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CAPITAL MARKET

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CAPITAL MARKET

  1. 1. UNIVERSITY OF EDUCATION BANK ROAD, CAMPUS LAHORE. B.B.A (HONS) 5TH SEMESTER CAPITAL MAREKT
  2. 2. 1. CAPITAL MARKET  DEFINATION  Instruments  Types Of Capital Market  Role Of Capital Market  Capital Market In Pakistan 2. STOCK MARKET  What is a stock market?  When to invest in a particular stock?  Importance and role of the stock markets  Role Of Stock Exchange In Capital Market Of Pakistan  Lahore Stock Exchange, Karachi Stock Exchange & Islamabad stock Exchange  Pakistan Stock Exchange and Listing in PSX 3. SECURITY AND EXCHANGE COMMISION OF PAKISTAN (SECP)  Definition  Mission, Vision  Function of SECP  Stock index 4.FOREIGN PORTFOLIO INVESTMENT
  3. 3. CAPITAL MARKET
  4. 4. CAPITAL MARKET The market where investment instruments like bonds, equities and mortgages are traded is known as the capital market. The primal role of this market is to make investment from investors who have surplus funds to the ones who are running a deficit.
  5. 5. INSTRUMENTS OF CAPITAL MARKET :  The capital market offers both long term and overnight funds.  The different types of financial instruments that are traded in the capital markets are: > equity instruments > credit market instruments, > insurance instruments, > foreign exchange instruments, > hybrid instruments and > derivative instruments.
  6. 6. Types of capital market There are two types of capital market: Primary market, Secondary market
  7. 7. Primary Market PRIMARY MARKET :  It is that market in which shares, debentures and other securities are sold for the first time for collecting long-term capital. This market is concerned with new issues. Therefore, the primary market is also called NEW ISSUE MARKET.
  8. 8. In this market, the flow of funds is from savers to borrowers (industries), hence, it helps directly in the capital formation of the country. The money collected from this market is generally used by the companies to modernize the plant, machinery and buildings, for extending business, and for setting up new business unit.
  9. 9. Secondary Market  The secondary market is that market in which the buying and selling of the previously issued securities is done. The transactions of the secondary market are generally done through the medium of stock exchange. The chief purpose of the secondary market is to create liquidity in securities.
  10. 10.  If an individual has bought some security and he now wants to sell it, he can do so through the medium of stock exchange to sell or purchase through the medium of stock exchange requires the services of the broker presently, their are 24 stock exchange in PAKISTAN. .
  11. 11. Role of Capital Market • The primary role of the capital market is to raise long-term funds for governments, banks, and corporations. • For companies, there are many reasons why they would want to raise capital. It is typically to finance: 1. Startup businesses – investing in new and innovative ideas 2. Ongoing operations – one reason a company may have to do this is because of an unexpected decline in revenue 3. Expansions – at home or abroad, with existing or new products/services, companies often need to borrow in order to grow
  12. 12. Capital Market in Pakistan: Instruments Traded In Pakistan :  Corporate Bonds  Federal Investment Bonds (FIB)  Equities
  13. 13.  What is a stock market? A stock market or equity market is a market for the trading of company stock (shares) and derivatives at an agreed price. According to Merriam Webster: “An association of people organized to provide an auction market among themselves for the purchase and sale of securities.”
  14. 14.  Importance and role of the stock Markets  Government capital-raising for development projects  Liquidity  Barometer of the economy  Stock exchange Protect investors  Mobilizes savings  Facilitates public borrowing
  15. 15. Role of Stock Exchanges In Capital Market of Pakistan Stock exchanges are playing a crucial role in the consolidation of a Pakistan's economy in general and in the development of industrial sector in particular. It is one of the most dynamic and organized component of capital market. In a developing country like Pakistan, the stock exchanges play a cardinal role in promoting the level of capital formation through effective mobilization of savings and ensuring investment safety.
  16. 16.  The Karachi Stock Exchange Limited (KSE), was a stock exchange located at the Stock Exchange Building (SEB) on Stock Exchange Road, in the heart of Karachi's Business District, I. I. Chandigarh Road, Karachi, Sindh Province of Pakistan It is Pakistan's largest and one of the oldest stock exchange in South Asia by market capitalization, with many Pakistani consortium as well as overseas enterprises listings. Founded on September 18, 1947, Karachi Stock Exchange Limited (KSE) is the exchange in Pakistan. It was declared the "Best Performing Stock Market of the World for the year 2002"
  17. 17. The Lahore Stock Exchange (Guarantee) Limited came into existence in October 1970, under the Securities and Exchange Ordinance of 1969 by the Government of Pakistan in response to the needs of the provincial metropolis of the province of Punjab The LSE has 152 members of which 81 are corporate, and 54 are individual members. The LSE was the first stock exchange in Pakistan to use the internet and currently 50% of its transactions are via the internet.
  18. 18. Islamabad Stock Exchange was the youngest of the three stock exchanges of Pakistan and is located in the capital of Islamabad. Islamabad stock exchange (ISE) was incorporated as a guarantee- limited company on 25 October 1989 in Islamabad capital territory 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. It started trading in July 1992There are 250 securities listed in Islamabad Stock Exchange at the moment
  19. 19. PAKISTAN STOCK EXCHANGE (PSX)
  20. 20. PSX Introduction • Pakistan Stock Exchange PSX 2016 - Pakistan Stock exchange is the merger of all three stock exchanges(ISE, LSE, KSE) of Pakistan. Entities which provide "trading" facilities for stock brokers and traders, to trade stocks and other securities.
  21. 21. Pakistan Stock Exchange PSX2016 -of Pakistan, aimed to help reduce market fragmentation and create a strong case for attracting strategic partnerships necessary for providing technological expertise and assistance.
  22. 22. Listing in PSX: As on March 25th, 2016 there are 580 companies listed in PSX and the total market capitalization is Rs. 6,793.053 billions. The listing is done on the basis of strict rules and regulations laid out by (SECP) & the management of (PSX).
  23. 23. SECURITY AND EXCHANGE COMMISION OF PAKISTAN (SECP)
  24. 24. DEFINATION : “The Securities and Exchange Commission of Pakistan (SECP) is the financial regulatory agency in Pakistan whose objective is to : • develop a modern and efficient corporate sector and a capital market based on sound regulatory principles, • in order to encourage investment and foster economic growth and prosperity in Pakistan”.
  25. 25. INTRODUCTION:  SECP stands for Security and Exchange Commission of Pakistan  Financial Regulatory Agency in Pakistan  Setup under the Act 1997  This Act may be called as the Securities and Exchange Commission of Pakistan Act, 1997.  It extends to the whole of Pakistan.
  26. 26. Its VISION is the development of modern and efficient corporate sector and capital market, based on sound regulatory principles. MISSION is to develop a fair, efficient and transparent regulatory framework, based on international legal standards and best practices
  27. 27.  These are the some following functions:  Regulating the issue of securities  Regulating the business in Stock Exchanges and any other securities markets  Prohibiting fraudulent and unfair trade practices relating to securities markets  Supervising and monitoring the activities of any central depository and Stock Exchange clearing house  Encouraging the organized development of the capital market and the corporate sector in Pakistan
  28. 28. Certificates issued by SECP
  29. 29. SECP Division • The SECP is divided into the following four divisions: Securities Market Division Company Law Division Specialized Companies Division Insurance Division
  30. 30. Law Division Objective: Growth of enterprise, protection of investors and creditors, promotion of investment and development of economy Law division divided into three departments:
  31. 31. Securities Market Division • Objective: Protection of investors, regulation of markets dealings in securities It has two department:
  32. 32. 3.Specialized Companies Division Objective: • To provide a regulatory environment for the development and promotion of a Non-Bank Financial (NBF) sector. • Protect the interests of shareholders, depositors and policyholders under the relevant laws. .
  33. 33. 4. Insurance Division. •The main objectives includes: •Regulates and monitors the Insurance Sector through • Insurance Ordinance, 2000 and the Companies Ordinance, 1984
  34. 34. Stock index: • A stock index or stock market index is a measurement of the value of a section of the stock market. • The movements of the prices in a market or section of a market are captured in price indices called stock market indices. • It is a tool used by investors &financial managers to describe the market &to compare the return on specific investments . Types of indices: 1. Global stock market index 2. National index
  35. 35. STOCK INDEX : KSE 100 increased 161 points or 0.34% to 47772 on Friday December 30 from 47667 in the previous trading session. Historically, the Pakistan Stock Market (KSE100) reached an all-time high of 47771.53 in December of 2016 and a record low of 538.89 in June of 1990.
  36. 36. Foreign portfolio investment (FPI) consists of securities and other financial assets passively held by foreign investors. It does not provide the investor with direct ownership of financial assets and is relatively liquid depending on the volatility of the market. FOREGIN PORTFOLIO INVESTMENT
  37. 37.  FPI is part of a country’s capital account and shown on its balance of payments (BOP). The BOP measures the amount of money flowing from one country to other countries over one monetary year. It includes the country’s capital investments, monetary transfers, and the number of exports and imports of goods and service.  Pakistan attracted only $68.2 million during the July-November as opposed to $140.3 million

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