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CAPITAL MARKET

: is the market for securities where companiesand government can raise long term funds

: includes stock market and bond market

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Key points of Analysis

Trends

Growth

SWOT

LE`PEST

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TRENDS

Increase in the number of listed companies

Automated trading and settlement system Intensifying Competition

KSE-100 index increased by 23.5% in termsof US Dollars

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GROWTH

KSE-100 Index that stood at 1,507 points at

the end of the year 2000.Reached record levels by 17 April-2006 at

12,274 points with market capitalization.

Which is 44% of GDP or $57 billion.

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GROWTH (Contd.)

Recently, the stock market has experienced

substantial volatility.Which resulted in a decline of 10,000 points.

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STRENGTHS

Availability of liquid stock

Economic Indicators signs of Recovery Increase in GDP

Forex Reserves

Agriculture Sector

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WEAKNESSES

Trading Limit of Few Stocks

Liquidity-A concern Authoritative Control Poor and Inefficient Public Services

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OPPORTUNITIES

Divestment will help Broaden the market

IMFs Loan Approval Incentives for the Debt market

Lowering of Tax Rates

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THREATS

Frequent Devaluation

Tax Rates Political instability

Terrorist Attack

Developing Economy

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A scan of the external macro-environment inwhich the firm operates can be expressed in

terms of the following factors Legal Economical Political

Environmental Social Technological

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LEGAL FACTORS

Legal implications and legislations can alsoinfluence the capital market activities.

Following are the examples of legal factors:

* Legal restrictions on specific businesses

* Banned products.* Heavy taxes and duties to discourage a

specific trade.

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ECONOMICAL FACTORS

Economic factors affect the purchasing power ofpotential customers and the firm's cost of capital.

Following are the examples of factors in the macro-economy:

* Economic growth

* Interest rates* Exchange rates* Inflation rates

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POLITICAL FACTORS

Political factors include government regulations and legalissues and define both formal and informal rules under

which the firm must operate. Some examples include:

* Tax policy* Foreign Policy

* Employment laws

* Environmental regulations* Trade restrictions and tariffs* Political stability

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ENVIRONMENTAL FACTORS

Environmental factors also affect the trade

and capital business in some ways.For instance:

* Natural Disasters

* Rehabilitation Policies

* EPA Regulations

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SOCIAL FACTORS

Social factors include the demographic and culturalaspects of the external macro environment. These factors

affect customer needs and the size of potential markets.Some social factors include:

* Population growth rate* Age distribution

* Career attitudes* Emphasis on safety

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TECHNOLOGICAL FACTORS

Technological Factors

Technological factors can lower barriers to entry,reduce minimum efficient production levels, andinfluence outsourcing decisions. Some technologicalfactors include:

* R&D activity

* Automation* Technology incentives* Rate of technological change* Obsolete