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History of KSE-100 index and political contribution towards it

Submitted by:
BBS-11-01
BBA 8th (Morning)

KSE-100 Index And Political Contributions

On November 1, 1991 the KSE-100 was introduced and remains to this day the most generally
accepted measure of the Exchange. Karachi Stock Exchange 100 Index (KSE-100 Index) is a
benchmark used to compare prices overtime, companies with the highest market capitalization
are selected. To ensure full market representation, the company with the highest market
capitalization from each sector is also included.

Brief History (1991 to 2015)

Karachi Stock Exchange began with a 50 shares index. As the market grew a representative
index was needed. 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 the 29th, 1995 the KSE all share
index was constructed and introduced on September 18, 1995. On November 1, 91 the KSE-100
was introduced and remains to this day the most generally accepted measure of the Exchange.
Karachi Stock Exchange 100 Index (KSE-100 Index) is a benchmark used to compare prices
overtime, companies with the highest market capitalization are selected. To ensure full market
representation, the company with the highest market capitalization from each sector is also
included.
World announced the Karachi Stock Exchange is the best performing world stock market in
2002. Since then the KSE keep on maintaining the reputation as one of the best performing
markets in the world. Since 1991, foreign investors have an equal opportunity together with local
investors to operate in the secondary capital market on the Karachi Stock Exchange. The
establishment of the new policy for foreign investors and initiated privatization in Pakistan has
accelerated the development of the KSE, which had even 663companies listed in 2006. In
addition, companies have a choice to be listed on one of the two markets - the ready market and
the over-the-counter (OTC) market, which has lesser listing requirements. While the ready
market requires listing companies to have minimum paid up capital of Rs 200 million (about UK
1.8 m), the companies with minimum of Rs 100 million can be listed on the OTC market. The
Karachi Stock Exchange trades the KSE-100 Index. It is a highly-diversified index of 100 largest
capitalization companies' stocks from all sectors of Pakistan
Pakistan was in crisis from the beginning of year 2007, but financial crisis triggered this crisis
and situation is going to worst. Pakistan is passing from crucial phase of its life. Crisis in
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Pakistan was started when former President Pervez Musharraf suspended Supreme Court Chief
Justice. Later on Lal Masjid incident took place which throughout Pakistan created huge tension
because after this incident chain of suicide attacks started in the country, which has not been
ended as yet. In large part due to fuel subsidies and other economic obligations, Pakistan's
budget deficit of $21 billion is the highest in a decade, and the current account deficit is
8.4percent of GDP. In all of Asia, Pakistan has the highest interest rates, least valuable currency,
and riskiest financial obligations. As a result, Pakistani government debt is considered one of the
riskiest in the world

1991-2006 (Steady growth)

On November 6, 1990 Nawaz Sharif was elected as Prime Minister and during his reign the
index was launched in November 1991 with a base of 1,000 points. In 1993 Benazir Bhutto was
elected as Prime minister and KSE achieved high performance during her era. On February 17,
1997 Nawaz Sharif sworn in as 19th Prime Minister he launches "Qarz utaro Mulk sanwaro"
scheme and stock exchange remained stable.

2007 (Record breaking growth)

In the reign of Pervaiz Musharraf KSE-100 index touched the highest ever benchmark of 14,814
points on December 26, 2007, a day before the assassination of former Prime Minister Benazir
Bhutto, when the index nosedived. As against market capitalization of Rs 334 billion on 12th
October, 1999, it was Rs 3,980 billion at the close of financial year 2006-07.

2008 Global crisis

In the year of 2008 President was Asif Ali Zardari and KSE face many crisis due to worldwide
crisis of economy as well as the previous governments instability and inability to cover up crisis

April 20: Karachi Stock Exchange achieved a major milestone when KSE-100 Index
crossed the psychological level of 15,000 for the first time in its history and peaked
15,737.32 on 20 April 2008. Moreover, the increase of 7.4 per cent in 2008 made it

the best performer among major emerging markets

May 23: Record high inflation in the month of May, 2008 resulted in the unexpected
increase in the interest rates by State Bank of Pakistan which eventually resulted in

sharp fall in Karachi Stock Exchange.

July 17: Angry investors attacked the Karachi Stock Exchange in protest at plunging

Pakistani share prices.

July 16 : KSE-100 Index dropped one-third from an all-time high hit in April, 2008
as

rising

pressure

on

shaky

Pakistan's

coalition

government

to

tackle Taliban militants exacerbates concern about the country's economic woes
August 18: KSE 100 Index rose more than 4% after the announcement of the
resignation of President Pervez Musharraf but Credit Suisse Group said that
Pakistan's Post-Musharraf rally in Stock Exchange will be short-lived because of a

rising fiscal deficit and runaway inflation

August 28: Karachi Stock Exchange set a floor for stock prices to halt a plunge that

has wiped out $36.9 billion of market value since April

December 15: Trading resumes after the removal of floor on stock prices that was
set on August 28 to halt sharp falls

2009-2010 (Quick recovery)

The index recovered quickly in 2009 and 2010 reaching new highs due to new governments
interventions as 18th amendment in constitution.

2011-2012 (Best emerging market)

PPP government did a lot of consideration towards stock market improvements and this can be
seen as on 7 November 2012 index recorded highest level of 16,218 points and is now KSE is
being considered as a best emerging market in Asia with returns in financial year 2011-2012 up
to 40 to 50%.

2013-2014(post-elections)
As of April the 30th KSE-100 Index recorded a new increase in its value standing at 28,913
points, that is more than 45.2% since the last fiscal year of 2012-2013 The KSE 100 index
reached its highest ever 32000.01 on 24 December, 2014
The newly elected government faces interlinked challenges: tackling emboldened militant groups
and terrorist organizations, advancing political reform, and stabilizing the economy. If Pakistan's
economy experiences further collapse, the government could lose further support of the people.
Experts are saying that Karachi Stock Exchange, one of the worst hit Stock Exchanges of the
world in the financial recession, has finally pulled through and that investors will make millions.
Let us all hope that this proves to be true and the now 'broke' stock-'Brokers finally recover from
this nightmare.

References

www.tradingeconomics.com/pakistan/stock-market
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http://en.wikipedia.org/wiki/KSE_100_Index
http://www.scstrade.com/MarketStatistics/MS_HistoricalIndices.aspx