Published on March 6, 2014
by Fahim Akhtar
Financial markets A place in which people and entities can trade financial securities, commodities, and other fungible items of value at low transaction cost and at prices that reflect supply and demand. •Stock markets •Commodity markets •Bond markets •Money markets •Futures markets •Insurance markets •Foreign exchange markets 3
Stock market A place where shares or stocks of corporate organizations listed in exchange are traded 4
How stock is listed for trade You want to expand business, and you need money 5
How stock is listed for trade Borrow from fiend and family 6
How stock is listed for trade 7 Go to banks for borrowing
How stock is listed for trade Go to general public 8
How stock is listed for trade 9
How stock is listed for trade 10
Registered company engages in business with funds generated Company reports profit quarterly Earnings and profitability is disbursed amongst all stake holders including those holding share during specified time Company earns more, shares goes up and in case of loss share sinks 11
Company doing good or bad business Financial results and bright or depressive expectations Players go for buying seeing rapid growth or selling anticipating depressed earnings New innovative product launched / business explored Some incentives / taxation affecting stock 12
• Listed companies • Market capitalization - • Average Daily Turnover - 570 5,154,737.92 (in millions) 263.84 (in million) 13
A stock index or stock market index is a method of measuring the value of a section of the stock market All shares KSE -100 KSE -30 KMI- 30 14
Historical performance Karachi Stock Exchange – 100 Index 15
The Federal Board of Revenue has collected Rs 1.26 billion capital gains tax (CGT) from stock exchanges during July-2012 to June 2013 ( approximately 1% of total tax collected in Pakistan) 16
• • • 200 stock brokerage houses,20,000 traders, equity dealers, researchers MBA / BBA finance , Marketing, CA, ACCA 17 50,000 professionals with market
Some international markets • • • • • • • Dow Nikkei 225 Hangseng Sensex FTSE Asx 200 DAX 18
Commodity market 19
Scare precious and energy resources Those controlling desire optimum economic benefits Smart trade of commodity in exchanges Major chunk of trade in crude and gold 20
Crude oil is used to • Produce a variety of fuels such as gasoline, diesel fuel, jet fuel and bunker fuel. • Kerosene • Fertilizers and bug killers. • Used in the production of cosmetics, perfumes • Chief ingredient in the manufacture of synthetic rubbers. 21
Crude oil reserves (in million barrels ) • Venezuela 297,570 • KSA 267,910 • Canada 175,200 • Iran 157,300 • Iraq 140,300 • Kuwait 104,000 • UAE 97,800 • Russia 80,000 • Pakistan 480 Opec formed in 1960 and often controls the prices of oil 22
Crude oil trade (in million barrels) Exporters Importers KSA 8.65 USA 12.22 Russia 9.67 Japan 5.1 Norway 2.94 China 3.4 Iran 2.52 Germany 2.48 UAE 2.52 South Korea 2.15 Venezuela 2.2 Pakistan 1.55 -1.8 Kuwait 2.15 India 1.69 Nigeria 2.15 Italy 1.56 50 % crude oil consumed is extracted internally in Pakistan 23
Jewelry forms two-thirds of annual gold demand. India is the largest consumer in volume terms, accounting for 29% of demand in 2012, followed by China and the USA Central banks and the International Monetary Fund play an important role in the gold price. At the end of 2011 central banks and official organizations held 23 percent of all above-ground gold 24
Gold Reserves in tones • • • • • • • • • • • • • • • United States Germany International Monetary Fund Italy France China Switzerland Russia Japan Netherlands India European Central Bank Turkey Taiwan Portugal 8,133.5 3,391.3 2,814.0 2,451.8 2,435.4 1,054.1 1,040.1 996.4 765.2 612.5 557.7 502.1 445.3 423.6 382.5 25 25
Speculators, takes into account economy , financial reports and events There are many future contracts trading like gold March and crude April Short selling in futures stabilize the prices 26
Gold prices take effect of • Dollar falling: • Inflation: • Economic crisis: • A fall in gold supply: technical rebound • US unemployment figures: • Political concerns, crisis: • Festivals: 27
Historical gold prices 28
• Commodities exchange work worldwide • NCEL is working in Pakistan renamed as PMEX • There are more than 50 commodity houses facilitating gold trade • More than 5000 MBAs employed in this sector many of them with good compensation package in Pakistan 29
• Account in PMEX or international broker • Variety of gold and crude oil contracts available • Futures also traded • Future carry more risk But than higher the risk, higher will be reward 30
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