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  ::. Stock Exchanges in Pakistan
  Finance | Stocks

 Learning the Stock Market

The fresher the fish the better the price at the market. The "stock market" is just that- a huge "market" where stocks are traded by many different vendors. Similar to the way other things are traded- like fish or vegetables at the old-world market, or cows at the cattle auctions- stocks are traded "at auction". Prices are determined by supply and demand- by sellers and buyers willingness to buy or sell at a certain price. As demand goes up, the price goes up, and so on.

Imagine, over 100 years ago, brokers literally shouting "I have 100 shares of Pacific Railroad for sale, how much will you offer me?" If a broker had an order to buy some stock he would shout "Someone sell me 100 shares of Pacific Railroad! Who has the best price?" You've probably seen some of that happening- in more modern times- in film clips of the Chicago Board of Trade where wheat, corn and pork bellies are bought and sold. Market trading is more organized now. Computers do the shouting.

Brokers arrange for the actual trades (isn't "broker" a funny name for someone that handles your money). A broker is someone who who sells stocks for a dealer. Charles Schwab is a dealer. The dealer holds inventories of stocks and sells them through the sales guy. The sales guy is the broker or the specialist. If a sell order comes across the computer at an attractive price, the dealer buys (through his agent, the specialist) , and adds this stock to his inventory. The brokers, and specialists, using computers, bring the dealers and investors together.

What makes the price of a stock change?
Companies are expected to earn profit. If profits increase, the stock price will likely increase. Even if investors think the earnings will increase, the stock price may go up. If good news comes out on a company, the price, and demand for the stock may go up. With bad news, the price and demand may go down. The price of a stock is even more dramatically affected when supply is very high or very low. It is not so uncommon for certain unscrupulous individuals to "create" news or other financial information, for the purpose of duping unsavy investors into creating a demand situation, into which, the unscrupulous-one "sells into" and makes an unfair profit. Investors beware.

There are several different prices:

Opening Price is the first price paid after trading starts, usually when the stock exchange "opens its trading doors", usually in the morning. Sometimes, opening price is higher or lower than the closing price of the previous day (orders are placed overnight, and after stacking up, affect the demand- and, thus, the opening price.

Closing Price is opposite- its the price of a stock when the market closes- the price "at the close".

Ask price is the price you will pay for a stock (and is slightly more than the trading price because it includes a dealer "commission").

Bid price is what the broker, or agent, will buy your stock for (and is slightly less than the trading price because it includes a dealer "commission").

Spread is the difference between the bid price and the ask price.

If many buy orders come through the specialist, the price for the stock will be increased. If many sell orders come across the desk, the price will go down. Supply and demand drives stock prices. Lots of orders reduces the spread- thinly traded stocks have a higher spread.

Stock Exchanges in Pakistan

Karachi Stock Exchange


The Karachi Stock Exchange (KSE) was established on 18th September, 1947. It was later converted and registered as a Company Limited by Guarantee on 10th March, 1949. Initially, 90 members were enrolled, however, only half a dozen of them were active as brokers. Similarly only 5 companies were listed with a paid up capital of Rs. 37 million.
Now KSE has emerged as the key institution of the capital market of Pakistan with:-



Listed companies 724, securities listed on the exchange 752: ordinary share 724, Preference shares 5 and debt securities (TFC's) 23


Listed capital US$ 4,646 million


Market capitalization US$ 7,746 million


Average daily turnover 142 million shares with average daily trade value US$ 78 million


Membership strength at 200


Corporate Members are 92 out of which 9 are public listed companies


Active Members are 133


Fully automated trading system with T+3 settlement cycle


Deliveries through central depository company


National Clearing and Settlement System in place


 Stock Exchange Road, Karachi
 Ph:92-21-2425502, 2425504

 Lahore Stock Exchange


Lahore Stock Exchange (Guarantee) Limited came into existence in October 1970, under the Securities and Exchange Ordinance, 1969, of the Government of Pakistan in response to the needs of the Provincial metropolis of the Punjab. Only 83 members had its memberships and it was housed in a rented building in the crowded area of Bank Square in exotic city of Lahore. The number of members has increased from 83 to 150 over a period of 25 years.

The past seven years have seen Lahore Stock Exchange come to its own. Business has been steadily on the increase. A modern Management Information System, (MIS) has been firmly in place. Clearing House activities are fully computerized, computer ordering has been implemented.

LSE has set up a credit rating company named "Pakistan Credit Rating Agency (Pvt) Limited", (PACRA), in a joint venture with International Finance Corporation (IFC), and IBCA Limited of London.

 Khayaban-e-Iqbal, Lahore
 Ph:92-42-6368000, 6368522

Islamabad Stock Exchange


The Islamabad Stock Exchange (ISE) was incorporated as a guarantee limited Company on 25th October, 1989 in Islamabad Capital territory of Pakistan 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. The purpose for establishment of the stock exchange in Islamabad was to cater to the needs of less developed areas of the northern part of Pakistan.

At present there are 103 Members out of which 29 are corporate bodies including commercial and investment banks, DFIs and brokerage houses. The other 74 Members are individual persons.

Since the inception of automated trading system which is called ISECTS the trade volume is multiplying day by day and the average daily turnover has now crossed the figure of 7.5 million shares. The automated system which was indigenously developed replaced the outcry system in 1997. Now all the listed securities are traded through the ISECTS. The system of physical handling of shares and securities is being phased out and majority of the scrips are settled through Central Depository Company of Pakistan Limited.

At the moment there are 285 companies/securities listed on the Exchange with an aggregate capital of Rs. 155,352.618 million. The market capitalization was Rs. 209,360.670 million (US $ 4,551.132 million) as on 10-09-98

 Fazal-ul-Haq Road, Blue Area, Islamabad
 Ph:92-51-823330, 275045


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