History of Karachi Stock Exchange

Karachi Stock Exchange 100 Index (KSE-100 Index) is a stock index

acting as a benchmark to compare prices on the Karachi Stock
Exchange (KSE) over a period of time. In determining representative
compaines to compute the index on, companies with the highest
market capitalization are selected. However, to ensure full market
representation, the company with the highest market capitalization
from each sector is also included.

History
Karachi Stock Exchange is the biggest and most liquid exchange in
Pakistan. It was declared the “Best Performing Stock Market of the
World for the year 2002”. As of Dec 8, 2009, 654 companies were
listed with a market capitalization of Rs. 8.561 trillion (US$ 120.5
billion) having listed capital of Rs. 2805.873 billion (US$ 40.615 billion).
The KSE 100TM Index closed at 9645.71 on June 19, 2010.By 30 july
total market capitalisation of the KSE reached Rs2.95
trillion,approximately 350 billion dollars.
The index was launched in late 1991 with a base of 1,000 points. By
2001, it had grown to 1,770 points. By 2005, it had skyrocketed to
9,989 points. It then reached a peak of 12,285 in February 2007. 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. The index
recovered quickly in 2008, reaching new highs near 15,500 (citation
needed) in April. However, by November 22, 2008 during the global
financial crisis of 2008 it had fallen to 9,187.

Market Indices
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.

Growth

The KSE is the biggest and most liquid exchange in Pakistan and in
2002 it was declared as the “Best Performing Stock Market of the
World” by Business Week. As of December 8, 2009, 652 companies
were listed with the market capitalization of Rs. 2.561 trillion (US$ 30.5
Billion) having listed capital of Rs. 717.3 billion (US$ 12 billion). On
December 26, 2007, the KSE 100 Index reached its highest value ever
and closed at 14,814.85 points.
Foreign buying interest had been very active on the KSE in 2006 and
continued in 2007. According to estimates from the State Bank of
Pakistan, foreign investment in capital markets total about US$523
Million. According to a research analyst in Pakistan, around 20pc of the
total free float in KSE-30 Index is held by foreign participants.
KSE has seen some fluctuations since the start of 2008.
Karachi stock exchange Board of Directors has recently (2007)
announced plans to construct a 40 story high rise KSE building, as a
new direction for future investment.
Disputes between investors and members of the Exchange are
resolved through deliberations of the Arbitration Committee of the
Exchange.
KSE began with a 50 shares index. As the market grew a
representative index was needed. 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.
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.

2008 and 2009 Karachi Stock Exchange 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.