The document provides information about Pakistan's economy and stock market index. It discusses that Pakistan inherited 34 industrial units at independence which now contribute 64% to GDP, with textiles, agriculture, automotive and other industries as major sectors. The Pakistan Stock Exchange originally had 5 listed companies and has now grown to over 500 companies with a market capitalization of over $7 trillion. It describes several stock market indexes calculated by the PSX including the KSE-100, KSE-30, KMI-30 and others, how free float capitalization is determined, and how the KSE-100 index in particular is calculated based on free float values of the top companies from each sector.

1. Pakistan Economy and Pakistan Stock
Exchange (PSX)
Mahnoor Nadeem – Iqra Afshan – Wajiha Muhammad Ismail

2. Contents
How many industries in Pakistan Economy?
How many companies in PSX?
How many indexes in PSX?
How is index calculated?

3. Pakistan
Industries
▪ At the time of independence, Pakistan inherited only 34
industrial units out of 921 industrial units in the
subcontinent.
▪ They were cotton textile, cigarettes, sugar, rice husking,
cotton ginning and flour milling industries; and together
they contributed only 7% of GDP and employed a little
over 26,000 employees.
▪ Today’s the economy of Pakistan is 22nd largest economy
in terms of Purchasing Power Parity.
▪ From producing only 7% of GDP, are now contributing to
64% of GDP.

4. Main Industries in Pakistan Economy
Textile
Industry
Agriculture
Industry
Automotive
Industry
Chemical
Industry
Mining
Industry
Leather
Industry
Services
Industry
Pharmaceutical
Industry

5. Main Industries Contribution in GDP
50%
19.30%
8.50%
Contribution in Pakistan Economy
Service Industry
Agriculture Industry
Textile Industry

6. Pakistan Stock
Exchange
(PSX)
PSX has made significant strides in its history,
having a small presence of 5 listed companies
initially with a total paid-up capital of Rs 37 Mn.
In 1960 there were 81 companies with a market
capitalization of Rs 1.8 Bn whereas now there are
531* (+2 GEM Board) companies listed on the
bourse with a market capitalization of Rs 7.68
trillion*. The listed companies are distributed
amongst 36 sectors/ groups of industries.​
*As of Dec 31, 2021

7. Objective
The objective of PSX is to provide a safe, reliable, efficient, and consistent marketplace where
investors can buy and sell common stock of listed companies and other securities. For over 60
years, the Exchange has facilitated capital formation, serving a wide spectrum of participants,
including individual and institutional investors, the trading community, and listed companies.

8. Index
“Index measures only change in prices of a defined group of
stocks over a period.”

9. Purpose of Index
The index aims to track the performance
of stock.
The stock market index acts like a
barometer which shows the overall
conditions of the market. Investors take the
stock market as a reference to decide about
which stocks to go for investing.

10. KSE
100
The most recognized index of PSX which includes
the largest companies based on largest free float
market capitalization.
The Index represents 85% of all the market
capitalization of the Exchange.
The KSE 100 is designed to provide investors with
a sense of how the Pakistan equity market is
performing.
Companies in KSE-100 index include the top one
largest company from each 35 sectors based on
free-float capitalization plus 65 overall largest
companies

11. KSE 30
• KSE 30 Index includes the top 30 most liquid companies listed on PSX
based on Free Float methodology.
KMI 30
• KMI 30 Index tracks the 30 most liquid Shariah compliant companies
listed at PSX.
All Share Index
• Consists of all listed companies on PSX based on Full Cap methodology.

12. NITPG Index
• The index aims to track the performance of stocks that represent top 50% free float market
capitalization of KSE-100 index.
UPP9 Index
• The Index aims to track the performance of top 9 companies with highest free float market
capitalization of KSE-100 index (excluding Oil and Gas sector companies)
MZNPI Index
• The Islamic Index aims to track the performance of top 12 companies with highest
average traded value and free float market capitalization of KMI 30 Index.

13. N B P P G I I n d e x
The Index aims to track the performance of top 15 companies with highest free float market
capitalization of KSE-100 Index.
J S M F I n d e x
The JSMF Index aims to track the performance of stocks which define positive momentum
based upon total return performance and value traded over a 30-day time.
A C I E T F I n d e x
ACIETF Index is an open-end Exchange Traded Fund which aims to track the authorized
benchmark index, the Alfalah Consumer Index which would be consumer focused comprise of a
maximum 20 stocks.
P S X - K M I A l l S h a r e I n d e x
PSX-KMI All Share Index comprises of all Shariah compliant companies listed on the Pakistan
Stock Exchange Limited. The Index was developed by Pakistan Stock Exchange Limited and
Meezan Bank Limited.

14. Index Calculation
The calculation of KSE 100
Index involves dividing the free-
float market capitalization of 100
companies in the Index by a
number called the Index Divisor.
The Divisor is the only link to the
original base period value of the
KSE 100 Index.

15. Stock Selection Rules for KSE 100
Top one largest company from each 35 sectors excluding open and
mutual fund sector based on free-float capitalization
+
65 overall largest companies in descending order on basis of free-float
capitalization
35+65= 100 companies

16. Free-Float Capitalization
• It is the amount of total number of shares always available in stock market for
trading.
How Free Float Capitalization is calculated ?
• In free float market capitalization, the value of the company is calculated by
excluding shares held by the promoters, controllers, government directives or
physical shares, (in short, these shares are usually called closely held shares). These
remaining shares are the free float shares.

17. Issued Share (1,000,000@10) 10,000,000
Less: Shares owned by promoters closely held shares (400,000@10) (4,000,000)
Free Float Market Capitalization (600,000@10) 6,000,000

18. How is KSE-100 calculated?
Day 1, 1991
▪ Total market capitalization of 10,000,000= 1000 Points (BASE POINTS)
▪ Base points are use as reference point for comparison of performance of the index
▪ The base period of KSE 100 Index is November 1991 and the base value is 1,000 index
points. The calculation of KSE 100 Index involves dividing the free-float market
capitalization of 100 companies in the Index by a number called the Index Divisor.

19. Cont.
Day 2, 1991
Now make changes in share price to calculate index of day 2
▪ Current value/base value x base points
10500000/10000000 x 1000 = 1050 (+50)
▪ So now we can say that today market is 50
points increased or overall free float
capitalization of the market is increased by 50
points
▪ For seeing percentage change
New points – Old points/ Old points x 100
1050 – 1000/ 1000 x 100 = 5% increase

20. Cont.
The other indexes are calculated on same patterns with little specifications
according to their characteristics.
KSE-100 is mostly used index in Pakistan stock exchange. The reason for
choosing KSE-100 for index calculation is because the Index comprises of
100 companies selected based on sector representation and highest Free-
Float Capitalization, which captures around ~80% to 70% of the total
Free-Float Capitalization of the companies listed on the Exchange.

21. Thank You … !