KARACHI STOCK EXCHANGE

KARACHI STOCK EXCHANGE

The oldest and largest stock exchange in Pakistan. It was established in 1947, and has historically been known for strong performance and high liquidity. However, the 2008 economic crisis and political instability in Pakistan caused the Karachi Stock Exchange to drop by more than a third between April and June 2008. See also: KSE 100 Index.

History of the Karachi Stock Exchange :

The Karachi Stock Exchange, the oldest exchange in Pakistan, was established in 1947 and became a registered company limited a few years later. Since then it has experienced a remarkable progress with only 5 companies listed and 90 members on the Exchange in the 1950s and 663 listed companies and 200 members in 2006.

In 2002, the Karachi Stock Exchange was recognized internationally by the magazine 'Business Week' as one of the best performing stock markets in the world.

The Karachi Stock Exchange has started trading through the computerized trading system KATS (Karachi Automated Trading System) since 1997. As the demand for Trading Workstations installation has been significant during the consecutive years, today over 1000 KATS workstations are already installed. In 2005, trading in the Internet was also initiated.

Since 1990, corporate entities can become members on the Karachi Stock Exchange. However, they have to meet stringent requirements of the Board of Directors and own a minimum capital of Rs. 20 million (approximately UK �181,000). At the beginning of 2006, 120 corporate members were registered in the Exchange.

The Karachi Stock Exchange introduced KSE 50 Index at the end of the 20th century. However, because of the growth in the stock market, the Index did not represent the stock market performance anymore. Thus, in 1991 a capital weighted KSE 100 Index launched. At the moment, the Exchange successfully trades two world-famous indices - KSE 100 Index and KSE All Share Index, which was introduced in 1995.

PERFORMANCE OF KARACHI STOCK EXCHANGE
As measured by the KSE 100 Index, the Karachi stock market has grown rapidly in the current century. The Karachi Stock Exchange was acclaimed as the best-performing stock market of the world in 2002.

KSE Indices

Evolution of the Karachi Stock Exchange

By 2007, the number of listed companies reached 754 by the year 2007. The market capitalization at the same time was US $52 billion whereas the listed capital was US $8.27 billion. Following the estimates of the State bank Of Pakistan , we see that the foreign investments in the capital market is as large as US $ 523 million.

The performance of the Karachi Stock Exchange has been wavering since the beginning of 2007. This could be because 2007 is an election year.

Karachi Stock Exchange Indices

The Karachi Stock Exchange uses the following index:

50 Shares Index- T his index was used initially but as the market grew there was a need for a new index.

KSE-100: The KSE-100 is a benchmark used to compare prices over a period of time. For the construction of the KSE-100 companies with the highest market capitalization. To make the selection more representative, the companies from all the sectors are chosen. The index was introduced in 1991 with 1000 as base points. By 2001 it has grown to 1770 points, in 2005 to 9989 points and reached a peak of 12285 by 2007. The KSE-100 is a capital weighted index comprised of 100 companies.

KSE-30 : This index was introduced at the end of 2006. it is comprised of 30 most floating stocks. By 1997 the KSE-30 traded at 14199 points.

Arbitration

The disputes that arise between members and the investors in the Karachi Stock Exchange are resolved through the advices of the Arbitration Committee of the Exchange.

Karachi is the capital of the province of Sindh, and the most populated city in Pakistan. It is located on the coast of the Arabian Sea in southeastern Pakistan, northwest of the Indus Delta. The city is the financial and commercial centre as well as the largest port of Pakistan. Population - Census (1998) 9,339,023, Estimate (2006) 11,969,284. Karachi is located in south Pakistan, directly north of the Arabian Sea. The city covers 3527 Square KMs. Karachi mostly comprises flat or rolling plains with hills on the western and northern boundaries of the urban sprawl. Two rivers pass through the city: the Malir River and the Lyari River.

Karachi is the financial capital of Pakistan. It accounts for a lion's share of Pakistan's GDP and generates about 65 per cent of the national revenue. Most of Pakistan's public and private banks have head offices in Karachi. Nearly all of these are located on I.I Chundrigar Road (the Karachi Wall Street) which is fast becoming home to the high rise headquarters of major corporations. The most notable of these are the Habib Bank Plaza, the tallest building in Pakistan before it was surpassed by Muslim Commercial Bank's MCB Tower. The Port of Karachi and nearby Port Qasim are the two main seaports of Pakistan, and Quaid-e-Azam International Airport is the largest airport in Pakistan.