FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT <strong>JUNE</strong> <strong>2013</strong>İSTANBUL MENKUL KIYMETLER BORSASICAPITAL MARKET DEVELOPMENT AND ECONOMIC OUTLOOKFurthermore, capacity utilization rates havebeen elevated and the economy is operatingnear its potential.The annual inflation rate based on CPIdecreased from 10.45% to 6.16% in 2012 whileunemployment rate remained unaltered at 9.1%.Weighted average interest rates for TL depositwere 10.05% in the end of 2011 while in end-November 2012 it decreased to 9.46%.The visible improvements in Turkish economyhave also boosted foreign trade, while annualexports reached to 140 billion US$ in theperiod January-November 2012 with a 14.3%increase, imports reached to 217 billion US$with a decrease of 1.6% in comparison to thesame period of 2011. Similarly, tourism revenuewhich is an important source of foreign currencyfor Turkey was 17.3 billion US$ in the first threequarters of 2012 compared to 17.8 billion US$ inthe same period of 2011.In 2012, İMKB National 100 Index reached to2,561 (US$ based). The stock market yearlytotal traded value was 347.85 billion US$ andthe average daily traded value of equitiesamounted to 1.37 billion US$.At the end of 2012, the market capitalization of406 İMKB traded companies reached to 309billion US$. Sixteen ETFs (Exchange TradedFund) are traded on İMKB Collective ProductsMarket.The turnover in fixed income securitiestransacted on Outright Purchases and SalesMarket was 200 billion US$ in 2012. The Repo/Reverse Repo Market turnover was 2.07 trillionUS$ in the same period. The average dailytraded value in the overall Debt SecuritiesMarket increased by 55% to 15.07 billion US$in 2012.Twenty six companies offered their stocks for thefirst time to public in 2012. The amount of fundsraised through 26 IPOs was 352.14 million US$.* Information provided by İMKBAnnual Average GDP Growth (%), Top 20 Countries (Forecast in OECD countries, 2011-2014)6,05,05.305.164.654,03,02,03.66 3.633.343.032.80 2.73 2.62 2.512.32 2.22 2.211.871.68 1.64 1.53 1.48 1.361,00,0ChileTurkeyEstoniaMexicoSource: OECD Economic Outlook No: 92IsraelKoreaAustraliaSlovak RepublicPolandIcelandSwedenNorwayUnited StatesCanadaNew ZealandFinlandGermanySwitzerlandAustriaIrelandKey Information ContactsCapital Markets Board of Turkey www.cmb.gov.trİMKB Settlement and Custody Bank Inc. (Takasbank) www.takasbank.com.trMerkezi Kayıt Kuruluşu www.mkk.com.trThe Association of Capital Market Intermediary Institutions of Turkey www.tspakb.org.trThe Turkish Derivatives Exchange (TurkDEX) www.turkdex.org.trCONTACT INFORMATIONContact Name Mr. Mahmut Aydoğmuş E-mail international@borsaistanbul.com Website www.borsaistanbul.comPAGE 52
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT <strong>JUNE</strong> <strong>2013</strong>KARACHI STOCK EXCHANGEWe remain committed to enhancing our riskmanagement and surveillance measures.Nadeem NaqviManaging DirectorThe year 2010-2011 was full of challenges,economic growth managed to grow by 2.4%.Global economic conditions also affectedthe domestic economy. The global economyslow down further due to deep-seated eurozone sovereign debt crisis, fragile financialconditions, and intractable fiscal issues runningthrough other developed economies such asUSA and England. The downgrade in creditratings of many advanced economies hascomplicated the matters to raise debt finance.Despite being a slow year, the headline inflationaveraged at 13.7%, agriculture sector managedto overcome the floods and posted real growthof 1.2 percent, services sector on the otherhand supported the growth and shown thegrowth of 4.1 percent. Strong remittances andgradual monetary easing by the State Bankof Pakistan led to encouraging corporateperformance. The KSE 100 index declined by5.61 percent in 2011.It is also encouraging to note that fourcompanies raised equity capital ofRs.16,010.92 million and seven companieslisted their TFCs of Rs.16,254.8 million in 2011this signals a path to recovery in market activityfor the next year.To restore volumes and liquidity KSE launchedMargin Trading, Margin Financing andSecurities Lending and Borrowing products assome of the landmark initiatives. To enhanceRisk management measures at KSE theExchange in conjunction with the NationalClearing Company of Pakistan introducedan exposure drop-out facility for memberswho have met their settlement obligations,this will increase the capacity to trade and/ orreinvest in the market due to prompt marginrelease. Exchange also developed an onlinereporting system to facilitate Brokerage Housesin complying with SECP Rule pertaining tointimation to the Exchange regarding any fall inthe Net Capital Balance.Moving forward, we remain committedto enhancing our risk management andsurveillance measures to further increasetransparency and to ensure a level playing fieldfor all investors.HISTORY AND DEVELOPMENTThe KSE is the biggest and most liquidexchange amongst the three exchangesof Pakistan. It came into existence on 18September 1947. It was later converted andregistered as a company limited by guaranteeon 10 March 1949. Initially, only five companieswere listed with a paid-up capital of Rs. 37million (US$ 0.62 million).The year 2010-2011 was full of challenges,economic growth managed to grow by 2.4%.Global economic conditions also affected thedomestic economy. The global economy slowdown further due to deep-seated euro zonesovereign debt crisis, fragile financial conditions,and intractable fiscal issues running throughother developed economies such as USA andEngland. The downgrade in credit ratings ofmany advanced economies has complicatedthe matters to raise debt finance.The KSE 100 Index registered decline of5.6 percent and closed at 11347.66 points.As of Dec 31, 2011, ordinary shares of 638companies were listed having listed capital ofRs. 1,048.44 billion (US$ 11.67 billion) with themarket capitalization of Rs.2,945.78 billion (US$32.80 billion).In 1991 the secondary market was opened toforeign investors on an equal basis with localparticipants. This measure, along with a policyof privatization, has resulted in rapid growth ofthe market since 1991.ManagementThe KSE has an independent Board of Directors(10 directors) with representation from theMembers of the Exchange & from the CorporateCommunity. Five directors are elected fromamongst the 200 members of the Exchangeand four non member directors are nominatedby Regulator i.e., SECP, the Chairman is electedby Board from amongst non member Directorswhereas, Managing Director is ex-officiomember of the board.KSE is in process of demutualization, it ispresently a company limited by guarantee, willbe converted into a company limited by shares.Automation of the ExchangeKSE has a fully automated trading system withT+2 settlement system whereby all tradessettle on the second day after the trade. Internetbased trading system was also launched inDecember, 2004 to provide an additional facilityfor investors to enter their orders. KSE has alsolaunched a single exchange-traded market fortrading corporate bonds in Pakistan using BATS.KSE’s BATS provide live system based, onscreen electronic Trading Platform which offer,market participants a transparent and efficienttrading system features and facilities crucialfor the Debt market Securities Trading. KSEalso launched Stock Index Futures Contractand sector indices. This marks a momentousachievement for the KSEUnique Identification Number was introducedto provide a traceable link between everyorder entered at the trading system of theExchange. VaR based margining system wasalso introduced in place of a slab based Riskmanagement system. The new RMS included,amongst others, a new netting regime; amargining system based on Value at Risk(VaR) and Capital Adequacy. KSE has alsoadopted the FIX protocol (Financial InformationExchange) for both trading and market data.The National Clearing & Settlement Companyand Central Depository System has alsobeen introduced. Transparency of the listedcompanies has been enhanced with theintroduction of quality audits, quarterly financialreports and timely dividend payouts. Corporategovernance is also now the part of the KSE’slisting regulation.FUTURE OUTLOOK 2012Introduction of New Products and NewMeasures:KSE plans to introduce new products into themarket, to further cater to the growing needs ofits investors and help develop Pakistan’s capitalmarkets. KSE will be introducing: ExchangeTraded Funds, new derivative products- options,etc, and Introduction of SME board.Corporatization and Demutualization of stockExchange:KSE is in process of demutualization, it ispresently a company limited by guarantee, willbe converted into a company limited by shares.PAGE 53
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