clearing Houses of three Stock Exchanges i. Lahore Stock Exchange (LSE) and Islamabad Stock Exchange (ISE) by a single and centralized entity.70. The Karachi Stock Exchange (KSE).5023 Million shares) Book value Rs.10 47.Associated Companies Central Depository Company of Pakistan CDS is an electronic book entry system to record and transfer securities.40 per share of Rs.808 Million (7. It is the system in which securities do not physically change hands.e. the Capital Market Project Consultants (Arthur Anderson & Co. but are transferred electronically from one client’s account to another.30 Million (3 Million shares) Book value Rs. NCSS is an electronic clearing & settlement system which has been developed to replace the individual clearing houses of Pakistan’s three Stock Exchanges by a single entity.36.22 per share of Rs. KSE investment (As of June 2006) Rs.39.10 % of Equity 39.

5% 34 .) Limited (VIS) KSE investment (As of June 2005) Rs.2. sugar. JCR-VIS is a joint venture between Japan Credit Rating Agency.10 12.25 Million shares) Book value Rs. Ltd. KSE investment up to DEC 2006 Rs. Vital Information Services (Pvt.09 Million (3.636 Million shares) % of Equity 36.89 per share of Rs. Japan's premier rating agency and Pakistan’s. etc. wheat. rice. (JCR).5 Million (0. approved by Securities & Exchange Commission of Pakistan and State Bank of Pakistan.36% JCR VIS Company limited JCR-VIS is a Credit Rating Co. cotton yarn.10. JCR-VIS is operating as a “Full Service” rating agency providing independent rating services in Pakistan. Ltd.Investments in Associated Companies Associated Companies National Commodity Exchange Limited NCEL is a company which provide a centralized and regulated place for commodity futures to be traded in Pakistan. Gold will be the first commodity to be traded and trading of other commodities will follow in phases.42. The exchange will deal in the trading of commodities such as gold.

KSE’s International Relations 35 .

etc. – Besides this. Commission) • KSE Data Network: – KSE Index & other data is available on Reuters. Bloomberg. 36 .g. Yahoo. Euro money.KSE’s International Relations • KSE is a member of: – FEAS (Federation of European Association Stock Exchange) – SAFE (South Asia Federation Exchange) • KSE is an affiliated member of: – WFSE (World Federation of Stock Exchange) – IOSCO (International Organization of the Sec. World Stock. various foreign research firms also publishes KSE Data for e. Derivatives & Commodity Exchanges. etc. Standard & Poor's.

Future Challenges 37 .

Index Markets • Encourage members to open branch offices in all major cities of Pakistan • Cross Border Listings 38 . infrastructure including setting up of BCP & DRS • Increase in the Free Float • New listings through Privatization process • Promote OTC and TFC Markets • Development of Derivatives.Future Challenges • Strengthening the Risk management • Investor’s education • Strengthening of human resources • Demutualization of KSE • Improve I. Options.T.

61 6218.07 787% 39 .747 1.40 4471. in Billion) MKT CAP (Rs. in Billion) KSE 100 INDEX March 21.50 9556. 2007 2006 2005 2004 2003 2002 2001 Increase 533 519 470 405 313 291 235 126% 3071 2771 2.62 10040.723 951 595 296 937% 11296.KSE At a Glance LISTED CAPITAL (Rs.60 2701.42 1273.

Working For Prosperous Pakistan Thank You 40 .

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