KSE_PRESENTATION
Transcript of KSE_PRESENTATION
![Page 1: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/1.jpg)
KARACHI STOCK EXCHANGE
Presented By: TAUSEEF LADAKSR MANAGER EQUITY SALES
TAURUS SECURITIES LIMITED
![Page 2: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/2.jpg)
CONTENTS KSE Introduction
100-index
COT/ CFS
New Trends
Mkt slang
Notes of advice
![Page 3: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/3.jpg)
KSE INTRODUCTION Overview
100 - Index
Products, Trading & KATS
![Page 4: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/4.jpg)
Overview
Currently there are three stock exchanges operating in Pakistan.
The Karachi Stock Exchange (Guarantee) Limited (KSE) -1947 The Lahore Stock Exchange (LSE) - 1970 The Islamabad Stock Exchange (ISE) - August 1992
KSE is a self-regulating body governed by its Board of Directors consisting of brokers, nominees of the Securities & Exchange Commission of Pakistan (SECP) and representatives from the private sector
200 members: out of which the corporate members are 109- out of which 9 are listed companies
Most of the members are involved in brokerage business or they have huge asset management companies
![Page 5: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/5.jpg)
Overview Continued…… Biggest and most liquid exchange in Pakistan.
Declared “best performing stock market of the world for the year 2002 AND 2006”
As on march 31st 2006 663 companies Market capitalization Rs. 3,257.062 bn (USD $ 54.28 bn) Listed capital Rs. 486.489 bn (USD $ 8.11 bn)
Began with a 50 shares index- when the market grew the KSE-100 was developed which is a capital weighted index and consists of 100 companies representing about 90 percent of market capitalization of the Exchange
KSE management has recently made an index of top 30 companies of most liquid and higher free-float companies. It is believed to give a better picture of the market compared to our existing capitalization based 100-index
Proper future derivatives are also in the pipeline
![Page 6: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/6.jpg)
Overview Continued……SALIENT LISTING REQUIREMENTS
Minimum paid up capital Rs 150 mn
Publishment of ‘prospectus’ or ‘offer for sale’.
Application for shares to be accepted through bankers to the issue.
Directors can not participate in subscription of shares offered to general public.
Co. must disclose the list of successful applicants within 10 days of subscription date.
Atleast 500 applications are subscribed to.
Initial listing fee: 10% of paid up capital or 1.5 mn whichever is lower.
![Page 7: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/7.jpg)
Overview Continued……OTHER REQUIREMENTS
A Co. may be de-listed from KSE ,if:
securities are quoted below 50 per cent of face value for a continuous period of three years.
It has failed to declare dividend or bonus for five years from the date of declaration of last dividend or bonus; or commencement of business.
it has failed to hold its annual general meeting for a continuous period of
three years.
liquidation - either voluntarily or under court order.
it has failed to pay the annual listing fees for a period of 2 years of penalty.
![Page 8: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/8.jpg)
Overview Continued……
Bird's eye view-KSE
1581
291341
487
762
0
150
300
450
600
750
1950 1960 1970 1980 1990 2000
No. of listed companies
![Page 9: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/9.jpg)
Overview Continued……
Bird's Eye view-KSE
0
75000
150000
225000
300000
375000
450000
1950 1960 1970 1980 1990 2000
Listed Capital (Rs) (mn) Market Capitalization (Rs) (mn)
LISTED CAPITAL & MARKET CAPITALIZATION
![Page 10: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/10.jpg)
Overview Continued……ASSOCIATED BODIES
SECP – security and exchange commission of Pakistan: The company is the regulatory body and is responsible in framing the rules and regulations of the stock market and to keep track of activities taking place in the stock market. The company is also working as a middleman between stock exchanges and the finance ministry or govt.
CDC – central depository company: Shares of public listed entities can be traded only through the stock exchange, whether in the physical form or in the electronic form (CDC form). Previously, all shares used to trade in the physical form as in the paper form, imagine the labor required for trading millions and millions of shares.
![Page 11: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/11.jpg)
Overview Continued……
CDC
Presently 97% of the settlements are routed through CDC.
With the implementation of CDC and automated trading system, trading and settlement of securities have become transparent and efficient.
CDC is like a bank account, where investors keep shares instead of cash, where KSE members, brokers, institutional investors and the retail investors have their account.
Retail investors may have a Private Individual investor a/c or they may have a CDC Sub a/c with the Broker they do their business with.
![Page 12: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/12.jpg)
Overview Continued……NCSS
Stands for National Clearing and Settlement System (NCSS) to replace the separate and individual Clearing Houses operated by each of the three Pakistani Stock Exchanges, was incorporated on July 03, 2001.
Established to provide Clearing and Settlement services to Pakistani Capital Market with full automation of pay & collect and Broker to Broker delivery system (BTB), Institutional Delivery System (IDS), cross exchange netting and such other value added features expected in future.
CDC is a depository company like banks are for money, whereas NCSS chiefly deals with clearing, settlement, transfer of shares/securities between the three local bourses (stock exchanges) and between broker-to-broker and institutional investors.
![Page 13: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/13.jpg)
100-INDEX
What is an index? Need for an index?
What is index’ history of indexes at KSE
Compare index levels with GDP
Types of index at KSE: all share/ 100-indexs
Index’s composition recomposing
![Page 14: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/14.jpg)
100-INDEX What is an index: basically just a barometer of the overall movement of
stock price in the exchange. It is a statistical measure by which one can gauge the price performance of listed securities, just like we have CPI for measuring inflation.
Index weightage of share can be calculated by:
Market cap of that scrip (* on a particular day)-------------------------------------------------------------- X 100
Total market cap of 100-index
Subsequently you can calculate new index value by the following formula: { New market cap / old market cap} * old index value. For e.g. market cap on 27th July was 2627 bn, & of 28th July was 2607 bn, where
as the index was at 10430 levels. Put the values in the formula and you will get index’s closing on 28th July i.e. yesterday.
![Page 15: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/15.jpg)
100-INDEX
KSE never had proper index until, 1991, prior to which there was small 50-share index in the traditional time of trading.
The KSE 100 Index was introduced in November 1991 and was recomposed
in November 1994 whereas the KSE All Share Index was introduced in September 1995.
![Page 16: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/16.jpg)
100-INDEX
![Page 17: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/17.jpg)
Index and GDP
100-INDEX
![Page 18: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/18.jpg)
COMPOSITION OF 100 INDEX
OPEN ENDED mutual funds do not form a part of 100-index
Inclusion of companies in 100-index is based market capitalization of the listed companies - ‘capitalization based’ index.
Top companies (in terms of market capitalization) from each of 34 sectors of KSE are selected first.
Then the remaining 66 companies are selected as follows: All listed companies, other than the top 34 that were earlier selected are listed in a descending order such that, company with highest market capitalization is at the top, while one with the lowest market capitalization is placed at the bottom. Then top 66 companies are selected.
100-INDEX
![Page 19: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/19.jpg)
CALCULATION METHODOLOGY
The formula for calculating the KSE100 Index is : {(Sum of Shares Outstanding * Current Price)/Base Period Value}*1000
The KSE100 Index calculation at any time involves the same multiplication of share price and shares outstanding for each of the KSE100 Index component stocks. The aggregate market value is divided by the base value and multiplied by 1000 to arrive at the current index number.
Subsequently you can calculate new index value by the following formula: { New market cap / old market cap} * old index value.
Maintenance of the index over time will require an on-going semi-annual recomposition process done effective from every March and September based on sector and market capitalisation rules.
100-INDEX
![Page 20: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/20.jpg)
Products – Trading & KATSMARKET PARTCIPANTS
From investing stance: Day jobbers Short term traders Punters Investors
From Legal/portfolio stance: Members Brokers Traders Institutional investors Retail investors High net worth individuals
![Page 21: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/21.jpg)
Products – Trading & KATSCOSTS
Tax on transactions CVT Withholding tax
CDC charges
Commission
Zakat deduction
Tax on dividends
Capital gain tax – exempt till June 2008
Stamp duty
![Page 22: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/22.jpg)
Products – Trading & KATSPRODUCTS
Bonds
Derivatives Equity Futures Equity Provisional
Equity Ready T+3 Ready T+2 Badla/CFS Physical Odd lot Spot T +1
![Page 23: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/23.jpg)
Products – Trading & KATSBONDS
Bond market is relatively small at KSE. As of March 2006, it only contributed to 23% of total market capitalization.
Following are key features:
Types of bonds are traded at KSE, Fixed Income for e.g. WAPDA, Corporate Bonds for e.g. TFC’s and Government Bonds
Traded and settled both in physical and in scripless form.
TFC’s are mostly traded over-the-counter through market makers. Price quoted is a clean price. Since trading is mostly OTC, settlement terms are all negotiable although the settlement cycle for TFC’s is generally on a T+1 basis.
![Page 24: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/24.jpg)
Products – Trading & KATSEQUITY DERIVATIVES - FUTURES
Future Forward
In International Markets: Both futures and forwards are hedging instruments, better known as derivatives. One thing that is common between them is that they both ‘Are contractual agreement, generally made on the trading floor of a future exchange, to buy or sell a particular commodity or financial instrument at a pre-determined price on a certain future date’.
However, they certain differences, which are mentioned here under.
Once they are made, they are openly traded on stock exchanges.
Forward contracts are usually tailor made contracts, between two parties, which are not traded after their initiation.
Since they are traded, they are marked to market on a daily/weekly basis, and therefore gains/losses are noted accordingly.
They are not traded and they are not marked to market, and no profit/losses settled between initial date and settlement date. Default risk remains there.
Due to daily/weekly adjustment of price changes are recorded as profit/losses, its default risk decreases.
Absence of this profit/loss adjustment, the default risk increases, as if the rates change drastically, depending on the case, either the buyer or the seller does default out of the contract.
There are no requirements of physical delivery of the underlying asset, at the future date transaction are settled by simply settling the differences
The contracts are physically settled, on the contract date.
![Page 25: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/25.jpg)
Products – Trading & KATSEQUITY DERIVATIVES - FUTURES
Pakistani market: In Pakistani market, we have a rather unique financial product, which is blend of both these Future and Forward. Following are its features;
It’s a contractual agreement, made between two parties to buy/sell a particular share at a pre-determined price on a certain specified future date. (Common feature of Future/forward)
These contracts are traded openly on the Exchange. (Future Feature)
Weekly profit/losses are settled, between initial price and weekend price. (Future Feature)
These contracts are settled through physically shares on the settlement date. (Forward Feature)
![Page 26: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/26.jpg)
Products – Trading & KATSEQUITY DERIVATIVES - FUTURES
KSE offers equity futures in selected securities. Presently, 30 blue chip companies are being traded on the futures counter.
The number of companies to be traded on the Futures Counter is determined by the Board every six months with the prior approval of the SECP. The KSE Board with the prior approval of the SECP determines the selection criteria.
When a buyer/seller accepts a bid/offer of a contract (quantity of shares) the contract as per format attached to these regulations shall be deemed to have taken place between buyer/seller.
Futures contracts are held in marketable lots of 500 shares.
Non-resident investors have just recently been allowed to trade in futures.
![Page 27: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/27.jpg)
EQUITY DERIVATIVES – PROVISIONAL
Key Features Include:
Cos. under the process of 1st time subscription and listing, subject to a min subscription of Rs 150 mn.
It is just like local futures counters, just that this provisional trading ceases when the company is formally listed on the trading board. And its settlement is done on the third day preceding the ceasing date. From the date of formal listing, trading in the shares of the company is shifted to the Ready Board Counter under T+3 Settlement system.
Provisional trading is also ceased if the shares of the company are left under subscribed.
Products – Trading & KATS
![Page 28: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/28.jpg)
EQUITY
Ready T +3
Transactions executed on the Ready Board Counter are settled according to the T+3 settlement cycle.
Transactions are settled through the clearinghouse that nets out the purchases and sales and the financial obligations thereon of each member / firm for the notified clearing period and issues instructions for deliveries of netted outstanding business .
Products – Trading & KATS
![Page 29: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/29.jpg)
EQUITY
Spot T +1
Spot transactions imply delivery upon payment. Normally in spottransactions the trade is settled within 24 hours
Prior to book closure, securities are placed on spot settlement on a T+1 basis. Securities are placed on spot in the preceding clearing from the clearing during which the book closure commences. Securities can therefore be traded on spot for about 5-7 days prior to book closure.
Products – Trading & KATS
![Page 30: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/30.jpg)
EQUITY
Physical
Trading at physical counter involves trading only in the physical/paper-form of shares, currently only less than 5 % of all shares are traded on this
counter.
Securities are delivered or received at the custodian banks’ counters. Deliveries of physical shares are generally received by 10:00.
Odd lot
Odd lot is an amount of a security that is less than the normal unit of trading for that particular security.
Products – Trading & KATS
![Page 31: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/31.jpg)
TRADITIONAL TRADING BEFORE KATS
No unison rates.
No transparency.
Physical shares – no electronic shares.
Index was calculated at the last registered rate at the “Batla” counter.
Last rate was treated as the rate of the day.
KATS came in 1998.
Products – Trading & KATS
![Page 32: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/32.jpg)
Products – Trading & KATS
![Page 33: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/33.jpg)
UNDERSTANDING KATS
Close Rate: The price of the stock at the end of previous day’s trading session.
Current Rate: Current market price of the stock, if the trading session is in progress. However, if it is not in progress then it shows the closing rates of today’s session, whereas the ‘close rate’ will reflect closing price of previous session.
Products – Trading & KATS
![Page 34: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/34.jpg)
UNDERSTANDING KATS
Bid Qty: Quantity of shares for which buyer is available on the market, at a given bid price.
Bid Price: Price at which buyer is available to purchase a particular quantity of shares.
The price and quantity combination that is displayed on KATS is that of the highest bid price. For instance let us assume that there are only three bids placed at KATS; 5000 shares for Rs 50 6000 shares for Rs 49.50 4000 shares for Rs 50.50
Since, volume/price combination (c) has the highest bid price of Rs 50.50, it will be reflected on KATS. Once combination (c) has been executed then the combination of second highest bid-price will be reflected on KATS, i.e. combination (a). And so and so forth, it goes on in a matter of fraction of seconds. If, following the execution of combination (c) another bid is placed of 1000 shares at Rs 50.20 then, instead of (a) this new bid will be reflecting on KATS.
Products – Trading & KATS
![Page 35: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/35.jpg)
UNDERSTANDING KATS
Offer/Ask Qty: Quantity of shares for which seller is available in the market at a given offer price.
Offer/Ask Price: Price at which seller is available in the market for a given quantity of shares.
The mechanism of offer quantity/price is exactly the opposite of bid price/quantity…. that is to say the price and quantity combination for offer that is displayed on KATS is that of the lowest offer price. For instance let us assume that there are only three offers placed at KATS; 5000 shares for Rs 50 6000 shares for Rs 49.50 4000 shares for Rs 50.50
Since, volume/price combination (b) has the lowest offer price of Rs 49.50, it will be reflected on KATS. Once combination (b) has been executed then the combination of second lowest bid-price will be reflected on KATS, i.e. combination (a). And so and so forth, it goes on in a matter of fraction of seconds. If, following the execution of combination (b) another offer is placed of 1000 shares at Rs 49.80 then, instead of (a) this new offer will be reflecting on KATS.
Products – Trading & KATS
![Page 36: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/36.jpg)
UNDERSTANDING KATS
Total Volume: Total Quantity of shares traded during the day.
High Rate: The maximum price at which the share is traded during the day. It may be higher or lower than the last closing rate.
Low Rate: The minimum price at which the share is traded during the day. It may also be higher or lower than the last closing rate.
Difference: The change in price between the current price and the last closing rate.
Products – Trading & KATS
![Page 37: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/37.jpg)
COT/CFS-CFS Mkt II Cot demystified
COT/CFS
![Page 38: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/38.jpg)
COT/CFSUNDERSTANDING COT/BADLA
KEY FEATURES:
3 party involvement: Purchaser, broker, financer.
Broker’s market.
Financed at closing rate, and not purchasing rate.
Interest is charged in paisas.
![Page 39: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/39.jpg)
COT/CFSCOT CFS
Since traditional times till phased out in august 2005
Implemented in august 2005 working to date, by- passing the proposed phase out date of February 2006
No separate counter for COT Separate counter for CFS
Financing available for 10 days max, if unreleased
Financing available for 30 days max, then refinance if unreleased.
No cap of maximum total amount of investment for the market.
Maximum investment Rs 55 bn
Officially Badla was only available in top volume 30 scrips in past 3 years before its phase out. Prior to that all companies could be financed through Badla, some times in-house Badla.
Was only available in top 14 scrips, recently changed to Future eligible 30 scrips
Finding of financer after the market (as discussed earlier)
Finding it within market hours at a real time basis (though actual system for really time was only placed sometime in January 2006)
![Page 40: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/40.jpg)
NEW TRENDS CFS Mkt II
Demutualization
Investor and Brokers education
Online brokerage services
IPO road shows
Other indices (30-index)
CSF 30 – 60 – 90 days futures
INDEX TRADING
CSF (CSF SETTLED FUTURE)
![Page 41: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/41.jpg)
CFS/CFS Mkt II CFS CFS Mkt II
Implemented in august 2005 working to date, by- passing the proposed phase out date of February 2006
Yet to be implemented, discussions between brokers, banks, SECP, and KSE under process
No such commitment Min commitment of Rs 200 mn required from CFS financers i.e. banks, DFI’s, Financial institutions
Financing available for 30 days max, then refinance if unreleased.
Financing pool proposed to be atleast for
90 days Maximum investment Rs 25 bn No cap
Max finance rate 18% No such cap
Finding it within market hours at a real time basis (though actual system for really time was only placed sometime in January 2006)
Finding it within market hours at a real time basis, however it may even extend upto 45 minutes after the market.
![Page 42: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/42.jpg)
DEMUTUALIZATION…..Much controversialSECP’S TWO MODELS
Fully Integrated Demutualized Exchange (FIDE)
New National Exchange
According to the FIDE model, the three stock exchanges should merge into a single FIDE. The Central Depository Company of Pakistan Limited (CDC), National Clearing Company of Pakistan Private Limited (NCC) and the National Commodity Exchange Limited (NCEL) shall become subsidiaries of the FIDE.
New National Security Exchange (NewSE), sponsored by financial institutions, shall start its operation as a National Exchange.
![Page 43: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/43.jpg)
DEMUTUALIZATION…..Much controversial
POINTS: FOR
Lower Monetary/Managerial/Time Cost For Listed Companies.
Lower Monetary/Managerial/Time Cost For Associated bodies (CDC, NCSS).
Improved price discovery/ Trading Volume & Broader Investor base.
Exchange to become a vocal body for the listed companies.
![Page 44: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/44.jpg)
DEMUTUALIZATION…..Much controversial
POINTS: AGAINST – Many conflicting interests in
Listing requirements/corporate governance .
Facilitation among market participants/intermediaries.
Market surveillance/settlement risk management.
Abuse of power.
![Page 45: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/45.jpg)
KSE 30-Index …..a new beginning
KEY FEATURES
Free Float Based index. (Free float shares = outstanding shares – [shares held by government, sponsors, associated undertakings] – physical shares.
Selection criteria for listed companies include:
Co. should have financial results for atleast 1-full year. Should be listed atleast 2-months Free float be atleast 5% of paid-up capital (exception given to OGDCL) Both types mutual funds excluded Co. has NOT been in default for atleast six months before the selection period.
![Page 46: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/46.jpg)
INCLUSION METHOD
Inclusion of companies in 30-index is based on free float market capitalization & average traded value, where 50% weightage is given both parameters.
30-companies are to be selected on the basis of there ranks. These ranks are calculated in the following manner
First, free-float market capitalization will be calculated of each company.
Second, average daily traded value of review period will be calculated of each company – traded value means “ No. of shares traded during the day, multiplied by price of each transaction ”.
Now, a factor (rank) would be arrived at by giving 50% weightage to both these values.
Finally, top 30 companies with highest factors would be selected for the index.
KSE 30-Index …..a new beginning
![Page 47: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/47.jpg)
KSE 30-Index …..a new beginning
100-INDEX 30-INDEX
Introduced in 1991- Restructured in 1994 To be introduced from 1st September 2006
Base divisor = 1000 Base divisor = 10000
Selection base – market cap. of outstanding shares.
Selection base – market cap. of free float shares and liquidity (ADTV)
Daily movement of index on basis of market cap of outstanding shares.
Daily movement of index on basis of market cap of free float shares.
Recomposed biannually: March & August Recomposed biannually: June & December
Not adjusted for dividend Adjusted for dividend
![Page 48: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/48.jpg)
MARKET SLANG Taizi (bullish)
Mandi (bearish)
Gola (day trading). Seedha gola/ ulta gola
Tukra (odd lot)
Udhar pay lay lo = Badla
Bhata (short selling)
Lao/Leyh (to buy/to sell) ‘lao mal OGDC’ also means very bullish on a OGDC
![Page 49: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/49.jpg)
Utha lia/ day dia (bought/sold)
Acha lagta hay (its means a view on the market/scrip, Acha = bullish)
Nazar aana/ dekhta hay (kia Nazar aata hay/dekhta hay: means a what’s your view on the market/scrip,)
Bhar bhar kay lena (market order)
Dhobi ghat (wash trade).
Waada (Future) OGDC waaday pay lao lo i.e. buy OGDC futures
Anday bachay khaay – received bonus, dividend
Market Badla vs. ghuru Badla
![Page 50: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/50.jpg)
Don’t be overwhelmed by greed/ fear
Cut losses short
Don’t work on tips, it work solid in the short run or few times, but not all the times
Start from long term investing to long term trading to
short term or day trading
NOTES OF ADVICE
![Page 51: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/51.jpg)
Do your analysis, and understand market, industry and scrip dynamics
Working on these might not enable you to make quick bucks but surely with adequate efforts and consistency you will surely benefit in the long run
![Page 52: KSE_PRESENTATION](https://reader033.fdocuments.us/reader033/viewer/2022051819/551e9b8549795987458b4567/html5/thumbnails/52.jpg)
Any thoughts ?
Thank You!