3. 1. CAPITAL MARKET
DEFINATION
Instruments
Types Of Capital Market
Role Of Capital Market
Capital Market In Pakistan
2. STOCK MARKET
What is a stock market?
When to invest in a particular stock?
Importance and role of the stock markets
Role Of Stock Exchange In Capital Market Of Pakistan
Lahore Stock Exchange, Karachi Stock Exchange & Islamabad stock Exchange
Pakistan Stock Exchange and Listing in PSX
3. SECURITY AND EXCHANGE COMMISION OF PAKISTAN (SECP)
Definition
Mission, Vision
Function of SECP
Stock index
4.FOREIGN PORTFOLIO INVESTMENT
5. CAPITAL MARKET
The market where investment instruments like bonds, equities and
mortgages are traded is known as the capital market.
The primal role of this market is to make investment from investors
who have surplus funds to the ones who are running a deficit.
6. INSTRUMENTS OF CAPITAL MARKET :
The capital market offers both long term and overnight funds.
The different types of financial instruments that are traded in the capital markets
are:
> equity instruments
> credit market instruments,
> insurance instruments,
> foreign exchange instruments,
> hybrid instruments and
> derivative instruments.
7. Types of capital market
There are two types of capital market:
Primary market,
Secondary market
8. Primary Market
PRIMARY MARKET :
It is that market in which shares, debentures and other
securities are sold for the first time for collecting long-term
capital.
This market is concerned with new issues. Therefore, the
primary market is also called NEW ISSUE MARKET.
9. In this market, the flow of funds is from savers to borrowers
(industries), hence, it helps directly in the capital formation of the
country.
The money collected from this market is generally used by the
companies to modernize the plant, machinery and buildings, for
extending business, and for setting up new business unit.
10. Secondary Market
The secondary market is that market in which the buying
and selling of the previously issued securities is done.
The transactions of the secondary market are generally done
through the medium of stock exchange.
The chief purpose of the secondary market is to create
liquidity in securities.
11. If an individual has bought some security and he
now wants to sell it, he can do so through the
medium of stock exchange to sell or purchase through
the medium of stock exchange requires the services of
the broker presently, their are 24 stock exchange in
PAKISTAN.
.
12. Role of Capital Market
• The primary role of the capital market is to raise long-term funds for
governments, banks, and corporations.
• For companies, there are many reasons why they would want to raise
capital. It is typically to finance:
1. Startup businesses – investing in new and innovative ideas
2. Ongoing operations – one reason a company may have to do this is
because of an unexpected decline in revenue
3. Expansions – at home or abroad, with existing or new
products/services, companies often need to borrow in order to grow
13. Capital Market in Pakistan:
Instruments Traded In Pakistan :
Corporate Bonds
Federal Investment Bonds (FIB)
Equities
14.
15.
What is a stock market?
A stock market or equity market is a market for the trading of
company stock (shares) and derivatives at an agreed price.
According to Merriam Webster:
“An association of people organized to provide an auction market
among themselves for the purchase and sale of securities.”
16.
Importance and role of the stock
Markets
Government capital-raising for development projects
Liquidity
Barometer of the economy
Stock exchange Protect investors
Mobilizes savings
Facilitates public borrowing
17. Role of Stock Exchanges In
Capital Market of Pakistan
Stock exchanges are playing a crucial role in the
consolidation of a Pakistan's economy in general and in
the development of industrial sector in particular. It is
one of the most dynamic and organized component of
capital market. In a developing country like Pakistan, the
stock exchanges play a cardinal role in promoting the
level of capital formation through effective mobilization
of savings and ensuring investment safety.
18.
The Karachi Stock Exchange Limited (KSE), was a stock
exchange located at the Stock Exchange Building (SEB) on Stock
Exchange Road, in the heart of Karachi's Business District, I. I.
Chandigarh Road, Karachi, Sindh Province of Pakistan It is
Pakistan's largest and one of the oldest stock exchange in South
Asia by market capitalization, with many Pakistani consortium
as well as overseas enterprises listings. Founded on September
18, 1947, Karachi Stock Exchange Limited (KSE) is the exchange
in Pakistan. It was declared the "Best Performing Stock Market
of the World for the year 2002"
19. The Lahore Stock Exchange (Guarantee) Limited came into existence in
October 1970, under the Securities and Exchange Ordinance of 1969 by the
Government of Pakistan in response to the needs of the provincial
metropolis of the province of Punjab The LSE has 152 members of which 81
are corporate, and 54 are individual members. The LSE was the first stock
exchange in Pakistan to use the internet and currently 50% of its
transactions are via the internet.
20. Islamabad Stock Exchange was the youngest of the three stock
exchanges of Pakistan and is located in the capital of Islamabad.
Islamabad stock exchange (ISE) was incorporated as a guarantee-
limited company on 25 October 1989 in Islamabad capital territory
with the main object of setting up of a trading and settlement
infrastructure, information system, skilled resources, accessibility
and a fair and orderly market place that ranks with the best in the
world. It started trading in July 1992There are 250 securities listed
in Islamabad Stock Exchange at the moment
23. PSX Introduction
• Pakistan Stock Exchange PSX 2016 - Pakistan Stock exchange is the
merger of all three stock exchanges(ISE, LSE, KSE) of Pakistan. Entities
which provide "trading" facilities for stock brokers and traders, to trade stocks
and other securities.
24. Pakistan Stock Exchange PSX2016 -of
Pakistan, aimed to help reduce market
fragmentation and create a strong case for
attracting strategic partnerships necessary for
providing technological expertise and assistance.
25. Listing in PSX:
As on March 25th, 2016 there are 580 companies
listed in PSX and the total market capitalization is Rs.
6,793.053 billions. The listing is done on the basis of
strict rules and regulations laid out by (SECP) & the
management of (PSX).
28. DEFINATION :
“The Securities and Exchange Commission of Pakistan (SECP) is the financial
regulatory agency in Pakistan whose objective is to :
• develop a modern and efficient corporate sector and a capital market based on
sound regulatory principles,
• in order to encourage investment and foster economic growth and prosperity in
Pakistan”.
29. INTRODUCTION:
SECP stands for Security and Exchange Commission of Pakistan
Financial Regulatory Agency in Pakistan
Setup under the Act 1997
This Act may be called as the Securities and Exchange Commission of Pakistan
Act, 1997.
It extends to the whole of Pakistan.
30. Its VISION is the development of modern and efficient corporate
sector and capital market, based on sound regulatory principles.
MISSION is to develop a fair, efficient and transparent regulatory
framework, based on international legal standards and best practices
31. These are the some following functions:
Regulating the issue of securities
Regulating the business in Stock Exchanges and any other securities markets
Prohibiting fraudulent and unfair trade practices relating to securities markets
Supervising and monitoring the activities of any central depository and Stock Exchange
clearing house
Encouraging the organized development of the capital market and the corporate sector
in Pakistan
33. SECP Division
• The SECP is divided into the following four divisions:
Securities Market Division
Company Law Division
Specialized Companies
Division
Insurance Division
34. Law Division
Objective:
Growth of enterprise, protection of investors and creditors, promotion of
investment and development of economy
Law division divided into three departments:
35. Securities Market Division
• Objective:
Protection of investors, regulation of markets
dealings in securities
It has two department:
36. 3.Specialized Companies Division
Objective:
• To provide a regulatory environment
for the development and promotion of a Non-Bank Financial (NBF) sector.
• Protect the interests of shareholders, depositors and policyholders under
the relevant laws.
.
37. 4. Insurance Division.
•The main objectives includes:
•Regulates and monitors the Insurance Sector through
• Insurance Ordinance, 2000 and the Companies
Ordinance, 1984
38. Stock index:
• A stock index or stock market index is a measurement of the value of a section
of the stock market.
• The movements of the prices in a market or section of a market are captured in
price indices called stock market indices.
• It is a tool used by investors &financial managers to describe the market &to
compare the return on specific investments .
Types of indices:
1. Global stock market index 2. National index
39. STOCK INDEX :
KSE 100 increased 161 points or 0.34% to 47772 on Friday December 30 from
47667 in the previous trading session. Historically, the Pakistan Stock Market
(KSE100) reached an all-time high of 47771.53 in December of 2016 and a
record low of 538.89 in June of 1990.
40. Foreign portfolio investment (FPI) consists of securities and
other financial assets passively held by foreign investors. It does
not provide the investor with direct ownership of financial assets
and is relatively liquid depending on the volatility of the market.
FOREGIN PORTFOLIO INVESTMENT
41. FPI is part of a country’s capital account and shown on its balance of
payments (BOP). The BOP measures the amount of money flowing
from one country to other countries over one monetary year. It
includes the country’s capital investments, monetary transfers, and
the number of exports and imports of goods and service.
Pakistan attracted only $68.2 million during the July-November as
opposed to $140.3 million
