Karachi Stock Exchange

The biggest Stock exchange of Pakistan located in Karachi is the Karachi Stock Exchange . Due to the liquidity offered by the Karachi Stock Exchange , it is known as stated as the “Best Performing Stock Market of the World for the year 2002”.

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.

Settlement

The settlement in the Karachi Stock Exchange takes place through the centralized clearing house. The shares that are traded from the Karachi Stock Exchange on Monday and Tuesday of any week are settled the following Monday. The payments that are made to the members or the investors are channelized through the Clearing House .

The shares of only those companies can be traded in the Karachi Stock Exchange which have offered the shares to the public either through the prospectus or an offer for sale. The trades in the Karachi Stock Exchange are settled through the weekly clearing system.

Nature of the Karachi Stock Exchange

Although initially the Karachi Stock Exchange was a physical exchange where trading took place by an open outcry system , now the Karachi Stock Exchange is fully automated.