moving averages, secp, stock exchanges
TRANSCRIPT
JEHANZAIB ALI1093-313140
Department of Management SciencesM. Phil 2nd Semester
Preston university IslamabadPH: +92-3227331734
PORTFOLIO MANAGEMENT
Moving AveragesDefinition & Generation of Signals
The moving average is simply an average. A trader can choose how many periods (measured in minutes, hours, days, weeks, etc.) the moving average should consider
Moving average that is calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods.
What is moving average?
When the closing price crosses and moves above the moving average, a buy signal is generated.
When the closing price moves below the moving average a sell signal is generated.
Generation of Signals
Simple Moving Average
Simple Moving Average
Required Rate of ReturnAnd Its Components
Minimum acceptable rate of return on an investment proposal that is comparable with the rate of return obtainable effortlessly and at a low level of risk in the financial markets (such as on a time deposit in a bank).
Required Rate of Return
Risk Premium
I. Business risk – Associated with specific business or industry.
II. Financial risk – Fluctuation in interest rates III. Liquidity risk – The risk of the securities at the
time of liquidityIV. Exchange rate risk – It is the value of one
currency in terms of other currency and faces risk V. Political risk – Instability of political system
Components
Inflation Rate Risk
“The general rise in the prices is termed as inflation”
Inflation is the major risk for the investment as it devalues the investment. An investor must get compensation against inflation risk to get some gain.
Risk & ReturnTrade off
The basic principle states that potential return rises with an increase in risk.
Low levels of uncertainty (low risk) are associated with low potential returns, whereas high levels of uncertainty (high risk) are associated with high potential returns.
Risk-return trade off
Graphical Representation
Structure and Function
SECP
Securities and Exchange Commission of Pakistan (SECP) is the apex regulatory body.
Setup in pursuance of the SECP Act 1997.
SECP regulates insurance companies, non-banking finance companies and private pensions.
An Overview
Organzation's Structure
Securities and Exchange Policy Board
Commision
Chairman
Commisioner SMD
Securities &
Market Division
Market
Supervision
& Capit
al Issue
s department
Policy
Regulation &
Developmen
t Depart
ment
Commisioner CLD
Company Law
Division
Corporatization & Compliance Department
Enforcement Department
Specialized
Company Division
Policy Regulation & Development Department
Supervision Department
Commisioner
Insurance
Insurance Division
Policy Regulation & Development Department
Supervision Department
SDLER
Division
Strategy Development & External Relationship Deparment
legislation & General Council Department
Commissioner OED &
TMFCO
Talent Management
, Finance & Communication Division
HR Training Department
Finance Department
Media & Corporate Communication Department
Organization Effectiveness Division
IT Department
Transformation & Knowledge Department
Complaints & Service Centre Department
Admin Department
Investor Education Department
Listing of companiesMonitoring of Security Exchanges“Stock Exchange" means any person who maintains
or provides a market place or facilities for bringing together buyers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a Stock Exchange
The most important eligibility criteria and requirements for registration of the Stock Exchange is to ensure fair dealing, protection of investors and its sustainable economic viability.
Functions of SECP
High Risk Common Stocks Vs
Low Risk Safe Deposits
Safe & Guaranteed investments bears low risk often backed by Government or insurance.
Investor gets nominal percentage in the compensation for bearing low risk.
Sometimes, investor did not get compensation for even inflation rate.
Low Risk Investments, Safe & Guaranteed
Depends upon investors risk bearing characteristics
High Risk investments generates more income.
Also provides compensation for bearing extra risk.
The basic motive behind bearing more risk is to get more income
High Risk Investments, High Return
Karachi Stock Exchange Vs
Islamabad Stock Exchange
Comparison between movement of stocks
KARACHI STOCK EXCHANGE
Construction & Materials (Cements)
Data from June 5th to June 12th
05-Ju
n-14
06-Ju
n-14
07-Ju
n-14
08-Ju
n-14
09-Ju
n-14
10-Ju
n-14
11-Ju
n-14
12-Ju
n-14
25
28
31
34
Chart Title
Open RateClose RateChange
Stoc
k Pr
ices
Maple Leaf Cement Factory (MLCF)
05-Ju
n-14
06-Ju
n-14
07-Ju
n-14
08-Ju
n-14
09-Ju
n-14
10-Ju
n-14
11-Ju
n-14
12-Ju
n-14
300
350
400
450
Chart Title
Open Rate Close Rate Change
Lucky Cement (LUCK)
Pharma & Bio TechData from June 5th to June 12th
05-Ju
n-14
06-Ju
n-14
07-Ju
n-14
08-Ju
n-14
09-Ju
n-14
10-Ju
n-14
11-Ju
n-14
12-Ju
n-14
170
175
180
185
190
Chart Title
Open RateClose RateChange
Stoc
k Pr
ices
Glaxo Smith Klien (Glaxo)
05-Ju
n-14
06-Ju
n-14
07-Ju
n-14
08-Ju
n-14
09-Ju
n-14
10-Ju
n-14
11-Ju
n-14
12-Ju
n-14
550
560
570
580
590
600
Chart Title
Open RateClose RateChange
Stoc
k Pr
ices
Abbot Laboratories (Abot)
ISLAMABAD STOCK EXCHANGE
Banking SectorData from June 6th to June 12th
06-Ju
n-14
07-Ju
n-14
08-Ju
n-14
09-Ju
n-14
10-Ju
n-14
11-Ju
n-14
12-Ju
n-14
15
18
21
24
Chart Title
Open RateClose RateChange
Stoc
k Pr
ices
Askari Bank Limited(AKBL)
06-Ju
n-14
07-Ju
n-14
08-Ju
n-14
09-Ju
n-14
10-Ju
n-14
11-Ju
n-14
12-Ju
n-14
125
128
131
134
Chart Title
Open RateClose RateChange
Stoc
k Pr
ices
Allied Bank Limited(ABL)
FertilizerData from June 6th to June 12th
06-Ju
n-14
07-Ju
n-14
08-Ju
n-14
09-Ju
n-14
10-Ju
n-14
11-Ju
n-14
12-Ju
n-14
180
190
200
210
220
Chart Title
Open RateClose RateChange
Stoc
k Pr
ices
Engro Corporation (ENGRO)
06-Ju
n-14
07-Ju
n-14
08-Ju
n-14
09-Ju
n-14
10-Ju
n-14
11-Ju
n-14
12-Ju
n-14
50
53
56
59
62
65
Chart Title
Open RateClose RateChange
Stoc
k Pr
ices
Engro Fertilizer (EFERT)
THANK YOU