KSE Analysis 2010

Course Presentation : IBF

The Karachi Stock Exchange or KSE is a stock exchange located in Karachi, Sindh, Pakistan.

Founded in 1947, it is Pakistan's largest and oldest stock exchange, with many Pakistani as well as overseas listings.

Its current premises are situated on Stock Exchange Road, in the heart of Karachi's Business District.

Karachi Stock Exchange

Number of members is fixed by the articles. Membership is transferable subject to the

membership criteria as laid down by the Board.

Surplus funds are not distributable to the members in any manner.

The funds are used only for the purpose of promoting the objectives of the company.

Company is without share capital.

Company Limited by Guarantee ?

Incorporated on March 10,1949. First Stock Exchange of the country. Started with 5 companies that has a paid

capital of Rs.37 million. Trading was done through an open-out-cry

system. The first index was the KSE 50 Index.

KSE Yesterday

Exchange owned by 200 members. 652 companies listed. 4 indices (KSE 100,30,All Share, KMI 30). Modern Risk Management System. KSE is FIX Complaint. Electronic Trading through KATS. Market Capitalization US $ 32.00 billion.

KSE Today

Publicly Listed Company with Strategic Investor.

Products to include; a) Exchange Traded Fund (ETF’s)

b) Tradable Sector Indices Board based investor participation. Cross border listing of companies. Opening up of branches in other cities & in

the region.

KSE Tomorrow

KSE began with a 50 shares index. As the market grew a representative index was

needed. On November 1, 1991 the KSE-100 was introduced

and remains to this date the most generally accepted measure of the Exchange.

The KSE-100 is a capital weighted index and consists of 100 companies representing about 90 percent of market capitalization of the Exchange.

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.

On August 29, 1995 the KSE all share index was constructed and introduced on September 18, 1995.

Market Indices

KSE 100 is widely reported and has representation of all sectors listed on the exchange.

It is a capital-weighted index and consists of 100 companies representing about 88% of total market capitalization of the Exchange.

KSE 100 Index

KSE-30 Index using the “Free-Float Market Capitalization "methodology and is live from September 1, 2006.

In addition to other criteria the companies included which have minimum free-float shares of 5% of the total outstanding shares and securities traded for 75% of the total trading days.

The scrip should be in the top companies, ranked on the basis of liquidity i.e., trade value of shares.

KSE 30 Index

It is a capital-weighted index and consists of all companies.

KSE All Share Index

Al Meezan Investments provide its Shariah expertise, guidelines, skills and stocks screening towards the activities with regard to launching and continuation process of the Index.

To provide investors suitable benchmark for returns on Shariah Compliant equity investments.

To help Shariah conscious people choose the profitable stocks which are Shariah Compliant.

To provide a relevant benchmark to Islamic equity funds for comparing their performance.

KMI 30 Index

Automation Started :• In September 1997 with Computer Based

Trading started in Selective Scrip under KATS.

• In May 1998, Open-Out-Cry System was Completely Abolished.

• For Fair, Transparent, Efficient & Cost-Effective Trading.

• By 1999 & 2000, Trading System & Servers were Upgraded.

KSE Key Facts

Fully automated trading, clearing and settlement system.

KATS (Karachi Automated Trading System) can handle over 500,000 trades daily.

Internet-routed trading facility.

Market information available on a real-time basis nationally as well as internationally via satellite.

Investors and fund managers can also access information through (Display Only Terminal).

Few T.V channels also display KSE ticker. Live display boards are also available at major places like Airport.

KSE –A Modern Electronic Exchange

KSE-100 index delivered a return of 28.1% in CY10 therefore ended as 5th best performing market within region.

Foreign inflow emerged as a key market driver , registering at US $522.

Bull run at the KSE 100 index largely took place in 4QCY10 (20.1 % return).

CY10 Remind: A look back to look ahead

CY10 Regional Market Performance

CY10 Regional FPI Flows (US $mn)

CY10 FIPI/LIPI Flows (US$ mn)

KSE – 100 Index

KSE looking past the Headlines

Oil & Gas stocks posted a 43.4% & 15.3% absolute & relative gain against the broader market over CY10.

Ex- OGDC, the coverage cluster posted a 27.6% absolute gain leading to an underperformance of 1.5% in CY10.

Oil & Gas

The listed banking sector gained 14.6% in CY10, but underperformed the KSE-100 Index by 13.4%.

Banks gained 26.6% in 4QCY10 alone (6.5% outperformance) and assumed to extend in new year.

Banks

The fertilizer sector trades at a forward PER of 8.8x versus the market at 8.2x & a PB multiple of 2.5x versus the market at 1.6x.

ENGRO is on top.

Chemicals

The telecom sector, while gaining 10% on an absolute basis, underperformed the benchmark KSE-100 Index by 18% during CY10.

Fixed Line Communication

The power sector trades at a forward FY11 PER of 6.6x versus the market at 8.2x & provides a dividend yield of 14% against market dividend yield at 6.7%.

Electricity

The listed FMCG sector gained a stellar 89.6% in CY10, outperformance of 61.5% vs. the Index, making it the best performing sector of CY10.

Food Producers

The Construction & Materials sector gained 9.2% in CY10, underperforming the KSE-100 Index by 18.9% in the process.

Construction & Materials

Gas Water and multi-utilities posted at 44% and 16% absolute and relative gain over CY10,falling behind foo

Water Gas & Multi Utilities

This sector gained an exceptional 28% in CY10, one of the few sectors to outperform the index.

Industrial Engineering

This sector gains 7% on an absolute basis, underperformed the benchmark KSE-100 Index by 22% during CY10.

Automobile & Parts

Textile sector, while gaining 6% on an absolute basis, underperformed the benchmark KSE-100 Index by 22% during CY10.

Personal Goods

This sector underperformed the benchmark Index by a staggering 50% during CY10.

Non Life Insurance

CY10 Sectoral Performance

Top 20 Stocks

Top 5 Gainers

Top 5 Losers

KSE100 Index vs. BSE Sensex

The Karachi Stock Exchange was declared as “The Best Performing Market of the World” in the year 2002, registering an increase of 112% in the KSE 100 Index.

In years 2003 and 2004, the Exchange was also amongst the Top 10 Best Performing Markets of the World and the Index increased by 65% and 39% respectively.

Best Performing Market of the World

END OF PRESENTATION….