Guideto Investors in Karachi Stock Exchange

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The Kara chi Stock Exchange

Managing Director’s Message
Securities markets of Pakistan have registered a period of un-paralleled growth during the past few years and have been acclaimed as the fastest growth markets in the world. As a result of reforms and liberalization process, our capital market has not only been making great strides but also adapting itself to new procedures, practices and patterns. In the prevailing environment in the country, investment through stock market has assumed greater importance. The Karachi Stock Exchange is the biggest and most adaptable Exchange of the country. With the fast and vast changes in the regulatory framework and procedures governing the capital market coupled with rising volatility, it is felt that the investors, who are the real backbone of this market, need to be fully aware and educated, not only for their own benefit, but also for improvement of quality investment and for creating a lucrative investment atmosphere. Investors’ education and training are therefore the most important and effective factors, which demand greater attention and response from all the major players in the field. The basic purpose of investors’ education is to create awareness of its importance in the minds of capable public who will make well considered investment decisions based on authentic information rather than hearsay.

The Karachi Stock Exchange (KSE) and the Securities & Exchange Commission of Pakistan (SECP), both have been endeavoring to restore confidence of investors in the stock market by ensuring adequate transparency and disclosure requirements. In addition, efforts are also being made to educate investors on investment risks and rewards, importance and significance of financial planning and, above all, rights and obligations of investors and means available to them.

This Guide is a part of KSE’s program to extend a helping hand to potential and existing stock market investors. I earnestly hope that it will indeed be very gainful to them.

Moin M. Fudda

T he Karachi Stock E xchange

Table of Contents
1.

PLANNING INVETMENT STRATEGY ...................................................................... 04 1.1
Your money merits your attention .................................................................................... 04

2.

FORMS OF INVESTMENT .......................................................................................... 04 2.1
Financial Investments ...................................................................................................... 05

3.

CAPITAL MARKETS .................................................................................................. 06

4.

WHAT IS A STOCK EXCHANGE? ............................................................................ 06 4.1
The Role of a Stock Exchange ......................................................................................... 06 4.2
Stock Exchanges in Pakistan ............................................................................................ 07

5.

MAJOR INSTRUMENTS TO INVEST IN THROUGH STOCK EXCHANGE .......... 07 5.1
Stocks / Shares .................................................................................................................. 07 5.2
Bonds ................................................................................................................................ 07

6.

WHAT IS A COMPANY? ............................................................................................. 08 6.1
Kinds of Companies .......................................................................................................... 08 6.1.1 Unlimited Companies ............................................................................................ 08 6.1.2 Companies Limited by Guarantee ...........................................................................08 6.1.3 Companies Limited by Shares...
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