KSE100 Index

Calculation:
The Free-float based KSE 100 was calculated parallel to the full-cap KSE-100
Index since 11th June 2012 and the recomposed KSE100 Index based on free-float
methodology effective from October 15th 2012. In this transition, the Rules for
composition and re-composition of the Index based on free-float methodology
have remained un-changed other than selection of companies on the basis of free-
float market capitalization as against total market capitalization.
Selections of companies
The KSE-100 Index was introduced in November 1991 with base value of 1,000
points. The Index comprises of 100 companies selected on the basis of sector
representation and highest FreeFloat Capitalization, which captures around ~80%
to 70% of the total Free-Float Capitalization of the companies listed on the
Exchange. Out of the following 36 Sectors, 35 companies are selected i.e. one
company from each sector (excluding Open-End Mutual Fund Sector) on the basis
of the largest Free-Float Capitalization and the remaining 65 companies are
selected on the basis of largest Free-Float Capitalization in descending order. This
is a total return index i.e. dividend, bonus and rights are adjusted.
Objective:
The primary objective of the KSE100 index is to have a benchmark by which the
stock price performance can be compared to over a period of time. In particular,
the KSE 100 is designed to provide investors with a sense of how the Pakistan
equity market is performing. Thus, the KSE100 is similar to other indicators that
track various sectors of the Pakistan economic activity such as the gross national
product, consumer price index, etc.
KSE30 Index
Calculation:
KSE-30 Index is calculated using the “Free-Float Market Capitalization”
methodology. In accordance with methodology, the level of index at any point of
time, reflects the free-float market value of 30 companies in relation to the base
period. The free-float methodology refers to an index construction methodology
that takes into account only the market capitalization of free-float shares of a
company for the purpose of index calculation.
SELECTION CRITERIA
The companies which qualify the prerequisites will be selected on the basis of
highest marks obtained as per the following criteria:
1 Free-Float Market Capitalization
.2 Liquidity
3 Final Rank
4 Selection of 30 companies for inclusion in the KSE-30 Index
4.1 The Company which is on the Defaulters’ Segment and/or its trading is
suspended, declared Non-Tradable (i.e. NT) in preceding 6 months from the date
of recomposition shall not be considered for inclusion in KSE-30 Index;
4.2 The Company will be eligible for KSE-30 Index if its securities are available in
the Central Depository System;
4.3 The Company should have a formal listing history of at least two months on
PSX;
4.4 The company must have an operational track record of at least one financial
year;
4.5 The Company should have minimum free-float shares of 5% of total
outstanding shares;
4.6 The Company will be eligible for KSE-30 Index if its securities are traded for
75% of the total trading days; 4.7 The company should have an Average Impact
Cost of equal
4.7 The company should have an Average Impact Cost of equal to or less than
1.5%;
4.8 The Open-End and Closed-End Mutual Funds will not be eligible for inclusion
in the KSE-30 Index
Objective:
The primary objective of the KSE-30 Index is to have a benchmark by which the
stock price performance can be compared to over a period of time. In particular,
the KSE-30 Index is designed to provide investors with a sense of how large
company’s scrips of the Pakistan’s equity market are performing. Thus, the KSE-
30 Index will be similar to other indicators that track various sectors of country’s
economic activity such as the gross national product, consumer price index, etc.
KMI30
Calculation:
KMI 30 Index shall be calculated on total return basis and corporate actions (Cash
dividend, Bonus and Right issue) adjustments shall be made in order to maintain
the index continuity. If no adjustments were made, a discontinuity would arise
between the current value of the index and its previous value despite the non-
occurrence of any economic activity of substance. At the Exchange, the base value
will be adjusted, which is used to alter market capitalization of the component
stocks to arrive at the KMI 30 Index value.
Selection Criteria:
All the eligible companies for the Islamic Index can be included up to a maximum
of thirty (30) companies. During the selection process, each company’s financial
reports are thoroughly reviewed by research analysts of Al Meezan to ensure that
the company meets benchmarks or thresholds for Shariah compliance screening.
Those that are found to be non-compliant are screened out. The industries that are
considered non-compliant (as defined in the eligibility criteria) are not considered
for inclusion in the Islamic, as these would not be appropriate for investment from
Shariah perspective. From the list of Shariah compliant companies, securities are
selected on the basis of Free Float and Impact Cost. While ranking the companies
50% weight is assigned to Free Float capitalization and the remaining 50% is
allocated to Impact Cost, such that the companies with the highest Free Float and
the lowest Impact Cost get the highest rank in the selection process. Top 30 ranked
companies as per above criteria are included in Islamic Index
Objective:
The objective of KSE-Meezan Index (KMI 30 Index) is to serve as a gauge for
measuring the performance of Shariah compliant equity investments. It may also
act as a research tool for strategic asset allocation process. Besides tracking
performance of Shariah compliant equities, its construction will increase investor
trust and enhance their participation.
BKTi
Calculation:
Tradable Banks index is calculated using the “Free-Float Market Capitalization”
methodology. In accordance with methodology, the level of index at any point of
time, reflects the free-float market value of top companies in relation to the base
period. The free-float methodology refers to an index construction methodology
that takes into account only the market capitalization of free-float shares of a
company for the purpose of index calculation.
Free-float Methodology improves index flexibility in terms of inclusion any stock
from all the listed stocks. This improves market coverage and sector coverage of
the index. For example, under a Full-Market Capitalization Methodology,
companies with large market capitalization and low free-float can be included in
the Index. However, under the Free-float Methodology, since only the free-float
market capitalization of each company is considered for index calculation, it
becomes difficult to include closely held companies in the index while at the same
time preventing their undue influence on the index movement.
Selection Criteria:
The Banking Sector plays vital roles in Pakistan’s economy and therefore PSX has
developed a Tradable Banks index which tracks at least 80% free-float market
capitalization of the Banking Sector. This index provides Investors and Market
Intermediaries with an appropriate benchmark that captures the performance of
each segment of the economy.
Objective:
The Free-Float calculation can be used to construct stock indices for better market
representation than those constructed on the basis of total market capitalization of
companies. It gives weight for constituent companies as per their actual liquidity in
the market and is not unduly influenced by tightly held large-cap companies. Free-
Float can be used by the Exchange for regulatory purposes such as risk
management and market surveillance.
The primary objective of the Banking tradable index is to have a benchmark by
which the stock price performance of the Banking Sector can be gauged and
compared over a period of time. This index is designed to provide investors with a
depiction of the breath of the sector and their performance in Pakistan’s equity
market.
OGTi
Calculation:
This Index is based on the internationally accepted standard of Free Float Market
Capitalization weightage. The weightage of each scrip is determined in the based
on the 50% Free Float (FF) and 50% Impact Cost (IC).
Selection Criteria:
The selection criteria give 50% weightage to the FF and 50% to IC of each stock.
The lowest IC and highest FF are given top marks. Companies are selected based
on total marks (in descending order) until at least 80% FF market cap of the given
sector (Oil & Gas) has been included. Once a minimum 80% FF market cap has
been achieved, no more companies shall be added to the index
Objective:
The primary objective of the Oil & Gas Tradable Index is to have a benchmark by
which the stock price performance of the Oil & Gas Sector can be gauged and
compared over a period of time. This index is designed to provide investors with a
depiction of the breath of the sector and their performance in Pakistan’s equity
market.
The Oil & Gas Sector plays vital roles in Pakistan’s economy and therefore PSX
has developed Oil & Gas Tradable Index which tracks at least 80% free-float
market capitalization of the Banking Sector. This index provides Investors and
Market Intermediaries with an appropriate benchmark that captures the
performance of each segment of the economy. *Oil & gas sector only includes Oil
& Gas exploration Sector
KMIALLSHR
Calculation:
The Index Technical Committee has used _15000_points__ as the base value,
whereas Dec 31, 2014 serve as the base period for the index. The value of Islamic
Index shall be arrived at by dividing the Full market capitalization (Total shares *
market price) of all eligible Islamic Securities in the Index by a number called the
Index Divisor. r. The Divisor is the only link to the original base period value of
the Islamic Index. It will keep the Index comparable over a period and will be the
adjustment point for all future corporate actions, replacement of scrips etc.
Given the circumstances, the revised market capitalization is divided by closing
index value (prior to adjustment) to get the new divisor which takes care of the
impact arising out of cash dividend, bonus, right issues or other such corporate
actions affecting the market price or number of outstanding shares. The calculation
will be carried out one day prior to the commencement of closure of share transfer
register on T+2 settlement basis and the prices shall be opened on ex entitlement
basis one day prior to the commencement of book closure of share transfer register
Selection Criteria:
The selection criteria for the companies / shares which can be included in All
Shares Islamic Index of Pakistan comprises of two broad categories:
1. Shariah Screening Criteria;
2. Technical filters
Shariah Screening Filters
For any stock to be Sharia compliant, it must meet ALL six criteria given below:
Screening Criteria # 1: Business of the Investee Company
Screening Criteria # 2: Interest Bearing Debt to Total Assets,
Screening Criteria # 3: Non-Compliant Investments to Total Assets, <33%
Screening Criteria # 4: Non-complaint Income to Total revenue,
Screening Criteria # 5: Illiquid Assets to Total Assets, >25%
Screening Criteria # 6: Net Liquid Assets/Share Vs Market Price/Share
Technical Screening Filters
Screening Criteria # 1: The Company which is on the Defaulters’ Counter and/or
its trading is suspended, declared Non-Tradable (i.e. NT) as on the re-composition
date shall NOT be considered for inclusion in All Shares Islamic Index
Screening Criteria # 2: The Company will be eligible for All Shares Islamic Index
of Pakistan of Pakistan if its securities are available in the Central Depository
System
Screening Criteria # 3 Newly listed company shall be included in index re
composition list which full fills the other eligible criteria.
Screening Criteria # 4 The company must have an operational track record of at
least one financial year
Screening Criteria # 5 The Company which have less than 5% free-float and / or of
its shares are traded for less than 75% of the total trading days of the review period
shall be included in Index however disclosed separately in the index.
Screening Criteria # 6 Mutual Funds (both Open-Ended and Closed-Ended) are
ineligible for inclusion in the All shares Islamic Index, however a separate list of
all Shariah complaints investments will be developed including mutual fund and
Sukkuk to provide investment with comprehensive list of Shariah complaints
investment avenues in the capital market.
Objective:
The principal objective of the All Shares Islamic Index is to gauge the performance
of the Shariah compliant segment of the equity market. Accordingly, it is important
that all those shares which meet the Shariah screening criteria should be included
in the All Shares Islamic Index in order to ensure completeness of the index and
adherence to the core objective of the proposed All Shares Islamic Index.
However, it is also worth noting that many of the listed companies in Pakistan are
closely held by sponsors, resulting in very small free floats. Such shares can be
illiquid and carry a high risk of price distortion. In order to achieve the objective of
the index, companies which do not meet the requirements of “minimum free float
of 5%” and “atleast 75% days trading”, should be disclosed as a separate category
to inform the investors about the illiquid nature of these shares.