Stock Exchange

Introduction, Branches and example

Example of two companies listed in SE &Trend of share
price

Preha Anum Baloch

 Stock Exchange
“Stock exchange or securities exchange is a corporation or mutual organization which provides
trading facilities for stock brokers and traders, to trade stocks and other securities.”

 Stock exchange also provide facilities for the issue and redemption of securities and
other financial instruments and capital events including the payment of income and
dividends.
 The securities traded on a stock exchange include:
 Shares issued by companies
 Unit trusts
 Bonds
 Other pooled investment products
 To trade any security on a certain stock exchange, it has to be listed there.
 Trade on exchange is only by members.
 The initial offering of stocks and bonds to investors is by definition done in the primary
market and subsequent trading is done in the secondary market.
 Stock exchange is most important component of stock market.
 Supply and demand in stock markets is driven by various factors
 There is usually no compulsion to stock via the stock exchange itself, nor must stock be
subsequently traded on the exchange. Such trading is said to be off exchange or over
the counter.
 Stock exchanges are part of global market for securities.

First Stock Exchange:

In the 11th century France the countries de change were concerned with managing and
regulating the debts of agricultural communities on behalf of the banks. As these men also
traded in debts, they could be called as first brokers.
Role of Stock Exchange:

 Raising capital for business

 Mobilizing savings for investment
 Facilitating company growth
 Redistribution of wealth
 Corporate governance
 Creating investment opportunities for small investors
 Government capital raising for development projects
 Barometer of the economy

Stock Exchanges in Pakistan

In Pakistan there are three stock exchanges working in big cities;

1. Karachi Stock Exchane (KSE)

2. Lahore Stock Exchange (LSE)
3. Islamabad Stock Exchange (ISE)

Karachi Stock Exchange (KSE)

The Karachi Stock Exchange is the located in Karachi, Sindh Pakistan. Founded in 1947, it is
Pakistan’s largest and oldest stock exchange, with many Pakistani as well as overseas listings. Its
current premises are situated on Stock Exchange Road, in the heart of Karachi’s Business
District.

 It is the most liquid stock exchange

 Declared as the “Best Performing Stock Market of the World for the year 2002”.
 Newspaper USA Today, termed KSE as one of the best performing business bourses in
the world.
History of KSE:

 Launched in late 1991 with a base of 1,000 points.

 By 2001 it had grown to 1,770 points.
 It then reached a peak of 12,285 points in 2007.

Growth and Progress:

Today KSE has emerged as the key institution of the capital formation in Pakistan with;

 Listed companies 653, securities listed on the exchange 692: ordinary shares 653,
Preference share 14 and debt securities (TFC’s) 25.
 Active members are 163.
 Fully automated trading system with T+2 settlement cycle.
 National Clearing and Settlement System in place.

Membership:

 Membership at KSE is limited and fixed at 200 and prospective members have to
purchase a seat from existing members.
 Since 1990, membership has been opened to corporate entities.
 The membership of KSE is also available to foreign entities.

KSE 100 Index:

KSE-100 Index is a stock index acting as a benchmark to compare prices on the KSE over a
period of time.

Lahore Stock Exchange (LSE)

Lahore stock exchange (Guarantee) limited is Pakistan second largest stock exchange after KSE.
it is located in Lahore, Punjab Pakistan.
  LSE was established in October 1970.
 It is the second largest stock exchange in the country.
 It has a market share of around 12-16% in terms of daily traded volumes.
 LSE has 519 companies, spanning 37 sectors of the economy, that are listed on the
exchange.
 LSE has 152 members of whom 81 are corporate and 54 are individual members.

History of LSE:

 Came into existence in October 1970, under the securities and exchange ordinance,
1969.
 It initially had 83 members and was housed in a rented building in the crowded area
of Bank Square in Lahore.
 Now number of listed companies has increased to 519.

Growth and Progress:

 Currently 50% of its transactions are done on internet.

 LSE has opened its branches in the industrial cities of Faisalabad and Sialkot for
trading.
 It offered internet based trading to its members in 2001.
 LSE made direct investment in Pakistan Credit Rating Agency (Pvt) Ltd.
 It enables brokers to reach out to the untapped retail markets.

Islamabad Stock Exchange (ISE)

The ISE has set the higher standards of operational efficiency and is commited to support a
climate of confidence and optimism.

 ISE was incorporated on 25th October, 1989.

 At present there are 118 members of ISE.
 Members are well educated and progressive minded.
  At present there are 248 companies listed at ISE.

Growth and Progress:

 ISE incepted automated trading system (ISECTS)

 Trade volume is being multiplies day by day.
 Average daily turnover has now crossed the figure of one million shares.
 The pace of listing has remained slow as the economy of the country is under
consistent pressure.
 Abbot Laboratories
Abbott Laboratories (Pakistan) Limited (Abbott Pakistan) is a health care company. It is a
subsidiary of Abbott Laboratories, the US. Abbott Pakistan is engaged in developing and
manufacturing pharmaceutical products. The company has two manufacturing facilities located
at Landhi and Korangi in Karachi. Abbott Pakistan is involved in the field of Pain Management,
Anesthesia, Medical Nutrition and Anti-Infectives. The company operates through four
divisions, namely, Abbott Pharma, Abbott Nutrition, Abbott Diagnostics, and Abbott Diabetes
Care. In addition, the company also has its operations across the worldwide. Abbott Pakistan is
headquartered in Karachi, Pakistan.

Share Price Trend of Abbott Laboratories

Date Open High Low Close Volume

12 Apr 2011 (Tue) 50.46 50.46 45.47 45.47 150
11 Apr 2011 (Mon) 50.46 50.46 45.47 45.47 150
8 Apr 2011 (Fri) 50.46 50.46 45.47 45.47 150
7 Apr 2011 (Thu) 50.50 50.50 45.47 45.47 1
6 Apr 2011 (Wed) 50.50 50.50 45.47 45.47 1
5 Apr 2011 (Tue) 49.10 49.10 45.47 45.47 335
4 Apr 2011 (Mon) 49.10 49.10 45.47 45.47 335
1 Apr 2011 (Fri) 49.10 49.10 45.47 45.47 335
31 Mar 2011 (Thu) 48.76 48.76 45.47 45.47 33
30 Mar 2011 (Wed) 48.76 48.76 45.47 45.47 33
29 Mar 2011 (Tue) 48.27 48.27 45.47 45.47 169
28 Mar 2011 (Mon) 48.27 48.27 45.47 45.47 169
25 Mar 2011 (Fri) 48.27 48.27 45.47 45.47 169
24 Mar 2011 (Thu) 48.27 48.27 45.47 45.47 169
23 Mar 2011 (Wed) 48.27 48.27 45.47 45.47 169
22 Mar 2011 (Tue) 48.27 48.27 45.47 45.47 169
21 Mar 2011 (Mon) 48.12 48.12 45.47 45.47 100
18 Mar 2011 (Fri) 48.12 48.12 45.47 45.47 100
17 Mar 2011 (Thu) 47.43 47.43 45.47 45.47 60
16 Mar 2011 (Wed) 47.43 47.43 45.47 45.47 60
 15 Mar 2011 (Tue) 48.02 48.02 45.47 45.47 60
14 Mar 2011 (Mon) 48.02 48.02 45.47 45.47 60

Future Performance of Abbott Laboratories

In the long run, the price and earnings of a company are correlated. If the two metrics are
diverging, there should be a good reason why. Divergence without reason can signal danger or
opportunity.

Revenues show how much the company is selling to customers, while margins tell how much of
that revenue becomes earnings that can be given you as a shareholder. Revenue growth often
persists over time, but margins are much more fickle - they generally shrink, which is painful to
shareholders. Watch them closely and think hard about what can affect them in the long run.

Lucky Cement Ltd.

Lucky Cement Limited has been sponsored by Yunus Brothers Group (YB Group) which
is one of the largest business groups of the Country based in Karachi and has grown up
remarkably over the last 50 years. The YB Group is engaged in diversified manufacturing
activities including Textile, Spinning, Weaving, Processing, Finishing, Stitching and
Power Generation. The Group consists of a number of industrial establishments other
then Lucky Cement Limited, they include:
1.Lucky Textile Mills
2.Fazal Textile Mills Limited
3.Gadoon Textile Mills Limited
4.Lucky Energy (Private) Limited
5.Yunus Textile Mills

Share Price Trend of Lucky Cement Ltd.

Date Open High Low Close Volume

12 Apr 2011 (Tue) 1.70 2.33 1.70 1.70 0
11 Apr 2011 (Mon) 1.70 2.33 1.70 1.70 0
8 Apr 2011 (Fri) 1.70 2.33 1.70 1.70 0
7 Apr 2011 (Thu) 1.70 2.33 1.70 1.70 0
 6 Apr 2011 (Wed) 1.70 2.33 1.70 1.70 0
5 Apr 2011 (Tue) 1.70 2.33 1.70 1.70 0
4 Apr 2011 (Mon) 1.70 2.33 1.70 1.70 0
1 Apr 2011 (Fri) 1.70 2.33 1.70 1.70 0
31 Mar 2011 (Thu) 1.70 2.33 1.70 1.70 0
30 Mar 2011 (Wed) 1.70 2.33 1.70 1.70 0
29 Mar 2011 (Tue) 1.70 2.33 1.70 1.70 0
28 Mar 2011 (Mon) 1.70 2.33 1.70 1.70 0
25 Mar 2011 (Fri) 1.70 2.33 1.70 1.70 0
24 Mar 2011 (Thu) 1.70 2.33 1.70 1.70 0
23 Mar 2011 (Wed) 1.70 2.33 1.70 1.70 0
22 Mar 2011 (Tue) 1.70 2.33 1.70 1.70 0
21 Mar 2011 (Mon) 1.70 2.33 1.70 1.70 0
18 Mar 2011 (Fri) 1.70 2.33 1.70 1.70 0
17 Mar 2011 (Thu) 1.70 2.33 1.70 1.70 0
16 Mar 2011 (Wed) 1.70 2.33 1.70 1.70 0
15 Mar 2011 (Tue) 1.70 1.70 1.70 1.70 1,800
14 Mar 2011 (Mon) 1.70 1.70 1.70 1.70 0

Future Performance of Lucky Cement

This shows that the company is on a constant rise Lucky Cement has a very strong
leadership and management. This can be seen by their recent success and how they have
managed to double their share of the local market in just a short while.
Lucky Cement also plans to increase their operations both locally (Installation of first
bulk loading facility in Pakistan, Up gradation of movable bulk handling facility to
continue and, Construction of silos at the port) and exploring new markets like India,
South Africa, Nepal etc.
Looking at all these details one can only assume that Lucky Cement is in fine Shape both
financially and Management wise and the future indeed looks very bright for Lucky
Cement.

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