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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT APRIL 2007 LAHORE STOCK EXCHANGE Hamid M. Imtiazi Managing Director and CEO LSE’s major objectives remain to provide investors with efficient and transparent trading, safe and secured settlement and accurate and timely information dissemination. The 2nd half of the year 2006 saw growth in several sectors especially Banks, Oil & Gas, Chemicals, Sugar and Auto & Allied. However, the market remained volatile during the period. LSE-25 Index started with 4,188.81 point showed sharp increase in the 3rd quarter of the year 2006 and after reaching the height of 4,825.26 points on 7 August 2006 started to decline to settle at 4,432.95 points on 29 September 2006. In the 4th quarter, due to bullish trend in the market the Index touched 5,031.21 points on 19 October 2006 but this momentum could not be sustained and Index started downward journey to settle at 4,072.92 point on 29 December 2006. As on 31 December 2006 market capitalization increased to US$ 43.582 billion. The average daily turnover of shares remained 30.992 million shares with average daily value of shares traded US$ 57.038 million during the period under review. LSE listed 4 Companies, 1 Open-end Fund and 1 Term Finance Certificate Issue of a Commercial Bank. The improved economic scenario, conducive environment due to structural reforms, consistency and continuity of economic policies including policy of privatization, deregulation and industrialization are attracting investors to all sectors of the economy of Pakistan. Privatization of state-owned companies is under consideration of the Government apart from secondary offerings of blue chips including Kot Addu Power Company Ltd., National Bank of Pakistan and United Bank Ltd. During the period under review, LSE successfully launched Unique Identification Number (UIN) System with an objective to bring more efficiency and transparency to the stock business and to improve the surveillance and monitoring capacity of the Exchange. LSE also released new Ultra Trade System; Trading Workstation version 4.93. LSE Training Institute has started formal courses to provide trained human resources for the capital market. In an effort to promote the education sector in general and financial expertise in particular in Pakistan, LSE is providing scholarships to the deserving students of Lahore University of Management Sciences (LUMS). LSE’s major objectives remain to provide investors with efficient and transparent trading, safe and secured settlement and accurate and timely information dissemination. In another trend-setting example, Lahore Stock Exchange and Islamabad Stock Exchange have joined hands to establish a Unified Trading Platform to bring increased liquidity in the market, improve price discovery, maximize transparency, increase turnover, broaden investor base, curtail risks and distortions in trade, provide cost effective service to the investing public and HISTORY AND DEVELOPMENT Lahore Stock Exchange (LSE) was incorporated in Lahore, the provincial capital of Punjab, Pakistan, under the Securities and Exchange Ordinance in 1969, as a company limited by guarantee. The activities of the Exchange have increased in all areas since inception. LSE introduced screen-based electronic trading in 1996 and became the first fully automated Stock Exchange of Pakistan. LSE has become a key institution in the financial sector of Pakistan and has a membership of 152 brokerage houses. As on 31 December 2006 there were 517 listed companies, having a listed capital of US$ 7.793 billion with a market capitalization of US$ 43.582 billion. LSE has made large investments in technology & automation to keep pace with globalization of securities trading. The Exchange is fully committed to providing a transparent, efficient, fair and investor friendly environment for the benefit of investors and issuers. The goal is to bring LSE up to international standards in operational, technical, regulatory and quality management areas and to ensure that not only domestic but also foreign investors are attracted to the Exchange for the development of the country. FUTURE OUTLOOK In 2007 Lahore Stock Exchange plans to: • continue with its strategy of increasing its geographical outreach through the use of information technology in order to attract higher trading volumes; • phase-out of Carry-Over Trading and its replacement with Margin-Trading and other modes of financing; • frame a strategy for the demutualization and integration of the stock exchanges of Pakistan in the interest of the Exchange and capital markets of the country; • enhance trading in the derivatives market and introduce Stock and Sector Index Futures; • replace existing exposure monitoring system with Value at Risk Margin System in line with global practices; • Market BrokerNet - Broker hosted Internet Stock Trading Solution; • promote and market the indigenously developed trading software i.e. Ultra Trade and related systems to other stock exchanges; • implement a regular timetable for the Broker System Audit, in order to build investors’ confidence; and • strengthen the surveillance function of the Exchange PAGE 94
FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT APRIL 2007 LAHORE STOCK EXCHANGE OFFICIAL 6 MONTH STATISTICS US$ millions # Shares millions Total Volume Average Daily Volume Total Volume Average Daily Volume Stocks Jul-06 1,617.79 77.04 858.65 40.89 Aug-06 1,454.18 66.10 735.10 33.41 Sep-06 1,015.31 48.35 535.55 25.50 Oct-06 1,040.74 65.05 565.37 35.34 Nov-06 1,084.70 51.65 650.25 30.96 Dec-06 680.98 34.05 405.22 20.26 TOTAL 6,893.70 57.04 3,750.14 31.06 Bonds Jul-06 n/a n/a n/a n/a Aug-06 n/a n/a n/a n/a Sep-06 n/a n/a n/a n/a Oct-06 n/a n/a n/a n/a Nov-06 n/a n/a n/a n/a Dec-06 n/a n/a n/a n/a TOTAL n/a n/a n/a n/a Other Jul-06 n/a n/a n/a n/a Aug-06 n/a n/a n/a n/a Sep-06 n/a n/a n/a n/a Oct-06 n/a n/a n/a n/a Nov-06 n/a n/a n/a n/a Dec-06 n/a n/a n/a n/a TOTAL n/a n/a n/a n/a Market Capitalization (US$ millions) Index MONTHLY STOCK VOLUME VS INDEX (US$ millions) Stocks Index MONTHLY MARKET CAPITALIZATION (US$ millions) Jul-06 46,971.85 4,660.42 Aug-06 44,901.79 4,347.82 Sep-06 45,865.02 4,432.95 Oct-06 49,025.77 4,831.98 Nov-06 46,347.77 4,425.38 Dec-06 43,582.54 4,072.92 CONTACT INFORMATION 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 5,000 50,000 45,000 4,000 40,000 35,000 3,000 30,000 25,000 2,000 20,000 15,000 1,000 10,000 5,000 0 0 July Aug Sept Oct Nov Dec July Aug Sept Oct Nov Dec Contact Name Mr. Amir Razakhan E-mail amir@lahorestock.com Website www.lahorestock.com * Please refer to page 84 for the Pakistan country report. PAGE 95
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