About Karachi Stock Exchange
Karachi Stock Exchange (Guarantee) Limited (KSE), currently the biggest and most liquid
stock exchange in Pakistan, was established on September 18, 1947. It was incorporated
on March 10, 1949. Only five companies were initially listed with a total paid-up capital
of 37 million rupees. The first index introduced in KSE was based on fifty companies and
was called KSE 50 index. Trading used to be carried out on open out-cry system.
With growth in number of listed companies and trading activities, a dire need for a true representative index and computerization of trading activities was felt. As a result KSE 100 Index was introduced on November 1, 1991. Computerized trading system called Karachi Automated Trading System (KATS) was introduced in 2002 with a capacity of 1.0 million trades per day and the ability to provide connectivity to an unlimited number of users.
To reconfirm the KSE-100 and to provide the basis of index trading in future, an all share index was introduced in 1995 which became operational on September 18, 1995. To address the needs of investor community two other indexes were also introduced later on called KSE 30 Index and KMI 30 Index.
Karachi Stock Exchange is located on Stock Exchange Road, in the heart of business district of Karachi. The premises is known as Stock Exchange Building.
Listing in Karachi Stock Exchange
As on June 15th, 2013 there are 584 companies listed in KSE and the total market capitalization is Rs. 4,836.362 billions. The listing is done on the basis of strict rules and regulations laid out by Securities Exchange Commission of Pakistan (SECP) & Karachi Stock Exchange (Guarantee) Limited. All the listed companies are categorized in various main business sectors. There are total 36 sectors listed on Karachi Stock Exchange. Out of these, 32 sectors contribute towards the market capitalization and all the listed companies (excluding their future contracts) are divided among these. Rest of the 4 sectors are allocated for indexes, futures bonds etc.These non market capitalization contributing sectors are as follows;
- Future Contracts
- Non Equity Inv Instruments
- Stock Index Future Contracts
Detailed information about these indexes can be obtained from KSE's web site http://www.kse.com.pk
KSE 100 Index:
The KSE-100 Index was introduced in November 1991 with base value of 1,000 points. The Index comprises of 100 companies selected on the basis of sector representation and highest market capitalization, which captures over 90% of the total market capitalization of the companies listed on the Exchange. Out of the above mentioned 36 Sectors, 32 companies are selected i.e. one company from each sector (excluding the non market capitalization contributing sectors) on the basis of the largest market capitalization and the remaining 68 companies are selected on the basis of largest market capitalization in descending order. This is a total return index i.e. dividend, bonus and rights are adjusted.
KSE ALL Index:
In 1995, the need was felt for an all share index to reconfirm the KSE-100 and also to provide the basis of index trading in future. By August 29, 1995 the KSE-All Share Index was constructed which became operative on September 18, 1995.
Similar to KSE 100 Index, KSE ALL Index is also calculated using market capitalization method.
KSE 30 Index:
The primary objective of the KSE-30 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-30 Index is designed to provide investors with a sense of how large companies' scrips of the Pakistan’s equity market are performing. Thus, the KSE-30 Index will be similar to other indicators that track various sectors of country’s economic activity such as the gross national product, consumer price index, etc.
KSE-30 Index is calculated using the “Free-Float Capitalization” methodology. In accordance with methodology, the level of index at any point of time, reflects the free-float market value of 30 companies in relation to the base period. The free-float methodology refers to an index construction methodology that takes into account only the market capitalization of free-float shares of a company for the purpose of index calculation.
KMI 30 Index:
Introduced in Spetember 2008, the objective of KSE-Meezan Index (KMI) is to serve as a gauge for measuring the performance of Shariah compliant equity investments. Besides tracking performance of Shariah compliant equities, its construction will increase investor trust and enhance their participation.
KSE-Meezan Index is also calculated using the “Free-Float Capitalization”.
Other Stock Exchanges in Pakistan:
Lahore Stock Exchange (Guarantee) Limited (LSE):
Lahore Stock Exchange is Pakistan's second largest stock exchange after the Karachi Stock Exchange (KSE).
It came into existence in October 1970, under the Securities and Exchange Ordinance of 1969 by the Government of Pakistan in response to the needs of the provincial metropolis of the province of Punjab. It initially had 83 members and was housed in a rented building in the crowded Bank Square area of Lahore. The LSE was the first stock exchange in Pakistan to use the internet and currently 50% of its transactions are carried out via internet.
The Lahore Stock Exchange has opened branches in the industrial cities of Faisalabad and Sialkot for trading. The Sialkot branch is referred to as the "Sialkot Trading Floor".
Islamabad Stock Exchange (Guarantee) Limited (ISE):
Islamabad Stock Exchange is the youngest of the three stock exchanges of Pakistan. It is located in Islamabad, the capital city of Pakistan. The Islamabad Stock Exchange (ISE) was incorporated as a guarantee limited Company on October 25, 1989 in Islamabad Capital territory of Pakistan with the main object of setting up of a trading and settlement infrastructure, information system, skilled resources, accessibility and a fair and orderly market place that ranks with the best in the world. The purpose for establishment of the stock exchange in Islamabad was to cater to the needs of less developed areas of the northern part of Pakistan. It was licensed as a stock exchange on January 7, 1992.
The ISE Towers comprise twin 22 storey towers with unique and inspiring amenities, offer futuristically and aesthetically designed offices with panoramic views, is constructed over a piece of land measuring 5600 square yards in the heart of Islamabad at Jinnah Avenue (Blue Area) which is the hub of all business and commercial activities in Islamabad. The building is facing 400 feet wide Jinnah Avenue on one side and has another entrance from 100 feet wide Nazim-ud-din Road.