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8/11/2019 FMR Presentation

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Impact of Economic Indicators over Karachi Stock

Exchange A Case Study of KSE

Hamza Iqbal9540

Faryal Alam9541

Shabbir Hussain9539

Hasan Danish

9529


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Economic indicator are used by the investors to gauge theeconomic situation. It allows investors to analyze the past andcurrent situation and to project the future prospects of theeconomy

There are three basic indicators that matter to investors in thestock market, namely inflation, gross domestic economicactivities product (GDP) and the labors market.

Stock market play very important role in economicdevelopment. Inefficiency of stock market is one of the mostserious limiting factors in under developed country. In theview of many experts stock market occupies the central andstrategic position in the process of economic development of

a country.

the focus of this research is towards the impact economicindicators (Inflation, GDP, Labour Force, Unemployment) overthe Stock Exchange (KSE) performance


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KARACHI STOCK EXCHANGE

The Karachi Stock Exchange or KSE is a stock exchange locatedin Karachi, Sindh, Pakistan. Founded in 1947, it is Pakistan's

largest and oldest stock exchange, with many Pakistani as well asoverseas listings.

Listed companies 658 Securities listed on the exchange 699: ordinary share 658. Preference shares 15 and debt securities (TFC's) 26. Listed capital Rs.631,125.55 million (US$ 10,388.90 million). Market capitalization Rs.4,019,418.17 million (US$ 66,163.26

million). Average daily turnover 262.48 million shares with average daily

trade value Rs.24,865.21 million (US$ 409.30 million). Membership strength at 200. Corporate Members are 167 out of which 9 are public listed

companies. Active Members are 164.


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Problem Statement:

What implies a significant relationship with the economy? How can astock market be as a leading indicator of the economic activity in thecountry? What are the possible impacts of the stock market mayhave on aggregate demand, particularly through aggregateconsumption and investment?


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Research Objectives:

These are the research objectives:

What are the positive and negative determinants of stock pricesin Pakistan?

Relationship between the stock market and economic indicators(inflation, GDP, labor force, unemployment).


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Benefits of the study

The study is very beneficial of the people who want to know theimpacts of economic indicator over the stock market in Pakistan. Thisresearch shows those factors which affect the performance of the stockmarket; Economic indicators allow analysis of economic performanceand predictions of future performance.


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LITERATURE REVIEW:

The growing importance of stock markets around the world has recentlyopened a new opportunity of research into the association between stockmarket development and economic growth. It is one of the most long-term debates in economics that whether financial development causeseconomic growth or whether it is a result of increased economic activity.

We gone through the following articles on different forums for our

research purpose: LIBERALIZATION OF THE MARKET INTEGRATION OF THE MARKET IN THE WORLD MARKETS NARROW ENVIRONMENT AND CORPORATE GOVERNANCE PAKISTANS STOCK MARKET IN AN INTERNATIONAL PERSPECTIVE Impact of Risk Free Rate on Stock Returns Evident From Karachi Stock

Exchange Pakistan The Impact of Institutional Development on Stock Prices in Pakistan The Systematic Risk and Leverage Effect in the Corporate Sector of

Pakistan


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Methodology:

This research is quantitative.

Quantitative methodology:

The major part of the research is quantitative, the data is taken mostlyfrom the selected research articles and from the organizations whosenames I have mentioned in the form A.I have search ten years data aboutthe impact of economic indicator over the stock market of Pakistan, and Ihave collect the economic indicator which has more impact on KSE. Theeconomic indicator which I have selected are unemployment, GDP,inflation and labor force.


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Data analysis technique:

Ho: Independent variables (inflation, GDP ,labor force, unemployment)

dont have impact on KSE Bi=0

Hi: Independent variables (inflation, GDP, labor force, unemployment )have impact on KSE Bi0


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Findings:

We have use 10 years data of GDP, Inflation, Unemployment, Labourforce and KSE 100 Index and run regression on our data by keeping

KSE as our dependent variable and GSP, Inflation, Unemployment andLabour force as our independent variable.

From the results we found R-square=0.861 that show the positivecorrelation between our dependent and independent variable. It showsthe strong relation and indicates that 86% change in the dependent

variable is explained by the independent variable and 14% change dueto other variables.

The probability value of the labour force is less then 0.05 (p-value


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CONCLUSION:

The regressions suggest that the capital market (KSE-100 index) ispositively correlated with labor force

The results for linear regression correlation between the variables i.e.KSE-100 index, labor force, unemployment, GDP, and inflation.86%variation is in dependent variable is explained by independentvariable which is goodness of fit model

The labor force is defined as the number of people employed plus thenumber unemployed but seeking work. Labour force has highestimpact on the stock market of Pakistan. Pakistan's economy hassuffered in the past from decades of internal political disputes, a fastgrowing population, mixed levels of foreign investment, and a costly,

ongoing confrontation with neighboring India.

We concluded that the labor force should be improved firstly becauseit has direct impact on the stock exchange of Pakistan. and it is astrong economic indicator of Pakistan.


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Thank You

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