Pakistan Stock Exchange

Last updated

Pakistan Stock Exchange Limited
FormerlyKarachi Stock Exchange Limited
Company type Stock exchange
PSX
Founded11 January 2016;8 years ago (2016-01-11)
(Originally Karachi Stock Exchange founded on 18 September 1947)
Headquarters
Karachi-74000
,
Pakistan
Key people
 Shamshad Akhtar (Chairperson and Independent Director)
Farrukh H. Sabzwari (CEO and Managing Director)
RevenueDecrease2.svgRs. 1.464 billion (US$5.1 million) (2023)
Decrease2.svgRs. 219.589 million (US$760,000) (2023)
Total assets Increase2.svgRs. 13.036 billion (US$45 million) (2023)
Total equity Increase2.svgRs. 10.395 billion (US$36 million) (2023)
Owners China Financial Futures Exchange (17%)
Shanghai Stock Exchange (8%)
Shenzhen Stock Exchange (5%)
Pak China Investor Company (5%)
Habib Bank Limited (5%)
Number of employees
231 (2023)
Website psx.com.pk
dps.psx.com.pk
Footnotes /references
Financials as of 30 June 2023 [1]
Coordinates 24°50′50.7″N66°59′53.9″E / 24.847417°N 66.998306°E / 24.847417; 66.998306
Currency Pakistani rupee  (₨) (PKR)
No. of listings523 (September 2023) [2]
Market cap Rs. 14.587 trillion (US$51 billion) (13 Dec 2024) [3]
Indices KSE 100 Index
KSE-30 Index
KSE ALL Index
KMI 30 Index
KMI ALL Index

The Pakistan Stock Exchange (PSX), founded as Karachi Stock Exchange (KSE), is a stock exchange based in Karachi, Pakistan. [4] [5] PSX was classified by MSCI as a frontier market on 8 September 2021. [6]

Contents

Pakistan Stock Exchange was founded in 1947 as Karachi Stock Exchange, In January 2016, Karachi Stock Exchange was renamed as Pakistan Stock Exchange after the merger of the Lahore Stock Exchange and Islamabad Stock Exchange. [7]

Investors on the exchanges include 1,886 foreign institutional investors and 883 domestic institutional investors along with about 220,000 retail investors. There are also about 400 brokerage houses which are members of the PSX as well as 21 asset management companies. [8] [9]

History

1947–2016: Karachi Stock Exchange

UK's Foreign Secretary William Hague rings the closing bell at the Karachi Stock Exchange on 24 June 2010 Karachi stock exchange (4729587341).jpg
UK's Foreign Secretary William Hague rings the closing bell at the Karachi Stock Exchange on 24 June 2010

Founded on 18 September 1947, Karachi Stock Exchange Limited (KSE) was registered in Pakistan. It was located at the Stock Exchange Building (SEB) on Stock Exchange Road, in the heart of Karachi's business district off I. I. Chundrigar Road (then known as McLeod Rd). [10] Since its establishment, the number of members at the KSE had been capped at 200, with each member possessing a trading card. [11] The value of these cards had experienced volatility, rising from slightly more than one million rupees before 1990 to approximately 40 million rupees in the mid-1990s, before settling at around 27.5 million rupees in 2002. [11]

From its founding up until May 27, 1998, the Karachi Stock Exchange (KSE) trading hall was characterized by the vocal trading cries of "La-oo" from buyers and "Lay" from sellers, a method known as open outcry. [11] The advent of foreign investors in the early 1990s catalyzed a push for modernization, supported by a $125 million loan from the Asian Development Bank for capital market reforms. [11] This led to the replacement of the traditional open outcry system with the automated Karachi Automated Trading System (KATS). [11]

Securities and Exchange Commission of Pakistan was founded in 1999 with the aim to reform the capital markets. [12] Khalid Mirza was appointed as SECP Chairman in March 2000. [13] Upon taking office, Mirza found the Karachi Stock Exchange characterized by extensive market manipulation and unethical practices. [13] Despite a market capitalization of only $6 billion, it exhibited extreme volatility and high turnover, with trading concentrated in just 30 of the 765 listed stocks. [13] Malpractices such as fund diversion, absence of margin requirements, and predatory lending were common, disadvantaging small investors. [13] Commercial banks were involved in lending to brokers who engaged in exploitative practices like "cornering." [13] Shareholder meetings were often delayed or not held, and there was a trend of companies delisting and liquidating assets, contributing to economic decline. [13] His efforts to reform the capital markets faced significant resistance, including public protests from stock exchange brokers who labeled him an "American agent." [13]

Despite efforts to clean up the market, significant issues persisted. [13] Manipulation continued, and brokers maintained substantial influence over the exchange, controlling 60 percent of its board of directors even after new SECP regulations aimed to limit their management role. [13] The SECP was granted authority to regulate accountants, but penalties for misconduct remained minimal, at $30 per offense. [13] Mirza and his team faced entrenched vested interests resistant to reform, and challenges in enforcing transparency and accountability in Pakistan's financial markets continued. [13]

On December 14, 1999, the SECP issued the Companies (Buy-back of Shares) Rules, 1999, which established detailed regulations and procedures for corporate share repurchases, commonly known as treasury stock. In 2002, Alhamd Textile Mills, a textile company based in Multan, became the first company in the history of stock exchange to buy back shares from its shareholders under these new regulations. [14]

2016–present: Pakistan Stock Exchange

The Pakistan Stock Exchange (PSX) came into existence in January 2016 when the Government of Pakistan decided to merge the three large exchange markets of the country (based in Karachi, Lahore, and Islamabad) into one combined market. [15] The PSX was launched on 11 January 2016. Prior to the formal launch, the Karachi Stock Exchange held a two-day pre-production mock trading session for all certificate holders of the three exchanges. The integration is expected to help reduce market fragmentation and create a strong case for attracting strategic partnerships necessary for providing technological expertise and assistance. The integration of the three exchanges has completed the second phase of the Stock Exchanges Demutualization and Integration Act 2012, passed by a joint session of the Parliament. [16]

The Shanghai Stock Exchange became a major shareholder with a 40% stake in the PSX. [17] : 154–155  PSX is integrated with China's stock market through the China Connect Interface, allowing Chinese investors to more easily enter Pakistan's stock markets. [17] : 155 

Indexes

Associate companies

Notable companies in which PSX owns controlling or significant minority stakes include:

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References

  1. ↑ "Pakistan Stock Exchange Annual Report 2023" . Retrieved 23 August 2024.
  2. ↑ Alam, Kazim (7 September 2023). "PSX chief hints at new wave of IPOs". DAWN.COM. Retrieved 17 March 2024.
  3. ↑ "Volatility fails to dampen rally". Business Recorder. 14 December 2024. Retrieved 14 December 2024.
  4. ↑ "Pakistan Stock Exchange formally launched". Dawn. Pakistan. 11 January 2016. Retrieved 9 October 2022.
  5. ↑ "Pakistan Stock Exchange formally launched | Pakistan Today". archive.pakistantoday.com.pk. 11 January 2016.
  6. ↑ "MSCI Downgrades Pakistan to Frontier Market After Four Years". Bloomberg. 7 September 2021 – via www.bloomberg.com.
  7. ↑ "Ishaq Dar formally launches Pakistan Stock Exchange". The News International . Retrieved 24 February 2022.
  8. ↑ "Pakistan Stock Exchange: a quantum leap for Pakistan's capital market". DailyTimes. Retrieved 22 February 2016.
  9. ↑ "Stock exchange: Pakistan likely to win emerging market status". The Express Tribune. 10 June 2015. Retrieved 22 February 2016.
  10. ↑ Dawn.com (11 January 2016). "Pakistan Stock Exchange formally launched". DAWN.COM. Retrieved 24 February 2022.
  11. 1 2 3 4 5 Hussain, Dilawar (23 September 2002). "Stock trading: identification of buyer/seller, fair or foul". DAWN.COM.
  12. ↑ "Khalid Mirza at SECP - Mohsin Bashir, Aneka F. Sufi, 2021".
  13. 1 2 3 4 5 6 7 8 9 10 11 Behar, Richard (29 April 2002). "Kidnapped Nation Welcome to Pakistan, America's frontline ally in the war on terror, where culture and economy conspire against even the best intentions". Fortune .
  14. ↑ Hussain, Dilawar (15 April 2002). "First-ever share buy-back offer". Dawn.
  15. ↑ "Pakistan Stock Exchange formally launched". DAWN.COM. 11 January 2016.
  16. ↑ Dawn.com (11 January 2016). "Pakistan Stock Exchange formally launched". www.dawn.com. Retrieved 22 February 2016.
  17. 1 2 Curtis, Simon; Klaus, Ian (2024). The Belt and Road City: Geopolitics, Urbanization, and China's Search for a New International Order. New Haven and London: Yale University Press. doi:10.2307/jj.11589102. ISBN   9780300266900. JSTOR   jj.11589102.
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