Stock Market

Market

vs.

Stock Market

Major Participants of market

Local Investors

Foreign Investors

Mutual Funds

Institutions

Banks

Stock Market deal In

Shares

Bonds

Stock Markets in PakistanKarachi Stock Exchange

KSE 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 37million rupees.

The first index introduced in KSE was based on fifty companies and was called KSE50 index.

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.

Continued

Lahore stock Exchange

Lahore Stock Exchange (Guarantee) Limited came into existence inOctober 1970, under the Securities and Exchange Ordinance,1969, of the Government of Pakistan .

The number of members has increased from 83 to 150 over aperiod of 25 years. Inadequacy of space, crowded area and severelimitations of communications cramped its growth.

Six hundred fourteen companies are listed at the LSE and moreare expected to list during the current year, market capitalizationof the institution amounts to about Rs. 300 billion.

Islamabad Stock

Exchange

The Islamabad Stock

Exchange (ISE) was

incorporated as a

limited Company on

25th October, 1989 in

Islamabad Capital

territory of Pakistan.

Need of Stock Market

Liquidity

To evaluate value of new stock

VisionTo be the pre-eminent stock market in Pakistan

and achieve market recognition both in terms of

quality and delivery of our services.

Mission

To create value for our investor and listed companies

through dynamic market operation, fair and

transparent business practices and effective

management.

Board of Directors1. Mr. Muhammad Rashid Zahir Chairman

2. Mian Ayyaz Afzal Managing Director

3. Mr. Zahid Latif Khan Member Director

4. Mian Humayun Parvez Member Director

5. Mr. Asif Saeed Malik Member Director

6. Mr. Mohammad Masud Ch. Member Director

7. Mr. Rashid Akhtar Chughtai SECP's Nominee Director

8. Mr. Umar Hayat Khan SECP's Nominee Director

9. Mr. Hussain Ahmed Ozgen SECP's Nominee Director

10. Malik Qamar Afzal SECP's Nominee Director

11. Chaudhry Mujeeb Ullah SECP's Nominee Director

Companies listed under sectors

Market Performance

Important market terms

Market Maker

Commission Broker

Agents

Bullish Bearish

Moving average chart show bullish and bearish

Proxy From

Term cont’d

T + 1 transactionNormally in this type of transaction the trade

is settled with in 24 hours

T + 3 TransactionIn T+3 settlement system the purchase and

sale of security is netted and the balance is

settled on third day following the day of

trade

Terms cont’d

Stock Quote :Current price

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 number of shares issued by company

Float :Shares owned by out side investors

Presenter Message

Muslims need to stop trying to meet

society's expectations and start

meeting Allah's expectations.

Account opening

For company Forms Issued By KSE Spice men Signature Card For Company Basic Information Account with Broker Optional P&L Margin Disclosure Statement Client Relationship from Power or AttorneyFor individuals Sub Account Opening Form Bank verification

Spice men Signature Card

BASIC

INFORMATION

For Company

CLIENT

RELATIONSHIP

FORM

POWER

OF

ATTORNY

SUB

ACCOUNT

OPENING

BANK

VERIFICATION

Market TermsBasis PointOne-hundredth of a percentage point.For example, the difference between 5.25% and 5.50% is 25 basis points.Buy-InIf a broker fails to deliver securities sold to another broker on the settlementdate, the receiving broker may buy the securities at the current market priceof the stock and charge the delivering broker the cost difference of such apurchase.LotMeans bundle of sharesCum DividendThe owner of shares purchased cum dividend is entitled to an upcomingalready-declared dividend. The opposite of this is ex dividend.Cyclical StockA stock of a company in an industry sector that is particularly sensitive to swingsin economic conditions.

Presenter Message

Just lifting your hands and praying

sincerely for a few minutes makes life's problems so much lighter.

100 Index

OBJECTIVE & DESCRIPTION

The primary objective of the KSE100 index is to have a benchmark by whichthe stock price performance can be compared to over a period of time.

The KSE 100 is designed to provide investors with a sense of how thePakistan equity market is performing.

The KSE100 is similar to other indicators that track various sector of thePakistan economic activities.

Method use for Calculation

Price weighted Index

Value weighted Index

Un weighted index

COMPOSITION OF THE KSE100 INDEXThe KSE100 contains a representative sample of common stock

that trade on the Karachi Stock Exchange.

1. Open-end Mutual Funds 19. Oil & Gas Marketing Companies

2. Close-end Mutual Funds 20. Oil & Gas Exploration Companies

3. Modarabas 21. Engineering

4. Leasing Companies 22. Automobile Assembler

5. Investment Banks/Investment Cos./Securities Cos. 23. Automobile Parts & Accessories

6. Commercial Banks 24. Cable & Electrical Goods

7. Insurance 25. Transport

8. Textile Spinning 26. Technology & Communication

9. Textile Weaving 27. &nbspFertilizer

10. Textile Composite 28. Pharmaceuticals

11. Woollen 29. Chemical

12. Synthetic & Rayon 30. Paper & Board

13. Jute 31. Vanaspati & Allied Industries

14. Sugar & Allied Industries 32. Leather & Tanneries

15. Cement 33. Food & Personal Care Products

16. Tobacco 34. Glass & Ceramics

17. Refinery 35. Miscellaneous

18. Power Generation & Distribution

STOCK SELECTION RULESThe selection criteria for stock inclusion in the recomposedKSE100 Index are:

Rule # 1: Largest market capitalization in each of the 34Karachi Stock Exchange sectors excluding open-end MutualFund Sector.Rule # 2: The remaining index places (in this case 66) aretaken up by the largest market capitalization companies indescending order.

CALCULATION METHODOLOGY

The KSE100 index is a basket of price and the number of shares

outstanding. The value of the basket is regularly compared to a

starting point or a base period.

CALCULATING THE KSE100

Step 1: The Base Period Day 1 TABLE 1

Step 2: Index Value as on Day 2 TABLE 2

Market TermIndexA statistical measure of the state of the stock market based on the performance of stocks.Examples are the S&P500 index Kse100 Index

Inside InformationNon-public information panitraining to the business affairs of a corporation that could affect thecompany's share price should the information be made to public

International Securities Identification Number (ISIN)The international standard that is used to uniquely identify securities. It consists of a two-characteralphabetic country code specified in ISO 6166, followed by a nine-character alphanumeric securityidentifier (assigned by a national security numbering agency), and then an ISIN check-digit.

Seed StockThe shares or stock sold by a company to provide start-up capital by carrying out an initial publicoffering (IPO).

Symbol ChangeA change in a listed issuer's stock symbol, which may be required by the Exchange in the context of an issuer'sreorganization or may be made at the request of the issuer. A requested symbol is available for use of itIs appropriate for the type of security and the issuer's voting structure.

Presenter Message

You are responsible for your own

happiness. If you expect others to

make you happy, chances are you'll always end up disappointed.

Listing Of Company

Major Requirements Of Listing

Minimum paid up capital of Rs. 200 million for a company seeking listing

To succeed public offer of equity, it has to be subscribed by at least 500 applications. The minimumpublic offering requirements by way of Offers For Sale as laid down under the Companies (Issue ofCapital) Rule, 1996

The offering document has to be cleared by KSE before it is submitted to the Securities & ExchangeCommission of Pakistan for approval.

Provisions of Regulation No. 5.4 of KSE Rule Book relating to minimum fresh public offering through prospectus as well as the minimum public offering requirements by way of Offers For Sale as laid down under the Companies (Issue of Capital) Rule, 1996.

The company seeking listing is required to fulfill the relevant requirement under the Rule Book of theExchange and the disclosures as required under the Second Schedule of the Companies Ordinance1984 & Companies (Issue of Capital) Rules,1996.

Time Frame For ListingThe listing application completed in every respectAlong with offering document requires 2 to 3weeks for clearance of the offering documents bythe Exchange.

The companies are allocated dates forpublication of offering document on receipt ofapproval under the relevant Laws from theSecurities & Exchange Commission of Pakistan

The companies are formally listed within 30 daysof close of public subscription.

FEE SCHEDULEInitial Listing Fee

Company shall pay an initial listing fee equivalent to one tenth of onepercent of the PAID-UP-CAPITAL subject to a maximum of rupees twomillion and five hundred thousand.

Annual Listing Fee:

company shall pay, in respect of each financial year of the Exchange,commencing from 1st July and ending on 30th June next, an annuallisting fee calculated on the basis of the company’s marketcapitalization, which shall be payable by or before the 30th Septemberin each calendar year

Companies having market capitalization as on June 30

Rate of Fee per annum

Up to Rs. 100 million Rs. 50,000+0.1% on excess over Rs. 50 Million

Above Rs. 100 million & up to Rs. 250 million

Rs. 100,000+0.055% on excess over Rs.100 million

Above Rs. 250 million & up to Rs. 500 million

Rs. 182,500+0.025% on excess over Rs.250 million

Above Rs. 500 million & up to Rs. 1,000 million

Rs. 245,000+0.015% on excess over Rs.500 million

Above Rs. 1,000 million & up to Rs. 2,000 million

Rs. 320,000+0.0055% on excess over Rs.1,000 million

Above Rs. 2,000 million & up to Rs. 10,000 million

Rs. 375,000+0.0025% on excess over Rs.2,000 million

Above Rs. 10,000 million Rs. 575,000+0.0003% on excess over Rs.10,000 million

Service Charges:

A company applying for enlistment on the Exchange shall, in

addition to other fees, pay a sum of Rs. 50,000/- (Rupees fifty

thousand only) as non-refundable service charges

If companies Executive has been found to be violated the Securities Regulations

Whose promoters/sponsors/controlling directors are in the defaulters list of State Bank of Pakistan either in their individual capacity or in the capacity of directors of othercompanies. such person will be allowed if he clears his name after settling his dues.

Which is a wholly owned subsidiary company, of a listed company which has violated Listingof Companies and Securities Regulations of the Exchange and is still in default of theseRegulations

Default person will not apply to nominee directors of the Government and FinancialInstitutions.

THE EXCHANGE SHALL NOT ENTERTAIN LISTING APPLICATION OF A COMPANY

Market TermOne-Sided MarketA market that has only buy orders or only sell orders booked for a particularsecurity.UptickA stock is said to be on an uptick when the last trade occurred at a higherprice than the one before it.ArbitrageThe simultaneous purchase of a security on one stock market and the sale ofthe same security on another stock market at prices which yield a profit.CertificateThe physical document that shows ownership of a bond, stock or othersecurity.Defensive StockA stock purchased from a company that has maintained a record of stableEarnings and continuous dividend payments through periods of economicdownturn.

Presenter Message

Allah has a purpose for your pain, a

reason for your struggles, and a

reward for your faithfulness.

Don't give up!

NCSS

NCSSAccordingly the Company was incorporated on July 3, 2001 to manageAnd operate the National Clearing & Settlement System (NCSS) in aFull automated electronic settlement system.

NCSS Live Operations were commenced from December 24, 2001.

The Company became fully operational in the year 2003-04 byinducting and handling clearing and settlement of all book entry

NCSS has been developed to replace the individual clearing houses ofPakistan's three Stock Exchanges by a single entity.

Value Added services

NCSS provides significant relief to the respective clearing houses of thethree Stock Exchanges as well as Clearing Members (CMs).

This system facilitates the clearing & settlement of all trades and transactions,carried out at all the three Stock Exchanges by way of providing following valueadded services through single settlement entity

Cross Exchange Netting Margin Financing Module Fully Automated Pay & Collect System Netting of Future Market Transactions with Regular Tariff Collection through Pay & Collect

NCSS cont’dCross Exchange Netting Broker-to-Broker Delivery System

BTB delivery module to facilitate Arbitrage Transactions betweenbroker CMs of different Exchanges

Institutional Delivery System

IDS functionality assists clearing and settlement of transactions betweenbroker and non-broker

Margin Financing Module

Margin Financing (MF) module to facilitate margin trading whereby BrokerCMs can arrange funds from other Broker/ Non Broker CMs based on theirpurchases.

Cont’d

Fully Automated Pay & Collect SystemFully Automated Pay & Collect System to enable automated moneysettlement

Netting of Future Market Transactions with Regular market tradesClearing and settlement of net buy or net sell positions of CMs in eachsecurity at the end of Future Contract Period.

Tariff Collection through Pay & CollectCollection of tariff through Pay & Collect system. Presently the tariffcollections under this system are made on monthly basis.

69

Broad based investor participation

Publicly Listed Company with strategic investor

Cross border listings of companies

Opening up of branches in other cities and in the region

Karachi Stock Exchange Tomorrow

Derivatives

Developed Derivative market

• Single Stock Futures Contracts have been traded successfully in KSE since 2001.

• Single stock Cash-settled Contracts are also introduced.

• Stock Index future contract also introduced from November 5 2007.

• Trade able sector indices

• Options on index and single stock will be introduced shortly.

The world top stock Exchanges

NEW YORK STOCK EXCHANGE:Market Capitalization

(2011, USD Billions) – 14,242

TOKYO STOCK EXCHANGE:Market Capitalization

(2011, USD Billions) – 3,325

LONDON STOCK EXCHANGE:Market Capitalization

(2011, USD Billions) – 3,266

The world top stock Exchanges

SHAINGHAI STOCK EXCHANGE:

Market Capitalization

(2011, USD Billions) – 2,357

HONGKONG STOCK EXCHANGE:

Market Capitalization

(2011, USD Billions) – 2,258

Market TermsShort sales permittedShort selling is permitted under the regulations for shortselling under ready market, 2002, of the Karachi StockExchange (guarantee) LimitedEquity OptionAn option contract that grants the holder theright to buy or sell a specific number of shares ofstock at a specified price during a specific periodof time.Expiration DateThe date at which an option contract expires.This means that the option can't be exercisedafter that date.

Option Writer

The seller of an option contract who may be

required to deliver (call option) or to purchase

(put option) the underlying interest covered by

the option, before the contract expires.

Option

An option which gives the holder the right, but not

the obligation, to buy a fixed amount of a certain

stock at a specified price within a specified time.

Calls are purchased by investors who expect a price

increase.

Presenter Message

Stay close to anything and everything that reminds you of Allah.