The benchmark 100-share index would witness a 0.83 basis point impact as the Karachi Stock Exchange (KSE) Wednesday replaced two apparently bad-performing listed firms in line with market capitalization rules of the Exchange.
“In aggregate, two companies will be affected due to re-composition process,” said a KSE notice made public here on Wednesday.
The companies affected by the re-composition carried out by the KSE for the review period ranging from September 2011 to February 2012, are Javedan Corporation Limited and International Industries Limited. While those replacing the above two include Engro Foods Limited and Fauji Cement Company Limited whose financial weight would increase total market capitalization of the recomposed index to 93.14 percent.
“The recomposed index, based on the prices of February 29 (2012) will capture the market capitalization to the extent of 93.14 percent of the total market capitalization as compared to 92.31 percent of the current index,” said the KSE notice.
The re-composed index would be effective from the 2nd of next month, April. The Re-Composition Rules of KSE-100 Index require the Exchange to place and remove the listed firms on the benchmark in accordance with the size of their market capitalization.
March 30 last year had seen the KSE removing three bed performing companies from the benchmark index that included Fauji Cement Company, WorldCall Telecom and KASB Bank Limited. These were replaced by Fatima Fertilizer Company Limited, Agritech Limited and Indus Dyeing and Manufacturing Company Limited.
Of the three excluded companies, Fauji Cement Company is a firm which this year, 2012, retained its lost position on the index by replacing International Industries Limited.
The revised list of 100 companies represented on the 100-share index comprises listed firms from various sectors. Of the 100 firms 15 are from banking sector; 10 from oil and gas sector; 11 from chemical sector; seven from food sector; six from non-life insurance sector; five from construction and materials; five from general industries; five from personal goods; five from electricity; three from automobile and parts; two from industrial engineering; two from tobacco sector, two from Pharma and Biotech; three from travel and leisure; two from gas water and multiutilities and one each from forestry and paper, industrial metals and mining, electronic and electrical equipment, industrial transportation, support services, beverages, household goods, leisure goods, healthcare equipment and services, media, fixed line telecommunication, life insurance, real estate investment and services, financial services, equity investment instruments, software and computer services and technology hardware and equipment sectors. Some market analysts, however, believe that the index does not represent actual position of the listed firms on the Karachi bourse as some heavyweights from energy and banking sector, particularly the OGDC, drive the index at will.
