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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
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