Karachi Stock Exchange all set to free-float to the top

In the wake of demutualization regime at the country’s bourses the front regulators at Karachi Stock Exchange (KSE) have decided to recompose the benchmark KSE-100 index on the basis of free-float market capitalization method.
The move is being carried out on the basis of recommendations extended by the KSE’s Index Expert Committee. According to the Exchange, the Board of Directors of the KSE took the decision in its meeting held on the 24th of April this year and had notified the same through a notice, KSE/N-2968, on June 15.
The Board had also decided that the rules for composition and re-composition of the index based on free-float methodology shall remain unchanged other than selection of the companies on the basis of free-float market capitalization as against total market capitalization.
The decision was notified vide Notice No. KSE/N-2968 dated June 15, 2012. In line with the above, the exercise of composition of companies in the KSE-100 index on the basis of free-float market capitalization has been carried out as per the closing prices of shares as on August 31 (2012).
As a result, 32 firms have been included in the index on the basis of sector rule, means the largest free-float market capitalization companies of the sector while the remaining 68 companies have been selected on the basis of capitalization rule: largest free-float market capitalization companies in descending order. In aggregate 16 companies would be affected due to the said migration of KSE-100 index from total market capitalization to free-float market capitalization. The incoming firms are: International Industries, Cherat Cement Company, Lafarge Pakistan Cement, Agriauto Industries, National Foods,
Azgard Nine, Nishat (Chunian), Hum Network, Kohinoor Energy, Bank of Khyber, Bank of Punjab, Bankislami Pakistan, JS Bank, Allied Rental Modaraba, JS Growth Fund and TPL Trakker.
The outgoing companies are: Byco Petroleum, Agritech, Engro Polymer & Chemicals, Bestway Cement, Al-Ghazi Tractors, Atlas Honda, Tandlianwala Sugar Mills, Unilever Pakistan Foods, Ibrahim Fibres, Indus Dyeing & Manufacturing Co., Philip Morris (Pakistan), Media Times, Dreamworld, P. I. A. C. “A” Silkbank and East West Insurance Company. According to Haroon Askari, deputy managing director KSE, the new index would take effect from the 15th of this month.
The paid up capital of the 100 companies included in the new index stands at Rs 717,351.736 while the number of free-float shares total at 18,593,062,201. The fresh changes would see the total free-float market capital amount to Rs 885,813,471, 657. Meanwhile, the KSE notified that its Board of Directors had, in its September 27th meeting, decided to discontinue contribution to the Clearing House Protection Fund (CHPF) by the Exchange’s members from this month, October 1st.
Also, the KSE Board decided to slash the “LAGA”, the charges the brokers and TREC holders pay to the Exchange, to Rs 2.46 and Rs 3.44 per transaction of Rs 100,000 in the ready and futures/off lots markets, respectively.
Previously, the KSE used to charge the brokers and TREC holders with Rs 2.68 for transactions under ready market and Rs 3.75 for futures and off lots markets transactions. Under the new changes, the 0.22 paisa and 0.31 paisa that used to go to the CHPF has been abolished.