Transcript Document 7428789

The primary objective of the Index is to have a
benchmark by which the stock price performance can be
compared to over a period of time. In particular, it is
designed to provide investors with a sense of how the
market is performing. Thus, it is similar to other
indicators that track various sectors of the economic
activity such a the gross national product, consumer
price index, etc.
Some major international indices are NYSE, FTSE
(London), NZSE 40, SENSEX 30
On November 1, 1991 the KSE 100 Index was
introduced.
It is capital weighted index and consists of 100
companies representing about 86% of market
capitalization of the Exchange.
In November 1994 it was recomposed by the Baring
Securities London and rules were framed for its recomposition.
• ON - LINE COMPUTATION OF THE INDEX
During market hours, prices of the Index scrips, at
which trades are executed, are automatically used by
the trading computer to calculate the KSE-100 Index
and continuously make up-dation on all trading
workstations connected to the KSE trading computer
on real time basis.
The KSE 100 Index re-composed on semi-annually
basis
The selection criteria for stock inclusion in the
recomposed KSE 100 Index are:
SECTOR RULE
Largest market capitalization in each of the 34
sector of the Exchange, excluding Open –
end Mutual Fund sector;
CAPITALIZATION RULE
The remaining 66 companies are taken up on
the basis of market capitalization companies
in descending order.
A number of the 34 top sector companies may also
qualify for inclusion on the basis of their market
capitalization: i.e. companies may qualify under
Sector Rule or under Capitalization Rule, or under
both. However, in that case the company shall be
included on the basis of Sector Rule.
Close-end Mutual Fund
Tobacco
Chemical
Modaraba
Refinery
Paper & Board
Leasing Companies
Power Generation &
Distribution
Vanapati & Allied
Inv. Banks / Inv. Cos. / Sec.
Cos
Commercial Banks
Insurance
Oil & Gas Marketing
Companies
Oil & Gas Exploration
Companies
Textile Spinning
Engineering
Textile Weaving
Automobile Assembler
Textile Composite
Automobile Parts &
Accessories
Woollen
Cables & Electric Goods
Synthetics & Rayon
Transport
Jute
Technology & Communication
Sugar & Allied
Fertilizer
Cement
Pharmaceutical
Leather & Tanneries
Foods & Personal Care
Products
Glass & Ceramics
Miscellaneous
SECTOR RULE:
Value-based Rule:
A company which is the largest in its sector by a minimum
of 10% in capitalization than the present largest in the sector
(in the index) will enter in the index on re-composition.
Time-based Rule:
A company which is the largest, but not more than 10%
greater in value than the present largest company in the
sector will enter the index after maintaining its position as
largest in the sector for two consecutive re-composition
period.
CAPITALIZATION RULE:
Time-based Rule:
A company may qualify for entry if it exceeds the
market capitalization of the last stock in the index
selected on the basis of market capitalization for two
re-composition periods.
A qualifying company automatically pushes out the
lowest capitalization selected stock in the index.
RULES FOR NEW ISSUES:
A newly listed company or a privatized company
shall qualify to be included in the existing index (on
day of recomposition) if the market capitalization of
the new or privatized company is at least 2% of the
total market capitalization.
VALUE
BASE
Companies largest in its Sector by a
minimum 10% at the last cut off date.
TIME
BASE
Companies which are greater but less
than 10%.
SECTOR BUFFER
Companies will enter the Index after
maintaining its position for last Two cut
off dates.
INDEX
TIME BASE
Companies which are amongst the top 66
companies on market capitalization basis.
MARKET CAP. BUFFER
Companies will enter the Index after maintaining its
position for last Two cut off dates.
INDEX
Hypothetical Example
Step 1
The Base Period Day 1
Stock
Share Price
(Rs.)
No. of Shares
Market Value
(Rs.)
A
20.00
50,000,000
1,000,000,000.00
B
30.00
100,000,000
3,000,000,000.00
C
40.00
150,000,000
6,000,000,000.00
Total Market Capitalization
10,000,000,000.00
Note: Base Period Value / Base Divisor = Rs.10,000,000,000.00 = 1000.00
Step 2
Index Value as on Day 2
Stock
Share Price
(Rs.)
No. of Shares
Market Value
(Rs.)
A
22.00
50,000,000
1,100,000,000.00
B
33.00
100,000,000
3,300,000,000.00
C
44.00
150,000,000
6,600,000,000.00
Total Market Capitalization
11,000,000,000.00
11,000,000,000.00
Index = -------------------------- = 1.10 * 1000 = 1100
10,000,000,000.00
The for Calculating the KSE 100 Index is:
Sum of Shares Outstanding x Current Price
-----------------------------------------------------------
x 1000
Base Period Value
OR
Market Capitalization
----------------------------------------------------------Base Divisor
x 1000
14,000.00
12,000.00
11,6 8 6 .4 4
9 ,556 .6 1
10,000.00
8,000.00
6 ,2 18 .4 0
6,000.00
4 ,4 71.6 0
4,000.00
2 ,70 1.4 2
2 ,16 4 .2 6
2,000.00
1,4 9 7.76
1,0 0 0 .0 0
13 3 9 .9 3
1753 .8 2
9 4 5.2 4
14 0 8 .9 1
150 7.6
1999
2000
1,2 73 .0 7
2 ,0 4 9 .11
1,2 4 3 .71
0.00
1991
1992
1993
1994
1995
1996
1997
1998
2001
2002
2003
2004
2005
2006
CFS
Implementation 25
Bn
Improvement in
Indo-Pak
Settlement
Relations Crisis
Indo-Pak
Tension
Improving
Economy
New Economic Agenda
Change of
Regime
CVT Levy
Terrorists Attack
in US
(9/11)
Nuclear
Tests
4-May-06
30-Jun-05
1-Mar-05
31-Dec-04
30-Jan-04
18-Sep-03
20-May-03
17-Dec-02
23-Jul-02
28-Feb-02
28-Sep-01
30-Apr-01
23-Nov-00
4-Jul-00
9-Feb-00
10-Sep-99
20-Apr-99
18-Nov-98
26-Jun-98
S&P upgraded
rating
14-Jan-98
12,500.00
12,000.00
11,500.00
11,000.00
10,500.00
10,000.00
9,500.00
9,000.00
8,500.00
8,000.00
7,500.00
7,000.00
6,500.00
6,000.00
5,500.00
5,000.00
4,500.00
4,000.00
3,500.00
3,000.00
2,500.00
2,000.00
1,500.00
1,000.00
500.00
COMPANY NAME
INDEX WEIGHTAGE
O. G. D. C.
23.82
P. T. C. L. “A”
7.30
Pakistan Petroleum Limited
6.50
National Bank of Pakistan Limited
6.48
MCB Bank Limited
4.27
United Bank Limited
3.29
Pakistan Oilfields Limited
2.89
Fauji Fertilizer Company Limited
2.20
Pakistan State Oil Company Limited
2.03
Sui Northern Gas Pipelines Limited
1.93
COMPANY NAME
INDEX WEIGHTAGE
INFOSYS TECHNOLOGIES
9.50
RELIANCE
8.86
ICICI BANK
7.61
ITC LTD
7.44
HDFC
4.35
HINDUSTAN LEVER
4.35
LARSEN & TOUBRO
4.35
ONGC
4.07
TELEVENTURES
3.97
SATYAM COMPUTERS
3.59
FUTURE PLANS
• INTRODUCTION OF 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 company’s 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.
• Globally, the Free-float Methodology of index construction is
considered to be an industry best practice and all major index
providers like MSCI, FTSE, S&P, STOXX and SENSEX have
adopted the same. MSCI, a leading global index provider, shifted all
its indices to the Free-float Methodology in 2002