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BF Mast Presentation

The capital market allows companies and governments to raise long-term funds and includes the stock and bond markets. An analysis of Pakistan's capital market shows trends of increasing listed companies and automated trading systems, as well as intensifying competition. The market experienced strong growth between 2000 and 2006 as measured by the KSE-100 index, but has since faced substantial volatility and declines. Strengths include available liquid stocks and economic recovery signs, while weaknesses are limited trading and liquidity concerns. Opportunities exist from privatization and incentives, while threats include devaluation, instability, and security issues. A PESTLE analysis identifies relevant legal, economic, political, environmental, social, and technological factors.

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1K views24 pages

BF Mast Presentation

The capital market allows companies and governments to raise long-term funds and includes the stock and bond markets. An analysis of Pakistan's capital market shows trends of increasing listed companies and automated trading systems, as well as intensifying competition. The market experienced strong growth between 2000 and 2006 as measured by the KSE-100 index, but has since faced substantial volatility and declines. Strengths include available liquid stocks and economic recovery signs, while weaknesses are limited trading and liquidity concerns. Opportunities exist from privatization and incentives, while threats include devaluation, instability, and security issues. A PESTLE analysis identifies relevant legal, economic, political, environmental, social, and technological factors.

Uploaded by

MSA-ACCA
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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CAPITAL MARKET

: is the market for securities where companies


and government can raise long term funds

: includes stock market and bond market


Key points of Analysis

 Trends

 Growth

 SWOT

 LE`PEST
TRENDS

 Increase in the number of listed companies


 Automated trading and settlement system
 Intensifying Competition
 KSE-100 index increased by 23.5% in terms
of US Dollars
GROWTH

 KSE-100 Index that stood at 1,507 points at


the end of the year 2000.
 Reached record levels by 17 April-2006 at
12,274 points with market capitalization.
 Which is 44% of GDP or $57 billion.
GROWTH (Contd.)

 Recently, the stock market has experienced


substantial volatility.
 Which resulted in a decline of 10,000 points.
STRENGTHS

 Availabilityof liquid stock


Economic Indicators signs of Recovery
 Increase in GDP
 Forex Reserves
 Agriculture Sector
WEAKNESSES

 Trading Limit of Few Stocks


 Liquidity-A concern
 Authoritative Control
 Poor and Inefficient Public Services
OPPORTUNITIES

 Divestment will help Broaden the market


 IMF’s Loan Approval
 Incentives for the Debt market
 Lowering of Tax Rates
THREATS

 Frequent Devaluation
 Tax Rates
 Political instability
 Terrorist Attack
 Developing Economy
 A scan of the external macro-environment in
which the firm operates can be expressed in
terms of the following factors
 Legal
 Economical
 Political
 Environmental
 Social
 Technological
LEGAL FACTORS

 Legal implications and legislations can also


influence the capital market activities.
Following are the examples of legal factors:

* Legal restrictions on specific businesses


* Banned products.
* Heavy taxes and duties to discourage a
specific trade.
ECONOMICAL FACTORS

 Economic factors affect the purchasing power of


potential customers and the firm's cost of capital.
Following are the examples of factors in the macro-
economy:

* Economic growth
* Interest rates
* Exchange rates
* Inflation rates
POLITICAL FACTORS

Political factors include government regulations and legal


issues and define both formal and informal rules under
which the firm must operate. Some examples include:

* Tax policy
* Foreign Policy
* Employment laws
* Environmental regulations
* Trade restrictions and tariffs
* Political stability
ENVIRONMENTAL FACTORS

 Environmental factors also affect the trade


and capital business in some ways.
For instance:

* Natural Disasters
* Rehabilitation Policies
* EPA Regulations
SOCIAL FACTORS

 Social factors include the demographic and cultural


aspects of the external macro environment. These factors
affect customer needs and the size of potential markets.
Some social factors include:

* Population growth rate


* Age distribution
* Career attitudes
* Emphasis on safety
TECHNOLOGICAL FACTORS
 Technological Factors
Technological factors can lower barriers to entry,
reduce minimum efficient production levels, and
influence outsourcing decisions. Some technological
factors include:
* R&D activity
* Automation
* Technology incentives
* Rate of technological change
* Obsolete

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