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CAPITAL MARKET INVESTMENTS
FORMS OF INVESTMENT <ul><li>REAL ESTATE </li></ul><ul><li>BUSINESS ENTERPRISES </li></ul><ul><li>PRECIOUS METALS AND STONE...
FINANCIAL INVESTMENTS <ul><li>Opposite to physical assets </li></ul><ul><li>Rights or entitlement to receive money </li></...
TYPES OF MARKETS <ul><li>DIRECT INVESTMENT(FINANCIAL MARKETS) </li></ul><ul><li>a) Hands over the money to the party to us...
CAPITAL MARKETS <ul><li>Marketplace for long term investments </li></ul><ul><li>Various market segments for different type...
MONEY MARKET <ul><li>Market for short term investment </li></ul><ul><li>It include primarily inter-bank placement of short...
STOCK EXCHANGE
HISTORY OF STOCK EXCHAGE <ul><li>Before the recognized S.E came into operation similar nature was done from the seaport </...
THE FIRST STOCK EXCHANGE <ul><li>The first Stock Exchange (S.E) came to operation in Scandinavian countries,followed by Eu...
THE BIGGEST STOCK EXCHANGE <ul><li>The Wall Street in New York, USA is the biggest S.E of the world, was established in 17...
HISTORY IN SUBCONTINENT <ul><li>East India Company started this business in India </li></ul><ul><li>The leading S.E in Ind...
LAHORE STOCK EXCHANGE <ul><li>Formed in 1934 </li></ul><ul><li>Present Lahore S.E was formed in 1970 and started functioni...
DEFINITION <ul><li>Stock Exchange is a market where shares and securities are bought and sold by members/brokers on behalf...
FEATURES <ul><li>Organized market </li></ul><ul><li>Regular market (opens at 10.15 a.m and closes at 1.30 p.m) </li></ul><...
FEATURES- CONTINUED <ul><li>Information media </li></ul><ul><li>Speculation </li></ul><ul><li>Contribution towards country...
WHY TO INVEST IN STOCK EXCHANGE ? <ul><li>SECURITY </li></ul><ul><li>LIQUIDITY </li></ul><ul><li>PROFIT </li></ul><ul><li>...
TYPES OF SHARES <ul><li>COMMON SHARES </li></ul><ul><li>PREFERRENCE SHARES </li></ul>
<ul><li>ULTRA TRADE </li></ul><ul><li>A software of Lahore Stock Exchange’ from where you can see the trading of the share...
VISIT: <ul><li>www.kse.com.pk </li></ul><ul><li>www.lahorestock.com.pk </li></ul><ul><li>WEBSITE OF TRADE DEVELOPMENT AUTH...
STOCK EXCHANGE
MISSION STATEMENT OF LAHORE STOCK EXCHANGE <ul><li>“ To bring the Lahore Stock Exchange (Guarantee) Limited up to the inte...
ROLE OF STOCK EXCHANGE <ul><li>Admits companies for trading their securities </li></ul><ul><li>Market for raising capital ...
STOCK EXCHANGES IN PAKISTAN <ul><li>KARACHI STOCK EXCHANGE  (1948) </li></ul><ul><li>LAHORE STOCK EXCHANGE  (1971) </li></...
 
 
 
PROCEDURE FOR PURCAHSE OF SHARES  INVESTORS Selection of broker Open A/C with member Order placement Kinds of order Inform...
WHY IN IPO PREMIUM IS CHARGED? <ul><li>The business is started before the issue of shares ,the Income Statement and the Ba...
FUNDAMENTAL ANALYSIS <ul><li>These analysis movement in share prices due to Demand and Supply conditions and is not relati...
CLEARING HOUSE Seller Member CLEARING   HOUSE Member Buyer Hands over securities Delivers cash
MEMBERS <ul><li>Members means a member in Stock Exchange. In 1970 the membership fee of Lahore Stock Exchange was Rs. 5,00...
AGENT <ul><li>The representative of a member or broker in a stock exchange. It can be any in number i.e. a member can have...
QUALIFICATION OF A MEMBER <ul><li>Net worth not less than Rs. 2.5 lakh </li></ul><ul><li>Graduate </li></ul><ul><li>Knowle...
MOVEMENT OF SECURITIES KARACHI Lahore Islamabad
TRADING AND SETTLEMENT <ul><li>READY TRADING (REGULAR TRADING) </li></ul><ul><li>a) T+3 settlement system </li></ul><ul><l...
HOW TO BECOME A SHAREHOLDER? <ul><li>INITIAL PUBLIC OFFERING (IPO) </li></ul><ul><li>TRADING IN THE STOCK EXCHANGE MARKET ...
TYPES OF ORDER <ul><li>LIMITED ORDER </li></ul><ul><li>Client specifies the limit of price of the shares. </li></ul><ul><l...
ONLINE TRADING SYSTEM Index---- Change ----- Volume -----------Up ----- Down--- No Change ---- Previous Index ----- Previo...
ABBREVIATION USED <ul><li>BBR – Best buyer rate </li></ul><ul><li>BBV -  Best buyer volume </li></ul><ul><li>BSR – Best se...
VISIT: <ul><li>Website of SECURITIES AND EXCHANGE COMMOSION OF PAKISTAN </li></ul><ul><li>www.secp.gov.pk </li></ul><ul><l...
STOCK INDEX <ul><li>MEANINGS </li></ul><ul><li>It is a tool for analyzing the performance of stock prices.It is important ...
PREPARATION OF KSE 100 INDEX <ul><li>100 Companies are selected out of the total to prepare this index. </li></ul><ul><li>...
STEPS <ul><li>Largest company in each of the 30 sectors. </li></ul><ul><li>Remaining 70 largest companies (apart from thos...
The total market capitalization (base divisor) is taken as 1,000 points. Company  name Share price Outstanding shares Mark...
So, the total market capitalization increased to 10,96,000 Company  name Share price Outstanding shares Market capitalizat...
FORMULA <ul><li>INDEX POINT = Current market capitalization </li></ul><ul><li>Base divisor </li></ul><ul><li>= 10,96,000 /...
RE-COMPOSITION OF INDEX <ul><li>Company once included do not remain there forever. </li></ul><ul><li>They can be dropped, ...
CENTRAL DEPOSITARY SYSTEM <ul><li>Central Depositary System is an electronic book entry system to record and transfer secu...
VISIT: <ul><li>WEBSITE OF CENTRAL DEPOSITORY COMPANY: </li></ul><ul><li>www.cdcpakistan.com </li></ul><ul><li>WEBSITE OF G...
STOCK EXCHANGE TERMS <ul><li>BULL </li></ul><ul><li>BEAR </li></ul><ul><li>STAG </li></ul><ul><li>BLUE CHIPS </li></ul><ul...
MUTUAL FUND <ul><li>It is a pool of money belonging to a group of investors entrusted to a Fund Managers(investment specia...
SOME SUGGESTIONS FOR INVESTMENT <ul><li>Make a portfolio. </li></ul><ul><li>Know you risk profile. </li></ul><ul><li>Consi...
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Stock Exchange

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Stock Exchange with reference to Pakistani Stock Exchange

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Stock Exchange

  1. 1. CAPITAL MARKET INVESTMENTS
  2. 2. FORMS OF INVESTMENT <ul><li>REAL ESTATE </li></ul><ul><li>BUSINESS ENTERPRISES </li></ul><ul><li>PRECIOUS METALS AND STONES </li></ul><ul><li>VALUABLE WORK OF ART </li></ul><ul><li>FINANCIAL INVESTMENTS </li></ul>
  3. 3. FINANCIAL INVESTMENTS <ul><li>Opposite to physical assets </li></ul><ul><li>Rights or entitlement to receive money </li></ul><ul><li>In the form of paper,carrying certain value </li></ul>
  4. 4. TYPES OF MARKETS <ul><li>DIRECT INVESTMENT(FINANCIAL MARKETS) </li></ul><ul><li>a) Hands over the money to the party to use </li></ul><ul><li>this money </li></ul><ul><li>b) Entitled to receive interest or dividend </li></ul><ul><li>c) For example Stock and bond market </li></ul><ul><li>INDIRECT MARKET (FINANCIAL INTERMEDIARIES) </li></ul><ul><li>a) Makes investment through other parties( Fund managers) </li></ul><ul><li>b) Entitled to receive returns </li></ul><ul><li>c) For example Mutual Funds </li></ul>
  5. 5. CAPITAL MARKETS <ul><li>Marketplace for long term investments </li></ul><ul><li>Various market segments for different types of investment </li></ul><ul><li>Stock Exchange is the most important type of Capital Market </li></ul>
  6. 6. MONEY MARKET <ul><li>Market for short term investment </li></ul><ul><li>It include primarily inter-bank placement of short term deposits and dealing in currencies as well. </li></ul><ul><li>For example T-bills, discounting of bills of exchange, bank to bank borrowing, borrowing by commercial banks to and from State bank. </li></ul>
  7. 7. STOCK EXCHANGE
  8. 8. HISTORY OF STOCK EXCHAGE <ul><li>Before the recognized S.E came into operation similar nature was done from the seaport </li></ul><ul><li>Investors used to finance cargo and receipts were issued by shippers </li></ul><ul><li>These receipts were traded at the pubs </li></ul>
  9. 9. THE FIRST STOCK EXCHANGE <ul><li>The first Stock Exchange (S.E) came to operation in Scandinavian countries,followed by European countries </li></ul><ul><li>Later on London became the leader because of the British Empire </li></ul>
  10. 10. THE BIGGEST STOCK EXCHANGE <ul><li>The Wall Street in New York, USA is the biggest S.E of the world, was established in 1792 </li></ul>
  11. 11. HISTORY IN SUBCONTINENT <ul><li>East India Company started this business in India </li></ul><ul><li>The leading S.E in India was established in 1850 </li></ul><ul><li>Eight S.Es in India, 2 each in Bombay, Calcutta and Ahmedabad and 1 each in Madras and Lahore. </li></ul>
  12. 12. LAHORE STOCK EXCHANGE <ul><li>Formed in 1934 </li></ul><ul><li>Present Lahore S.E was formed in 1970 and started functioning from 13 May 1971 </li></ul>
  13. 13. DEFINITION <ul><li>Stock Exchange is a market where shares and securities are bought and sold by members/brokers on behalf of their clients and also on their accounts. </li></ul>
  14. 14. FEATURES <ul><li>Organized market </li></ul><ul><li>Regular market (opens at 10.15 a.m and closes at 1.30 p.m) </li></ul><ul><li>Clearing house </li></ul><ul><li>Free competition </li></ul><ul><li>Second hand securities </li></ul><ul><li>Listed securities </li></ul><ul><li>Price quotation </li></ul>
  15. 15. FEATURES- CONTINUED <ul><li>Information media </li></ul><ul><li>Speculation </li></ul><ul><li>Contribution towards country’s economic development </li></ul>
  16. 16. WHY TO INVEST IN STOCK EXCHANGE ? <ul><li>SECURITY </li></ul><ul><li>LIQUIDITY </li></ul><ul><li>PROFIT </li></ul><ul><li>a) dividend </li></ul><ul><li>b) market fluctuations </li></ul><ul><li>c) bonus and right shares </li></ul><ul><li>TAX RELIEF </li></ul><ul><li>a) as investment </li></ul><ul><li>b) as capital gain </li></ul>
  17. 17. TYPES OF SHARES <ul><li>COMMON SHARES </li></ul><ul><li>PREFERRENCE SHARES </li></ul>
  18. 18. <ul><li>ULTRA TRADE </li></ul><ul><li>A software of Lahore Stock Exchange’ from where you can see the trading of the shares. </li></ul>
  19. 19. VISIT: <ul><li>www.kse.com.pk </li></ul><ul><li>www.lahorestock.com.pk </li></ul><ul><li>WEBSITE OF TRADE DEVELOPMENT AUTHORITY OF PAKISTAN: </li></ul><ul><li>www.tdap.gov.pk </li></ul>
  20. 20. STOCK EXCHANGE
  21. 21. MISSION STATEMENT OF LAHORE STOCK EXCHANGE <ul><li>“ To bring the Lahore Stock Exchange (Guarantee) Limited up to the international operational,technical and regulatory standards and to gain and maintain the confidence of investors as one of the best regional stock exchange”. </li></ul>
  22. 22. ROLE OF STOCK EXCHANGE <ul><li>Admits companies for trading their securities </li></ul><ul><li>Market for raising capital </li></ul><ul><li>Forum to bring companies and investors together </li></ul><ul><li>Market place for listed public companies to sell and buy securities </li></ul><ul><li>Efficient,fair and transparent working </li></ul><ul><li>Barometer of business and economy </li></ul>
  23. 23. STOCK EXCHANGES IN PAKISTAN <ul><li>KARACHI STOCK EXCHANGE (1948) </li></ul><ul><li>LAHORE STOCK EXCHANGE (1971) </li></ul><ul><li>ISLAMABAD STOCK EXCHANGE (1992) </li></ul><ul><li>Karachi S.E is the oldest and largest in Pakistan. </li></ul>
  24. 27. PROCEDURE FOR PURCAHSE OF SHARES INVESTORS Selection of broker Open A/C with member Order placement Kinds of order Information to the Operator Order execution Confirmation to the office Delivery of shares & money
  25. 28. WHY IN IPO PREMIUM IS CHARGED? <ul><li>The business is started before the issue of shares ,the Income Statement and the Balance Sheet shows better performance. </li></ul>
  26. 29. FUNDAMENTAL ANALYSIS <ul><li>These analysis movement in share prices due to Demand and Supply conditions and is not relating to Balance Sheet. </li></ul><ul><li>TECHNICAL ANALYSIS </li></ul><ul><li>These analysis are made on the bases of Financial Statements. </li></ul>
  27. 30. CLEARING HOUSE Seller Member CLEARING HOUSE Member Buyer Hands over securities Delivers cash
  28. 31. MEMBERS <ul><li>Members means a member in Stock Exchange. In 1970 the membership fee of Lahore Stock Exchange was Rs. 5,000 and now it is approximately Rs. 28 million. </li></ul><ul><li>BROKER </li></ul><ul><li>A broker may or may not be a member engaged in the business of effecting the sale and purchase of securities for others. </li></ul>
  29. 32. AGENT <ul><li>The representative of a member or broker in a stock exchange. It can be any in number i.e. a member can have many agents </li></ul>
  30. 33. QUALIFICATION OF A MEMBER <ul><li>Net worth not less than Rs. 2.5 lakh </li></ul><ul><li>Graduate </li></ul><ul><li>Knowledge of the business </li></ul><ul><li>At least two years experience of Stock market </li></ul><ul><li>Pakistani citizen </li></ul><ul><li>Sound mind </li></ul><ul><li>Not expelled or declared default by S.E </li></ul><ul><li>In case of corporate body paid up capital Rs.40 million </li></ul><ul><li>Taxpayer </li></ul>
  31. 34. MOVEMENT OF SECURITIES KARACHI Lahore Islamabad
  32. 35. TRADING AND SETTLEMENT <ul><li>READY TRADING (REGULAR TRADING) </li></ul><ul><li>a) T+3 settlement system </li></ul><ul><li>b) T+1 settlement system </li></ul><ul><li>FORWARD TRADING </li></ul><ul><li>Also known as future trading. Transactions of one month are settled 4 th day of next month. </li></ul>
  33. 36. HOW TO BECOME A SHAREHOLDER? <ul><li>INITIAL PUBLIC OFFERING (IPO) </li></ul><ul><li>TRADING IN THE STOCK EXCHANGE MARKET </li></ul>
  34. 37. TYPES OF ORDER <ul><li>LIMITED ORDER </li></ul><ul><li>Client specifies the limit of price of the shares. </li></ul><ul><li>MARKET ORDER </li></ul><ul><li>Also known as at the best order,it is executed at the prevailing market rate. </li></ul>
  35. 38. ONLINE TRADING SYSTEM Index---- Change ----- Volume -----------Up ----- Down--- No Change ---- Previous Index ----- Previous Volume ----- BBR BBV SYM BBS BSR L.RATE L. VOL Open Change
  36. 39. ABBREVIATION USED <ul><li>BBR – Best buyer rate </li></ul><ul><li>BBV - Best buyer volume </li></ul><ul><li>BSR – Best seller rate </li></ul><ul><li>BSV - Best seller volume </li></ul><ul><li>SYMBOL – abbreviation of company’s name,like PSO for PAKISTAN STATE OIL. </li></ul>
  37. 40. VISIT: <ul><li>Website of SECURITIES AND EXCHANGE COMMOSION OF PAKISTAN </li></ul><ul><li>www.secp.gov.pk </li></ul><ul><li>Website of MINISTRY OF FINANCE </li></ul><ul><li>www.finance.gov.pk </li></ul>
  38. 41. STOCK INDEX <ul><li>MEANINGS </li></ul><ul><li>It is a tool for analyzing the performance of stock prices.It is important method to see that how did the market do today.It shows the degree of activity of the market. </li></ul>
  39. 42. PREPARATION OF KSE 100 INDEX <ul><li>100 Companies are selected out of the total to prepare this index. </li></ul><ul><li>Companies are selected from the following sectors. Leasing,insurance,Woolen,textile,synthetic, and rayon,cement,sugar,tobacco,construction, paper and board,transportation,communication,glass, </li></ul><ul><li>ceramics etc </li></ul>
  40. 43. STEPS <ul><li>Largest company in each of the 30 sectors. </li></ul><ul><li>Remaining 70 largest companies (apart from those selected above) in descending order. </li></ul>
  41. 44. The total market capitalization (base divisor) is taken as 1,000 points. Company name Share price Outstanding shares Market capitalization A 10 50,000 Rs.500,000 B 20 20,000 400,000 C 25 4,000 100,000 Total 1,000,000
  42. 45. So, the total market capitalization increased to 10,96,000 Company name Share price Outstanding shares Market capitalization A 10 50,000 Rs.500,000 B 25 20,000 500,000 C 24 4,000 96,000 Total 10,96,000
  43. 46. FORMULA <ul><li>INDEX POINT = Current market capitalization </li></ul><ul><li>Base divisor </li></ul><ul><li>= 10,96,000 /10,00,000 </li></ul><ul><li>= 1,096 points </li></ul>
  44. 47. RE-COMPOSITION OF INDEX <ul><li>Company once included do not remain there forever. </li></ul><ul><li>They can be dropped, if they fail to meet the criteria. </li></ul><ul><li>Re-composition committee holds meetings twice a year. </li></ul><ul><li>Companies position is analyzed to exclude or include certain companies. </li></ul>
  45. 48. CENTRAL DEPOSITARY SYSTEM <ul><li>Central Depositary System is an electronic book entry system to record and transfer securities (such as shares and TFCs) .It means that now securities do not physically change hands but transfer takes place through electronic system. </li></ul><ul><li>WHY IT WAS NEEDED? </li></ul><ul><li>1) To avoid lengthy procedure in delivery and settlement. </li></ul><ul><li>2) To avoid tedious verification process. </li></ul><ul><li>3) There was risk of damage,lost,forgot. </li></ul><ul><li>4) To avoid issuance of bogus certificate </li></ul>
  46. 49. VISIT: <ul><li>WEBSITE OF CENTRAL DEPOSITORY COMPANY: </li></ul><ul><li>www.cdcpakistan.com </li></ul><ul><li>WEBSITE OF GOVERNMENT OF PAKISTAN AND PRIVATISATION COMMISSION OF PAKISTAN </li></ul><ul><li>www.pak.gov.pk </li></ul><ul><li>www.privatisation.gov.pk </li></ul>
  47. 50. STOCK EXCHANGE TERMS <ul><li>BULL </li></ul><ul><li>BEAR </li></ul><ul><li>STAG </li></ul><ul><li>BLUE CHIPS </li></ul><ul><li>IPO </li></ul><ul><li>INVESTMENT COMPANIES </li></ul><ul><li>LISTED COMPANY </li></ul><ul><li>MARKET CAPITALISATION </li></ul><ul><li>PORTFOLIO </li></ul><ul><li>SETTLEMENT </li></ul><ul><li>MUTUAL FUND </li></ul><ul><li>SPOT </li></ul><ul><li>CAPITAL GAIN </li></ul><ul><li>TELE STOCK </li></ul>
  48. 51. MUTUAL FUND <ul><li>It is a pool of money belonging to a group of investors entrusted to a Fund Managers(investment specialists) hired by the group. </li></ul><ul><li>TYPES </li></ul><ul><li>1) CLOSED-END FUND </li></ul><ul><li>Having fixed pool of money. </li></ul><ul><li>2) OPEN- END FUND </li></ul><ul><li>Pool money is not fixed but fund managers continuously allows investors to come and leave the fund </li></ul>
  49. 52. SOME SUGGESTIONS FOR INVESTMENT <ul><li>Make a portfolio. </li></ul><ul><li>Know you risk profile. </li></ul><ul><li>Consider you age,income,need. </li></ul><ul><li>Follow the stock market on daily basis. </li></ul><ul><li>Pick a trust worthy broker. </li></ul><ul><li>Start with an amount you can afford to loose. </li></ul><ul><li>Play long term. </li></ul><ul><li>Patience and strong nerves. </li></ul>

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