Stock Market History

History of stock market trading in the United States can be traced back to over 200 years ago. Historically, The colonial government decided to finance the war by selling bonds, government notes promising to pay out at profit at a later date. Around the same time private banks began to raise money by issuing stocks, or shares of the company to raise their own money. This was a new market, and a new form of investing money, and a great scheme for the rich to get richer. A little futher on the history tumeline, more specifically in 1792, a meeting of twenty four large merchants resulted into a creation of a market known as the New York Stock Exchange(NYSE). At the meeting, the merchants agreed to meet daily on Wall Street to daily trade stocks and bonds. Further in history, in the mid-1800s, United States was experiencing rapid growth. Companies needed funds to assist in expansion required to meet the new demand. Companies also realized that investors would be interested in buying stock, partial ownership in the company. History has shown that stocks have facilitated the expansion of the companies and the great potential of the recently founded stock market was becoming increasingly apparent to both the investors and the companies. By 1900, millions of dollars worth of stocks were traded on the street market. In 1921, after twenty years of street trading, the stock market moved indoors. History brought us the Industrial Revolution, which also played a role in changing the face of the stock market. New form of investing began to emerge when people started to realize that profits could be made by re-selling the stock to others who saw value in a company. This was the beginning of the secondary market, known also as the speculators market. This market was more volatile than before, because it was now fueled by highly subjective speculation about the companys future. This was the pretext for appearance of such stock market giants as NYSE. History books tell us that the reason the NYSE is so highly regarded among stock markets was primarily because they only trade in the very large and wellestablished companies. It acted as a more stable investment alternative, for people interested in throwing their capital into the stock market arena. The smaller companies making up the stock market formed into what eventually became the American Stock Exchange (AMEX). Contrary to the 80-year old history, today the NYSE, AMEX, NASDAQ and hundreds of other exchange markets make a significant contribution to the national and global economy. The growth in the number of market participants led the government to decide that more regulation of the stock market was needed to protect those investing in stock. History was made in 1934, when following the Great Crash, Congress passed the Securities and Exchange Act. This act formed the Securities and Exchange Commission (SEC), which, through the rules set out by the act and succeeding amendments, regulates American stock market trading with the help of the exchanges. It also includes overseeing the requirements for a company to issue stock shares to the public and ensures that the company offers relevant information to potential investors. The SEC also oversees the daily actions of market exchanges and how they trade the securities offered.

Although historically, investing in stocks was a hobby for the rich, an average person too soon came to realize the value of the investing in stocks vs. traditional assets like land or a house.

The Components of the Stock Market

Gilberto Fuentes is a copywriter based in New York and has been developing Web-based content on business-related topics since 2009. He has developed copy for websites in the U.S. and U.K. and published work in the online edition of the "San Francisco Chronicle" and on NerdWallet and LendingTree. Fuentes holds a dual Bachelor of Arts in English and economics from St. Edwards University. By Gilberto Fuentes, eHow Contributor
updated: May 24, 2010

1.

Stocks are risky but generally reward long-term investment.

Learning about the components of the stock market helps investors understand the market's many uses. One of the most important uses of the stock market is to provide large companies with a way to raise capital in exchange for a portion of company ownership. The aggregate effect is that millions of investors help finance economic development as businesses expand and stock appreciates in value. Arguably, understanding how each component works in this process is important.

2. Stock Exchanges

Billions of stock trades occur every day at the New York Stock Exchange.

Stock markets around the world are commonly organized into stock exchanges. Exchanges are generally classified as national, regional, and over-the-counter markets. For example, the largest stock exchange in the United States is the New York Stock Exchange, which has the highest trading volume in the world. Regional exchanges include the Chicago Stock

Exchange and the Philadelphia Stock Exchange. Over-the-counter markets include stocks not formally listed in any exchange.

3. Stocks
o

Stocks represent a share of ownership in the issuing company. By selling pieces of ownership in the stock market, a company raises capital to invest back into the company. To raise money this way, the issuing company must be listed in a stock exchange. To get listed on an exchange, companies must meet specific criteria called listing requirements that are established by each stock exchange. For example, the New York Stock Exchange indicates, among other requirements, that companies must have earned between $10 and $12 million in the last three years and have at least 1.1 million public shares to qualify for listing on the exchange. As a result of the listing requirements, the stock market is a collection of stocks issued by some of the leading companies in the country.

Brokers
o

Another important component of the stock market is the professionals who work there. Stock brokers are the individuals who actually do the buying and selling in the stock market. However, these transactions are on behalf of investors and not necessarily for the personal benefit of the broker. Brokers are commonly categorized into four groups: commission brokers, independent brokers, competitive traders, and specialists. Commission brokers work for brokerage firms or individual investors who buy and sell stocks. Like the name indicates, independent brokers work for themselves and may free lance for other brokers or brokerage firms that need extra help. Competitive traders look for disparities in stock prices to make money for themselves or clients. Lastly, specialists ensure that the buying and selling process occurs fairly and efficiently.

Investors
o

Investors make up an important component of the stock exchange because investor capital is what makes the market work. Investors include large financial intuitions, insurance companies, the federal government, retirement funds, and individuals. Investors put their money in the stock market to buy ownership in companies, take advantage of emerging trends or invest in new products. If the stock price appreciates, the investor makes money. However, if the stock loses value, the investor can lose a part or all of his investment.

Read more: The Components of the Stock Market | eHow.com http://www.ehow.com/list_6547077_components-stock-market.html#ixzz1LzSeivYP

Karachi Stock Exchange

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Karachi Stock Exchange

Type Location Founded Owner Key people Currency No. of listings

MarketCap

Stock Exchange Karachi, Pakistan

1947 Karachi Stock Exchange Limited

Haroon Askari, AMD

PKR

652 US$ 32.5 billion - 19 Aug, 2010[1] US$ 12 billion

KSE 100 Index

Volume

Indexes

KSE-30 Index KSE-All Shares Index KMI 30 Index

Website

www.kse.com.pk

The Karachi Stock Exchange or KSE is a stock exchange located in Karachi, Sindh, Pakistan. Founded in 1947, it is Pakistan's largest and oldest stock exchange, with many Pakistani as well as overseas listings. Its current premises are situated on Stock Exchange Road, in the heart of Karachi's Business District.

Contents
[hide]

1 History 2 Business o 2.1 Trading 3 Growth 4 2008 and 2009 Karachi Stock Exchange Crisis 5 See also 6 References 7 External links

[edit] History
Karachi Stock Exchange is the biggest and most liquid exchange in Pakistan. It was declared the Best Performing Stock Market of the World for the year 2002. As of Dec 8, 2009, 654 companies were listed with a market capitalization of Rs. 8.561 trillion (US$ 120.5 billion) having listed capital of Rs. 2805.873 billion (US$ 40.615 billion). The KSE 100TM Index closed at 9645.71 on June 19, 2010.By 30 july total market capitalisation of the KSE reached Rs2.95 trillion,approximately 350 billion dollars.

[edit] Business
[edit] Trading

The exchange has pre-market sessions from 09:15am to 09:30am and normal trading sessions from 09:30am to 03:30pm. [2] The karachi stock exchange has undergone a considerable deal of downturn partly due to global financial crisis and partly on account of domestic troubles. It remained suspended in excess of 4 months and resumed normal trading only on December 15, 2008. The KSE 100 Index and KSE 30 Index after hitting the low around mid January has now rebounced and recovered 20-25% till March 12, 2009. By 30 july 2010 total market capitalisation of the KSE reached Rs2.95 trillion,approximately 35 billion dollars.It was newly appointed in 18th September 1948

[edit] Growth

The KSE is the biggest and most liquid exchange in Pakistan and in 2002 it was declared as the Best Performing Stock Market of the World by Business Week. As of December 8, 2009, 652 companies were listed with the market capitalization of Rs. 2.561 trillion (US$ 30.5 Billion) having listed capital of Rs. 717.3 billion (US$ 12 billion). On December 26, 2007, the KSE 100 Index reached its highest value ever and closed at 14,814.85 points. Foreign buying interest had been very active on the KSE in 2006 and continued in 2007. According to estimates from the State Bank of Pakistan, foreign investment in capital markets total about US$523 Million. According to a research analyst in Pakistan, around 20pc of the total free float in KSE-30 Index is held by foreign participants. KSE has seen some fluctuations since the start of 2008. Karachi stock exchange Board of Directors has recently (2007) announced plans to construct a 40 story high rise KSE building, as a new direction for future investment. Disputes between investors and members of the Exchange are resolved through deliberations of the Arbitration Committee of the Exchange. KSE began with a 50 shares index. As the market grew a representative index was needed. On November 1, 91 the KSE-100 was introduced and remains to this day the most generally accepted measure of the Exchange. Karachi Stock Exchange 100 Index (KSE-100 Index) is a benchmark used to compare prices overtime, companies with the highest market capitalization are selected. To ensure full market representation, the company with the highest market capitalization from each sector is also included. In 1995 the need was felt for an all share index to reconfirm the KSE-100 and also to provide the basis of index trading in future. On August the 29th, 1995 the KSE all share index was constructed and introduced on September 18, 1995.

[edit] 2008 and 2009 Karachi Stock Exchange Crisis

April 20 : Karachi Stock Exchange achieved a major milestone when KSE-100 Index crossed the psychological level of 15,000 for the first time in its history and peaked 15,737.32 on 20 April 2008. Moreover, the increase of 7.4 per cent in 2008 made it the best performer among major emerging markets.[3][4] May 23: Record high inflation in the month of May, 2008 resulted in the unexpected increase in the interest rates by State Bank of Pakistan which eventually resulted in sharp fall in Karachi Stock Exchange.[5][6] July 17 :Angry investors attacked the Karachi Stock Exchange in protest at plunging Pakistani share prices.[7][8] July 16 : KSE-100 Index dropped one-third from an all-time high hit in April, 2008 as rising pressure on shaky Pakistan's coalition government to tackle Taliban militants exacerbates concern about the country's economic woes.[9] August 18: KSE 100 Index rose more than 4% after the announcement of the resignation of President Pervez Musharraf but Credit Suisse Group said that Pakistan's Post-Musharraf

rally in Stock Exchange will be short-lived because of a rising fiscal deficit and runaway inflation.[10][11] August 28 :Karachi Stock Exchange set a floor for stock prices to halt a plunge that has wiped out $36.9 billion of market value since April.[12] December 15: Trading resumes after the removal of floor on stock prices that was set on August 28 to halt sharp falls.[13][14]

[edit] See also

KSE 100 Index. Lahore Stock Exchange. Islamabad Stock Exchange. Economy of Pakistan Economy of Karachi List of Pakistani companies List of stock exchanges

[edit] References
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.
^ [1] ^ Market Hours, Karachi Stock Exchange via Wikinvest ^ Karachi Stock Exchange reaches record high - Gulf News ^ Monster & Critics ^ Pakistan Stocks Slump, Led by Banks, After Unexpected Rate Rise - Bloomberg ^ Billions wiped off on KSEs black Friday - Dawn.com ^ Protest over Pakistan share slump - BBC News ^ Pakistani Investors Stone Exchange as Stocks Plunge - Bloomberg ^ Forbes.com ^ Pakistan shares up on resignation - BBC News ^ Pakistan's Post-Musharraf Rally Will Falter, Credit Suisse Says - Bloomberg ^ Pakistan Stock Index Is Little Changed; Trading Limits Remain Bloomberg ^ Pakistans Stock Index Falls to 2-Year Low After Lifting Curbs - Bloomberg ^ The Avoidable collapse of Karachi Stock Exchange 2008 - KSE

[edit] External links

Karachi Stock Exchange Website

[show]v d eKarachi topics

[show]v d eEconomy of Pakistan

Retrieved from "http://en.wikipedia.org/wiki/Karachi_Stock_Exchange"

Categories: Karachi | Stock exchanges in Asia | Stock exchanges of Pakistan | Economy of Pakistan | Buildings and structures in Karachi

Hidden categories: Pakistan articles missing geocoordinate data | All articles needing coordinates
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