Economics Final Presentation

8/14/2019 Economics Final Presentation

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(Operation & Function in Business)


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Reema Nawaz

Rabia Muzafar Ali

Ayesha Karim

Tooba Imitiaz

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Over view of market

Stock exchange

Functions of stock exchangeWorld major stock exchanges

Pakistans stock exchanges


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Market Overview

Introduction of Stock ExchangeTypes of operators in Stock Exchange

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Market

Capital market Money Market

Non Security MarketSecurity Market

Stock Exchange


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A public place where buyers and sellers maketransactions, directly or via intermediaries. Alsosometimes means the stock market.

A market is a public place where provision andobject are exposed for sale.

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Types of Market:-

There are two types of Market as following :

Capital Market

Money Market

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Money Market:-

In finance, the money market is the global financialmarket for short-term borrowing and lending. Themoney market is where short-term obligations suchas

Treasury bills,

commercial paperbankers'

acceptances are bought and sold.

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Capital Market:-

It is defined as a market in which money isprovided for periods longer than a year as theraising of short-term funds takes place onother markets (e.g., the money market). Thecapital market includes

the stock market (equity securities)

the bond market (debt).

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Organization of markets:-

A market can be organized as:-

an auction,

a private electronic market,a commodity wholesale market,a shopping center,a complex institution such as a stock market,

An informal discussion between two individuals.

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Market Infrastructure:-

Stock exchangeClearing and settlement

Education and training

Investors protectionRating agency

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Securities:-

The Securities traded on a stock exchange include:

Shares issued by companies.

Debentures.

Bonds.

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Share Holder:-

The people who provide finance to company bypurchasing shares are called shareholders.

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Types of Shares:-

Preference Shares

Cumulative preference shares

Non-Cumulative preference shares

Ordinary Shares

Deferred Shares

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Debentures:

The loan given by an invited person to a Public LimitedCompany.

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The operators who buy and sell securities onstock exchange are of several types.

Brokers (trade on behalf of outsiders)Jobbers (trade on his own behalf)

Bears (expects rise in future price)

Bulls (expects fall in price)

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Trading Procedure on SE

Role In EconomyFunction of stock exchange

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Preparing the Contract Note:The broker prepares a contract note stating:

The number and price of the security bought or sold.Brokerage and amount payable by the client.

Settlement:In the case of forward delivery contracts,settlements are done in a week or once in a month.On the settlement day, the difference in thepurchase and the sell price may be paid withoutany delivery of securities.

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Raising capital for businesses:People sell and purchase shares to expand their business

capital.

Stock Exchange provide opportunities to easily sell their

shares.Mobilizing savings for investment:People draw their savingsand invest in shares.

Savings are mobilized to invest in many of economic sectors

i.e. agriculture , commerce and industry.As a result savings makes stronger economic growth.

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Facilitating company growth:Company view acquisitions as an opportunity to:

Expand product line

Increase distribution channels Increase its market shares Or other acquire other necessary business assets.

A merger agreement through the stock market is

simplest and common way for the growth of thecompany.

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Corporate governance:

By having a wide and varied scope of owners, companiesgenerally tend to improve on their management standardsand efficiency

In order to satisfy the demands of these shareholders andthe more stringent rules for public corporations imposed bypublic stock exchanges and the government.

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Creating investment opportunities forsmall investors:As opposed to other businesses that require huge

capital outlay, investing in shares is open to both the large and small stock

investors,because a person buys the number of shares they can afford.

Therefore the Stock Exchange provides the opportunity for smallinvestors to own shares of the same companies as large investors.

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Government capital-raising fordevelopment projects:Governments at various levels may decide to borrow

money in order to finance infrastructure projects

such as sewage and water treatment works or housingestates by selling another category of securities,known as bonds.

These bonds can be raised through the StockExchange whereby members of the public buy them,

thus loaning money to the government.

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The issuance of such bonds can obviate (toremove) the need to directly tax the citizens inorder to finance development,

Barometer of the economy:At the stock exchange, share prices rise and fall

depending, largely, on market forces.Share prices tend to rise or remain stable when

companies and the economy in general showsigns of stability and growth.

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Regulation of companies:The stock exchange exercises a whole some influence on

the management of companies.

A company that wants to be listed on stock exchange

must bind itself to the rules and regulations prescribedby the stock exchange.

Employment Opportunities:Stock exchange provides employment opportunities to

the jobbers and other members who perform thereactivities in the stock exchange.

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Employment Opportunities:Stock exchange provides employment

opportunities to the jobbers and other memberswho perform there activities in the stockexchange.

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Function of SE

1. Main activities

2. Function as:

An organizationIn favor of investor

In favor of companies

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The functions of stock exchange are as following

1. Main activities:To promote the savings and for them to be canalizedtowards of carrying through investment projects that

otherwise wouldnt be possible you need that the issuinginstitution of the securities to be admitted for quoting.

The negotiations will be done on the primary market.

To provide liquidity to the investors.

The investor can recuperate the money invested when

needed.

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2. Functions as an organization are:To guarantee the legal and economic security of

the agreed contracts.

To provide official information about the

quantities that are negotiated and of the quotedprices.

To fix the prices of the securities according to thefundamental law of the offer and the demand.

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3. Functions in favor of the investor: It permits him the access to the profitable

activities of the big companies. It offers liquidity to the security investments,

through a place in which to sell or buy securities. It permits for the investor to have a political

power in the companies in which he invests itssavings due that the acquisition of ordinary sharesgives him the right (among other things) to vote in

the general shareholders meetings of the companyin question.

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World major stock exchanges

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The world major stock exchanges are classifiedaccording to regions

America

AfricaAsia

Europe


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Stock Exchange Market Value Total Share Turnover(millions USD) (million USD)

NASDAQ 2,847,535.2 19,343,868.3

So Paulo Stock Exchange 1,032,518.4 361,959.0

Toronto Stock Exchange 1,432,877.0 798,193.1

New York Stock Exchange 10,842,001.9 12,158,620.6


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Australian Securities Exchange 1,066,513.2 560,912.8

Bombay Stock Exchange 1,082,572.0 171,176.2

Hong Kong Stock Exchange 1,945,517.7 970,227.6

Korea Exchange 727,125.3 1,050,473.8

National Stock Exchange of India 1,019,109.0 506,652.3Shanghai Stock Exchange 2,142,756.8 3,315,768.5

Shenzhen Stock Exchange 596,320.2 1,701,256.8

Tokyo Stock Exchange 3,478,602.5 2,675,983.3


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Johannesburg Securities Exchange

690,797.5 210,180.8


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Euronext 2,605,097.6 1,195,962.2

Frankfurt Stock Exchange 1,204,292.0 1,589,736.7

London Stock Exchange 2,560,491.1 2,321,518.5Madrid Stock Exchange 1,178,525.6 1,040,751.1

Milan Stock Exchange 636,674.8565,759.3

Nordic Stock Exchange Group 781,146.3 503,049.9

Swiss Exchange 992,356.4 520,867.5


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Pakistans stock exchanges

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Karachi Stock Exchange

Lahore Stock Exchange

Islamabad Stock Exchange


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History:-The KSE is the first stock exchange located in Karachi, Sindh, PakistanFounded in 1947; it is Pakistan's largest and oldest stock exchange, withmany Pakistani as well as overseas listings. Its current premises aresituated on Stock Exchange Road, in the heart of Karachi's Business

District.Stock indices:- A stock index is a method of measuring asection of the stock market. There are two big indices used in KarachiStock Exchange.

KSE 100 Index:-KSE-100 Index) is a stock index, acting as abenchmark to compare prices on the Karachi Stock Exchange (KSE) overa period of time. The index was launched in late 1991 with a base of1,000 points

KSE-30 Index:KSE-30 Index with base value of 10,000 points,formally implemented from Friday, September 1, 2006


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2008 Karachi Stock Exchange Crisis

April 20:-peaked 15,737.32 on 20 April, 2008

May 23:- Record high inflation in the month of May sharpfall

July 17:- investors attacked the KSE

July 16:- KSE-100 Index dropped one-third from an all-time high hit

August 18:-KSE 100 Index rose more than 4% after the

resignation of President Pervaiz Musharaf

August 28:-set a floor for stock prices to halt a plungethat has wiped out $36.9 billion of market value since April

December 15:-Trading resumes


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History:-

The Islamabad Stock Exchange (ISE)was incorporated as a guarantee limited Companyon 25th October, 1989 in Islamabad Capital

territory of Pakistan with the main object ofsetting up of a trading and settlementinfrastructure, information system, skilledresources, accessibility and a fair and orderlymarket place that ranks with the best in the world.The purpose for establishment of the stockexchange in Islamabad was to cater to the needsof less developed areas of the northern part ofPakistan.


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Economics Final Presentation

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