Finance report: | Federal Urdu university Gulshan campus K arachi 1 Security analysis and portfolio management Report on the relationship of stock prices wit h Economic indicators of Automobile industry Group members Muhammad Irfan Roll No: 51 Section A, MBA3 Hina Mubeen Roll No: 29 Section A, MBA3 Aqeela Tariq Roll No: 09 Section A, MBA3 Masham Zehra Rizvi Roll No: 40 Section B, MBA3 Najma Malik Roll No: 04 Section B, MBA3 Submitted to: Sir Nadeem Araien
Finance report: | Federal Urdu university Gulshan campus Karachi
5 Security analysis and portfolio management
GDP - real growth rate: 2.7% (2010 est.)
4.3% (2009 est.)
3.6% (2008 EST.)
2.Gross national product / GNI, Atlas method (current US$):
The Gross National Product (GNP) is the total dollar value of all final goods and services
produced for consumption in society during a particular time period. Its rise or fall measures
economic activity based on the labor and production output within a country. The figures used to
assemble data include the manufacture of tangible goods such as cars, furniture, and bread, and
the provision of services used in daily living such as education, health care, and auto repair.
Intermediate services used in the production of the final product are not separated since they are
reflected in the final price of the goods or service. The GNP does include allowances for
depreciation and indirect business taxes such as those on sales and property.
The Gross Domestic Product (GDP) measures output generated through production by labor and
property which is physically located within the confines of a country. It excludes such factors as
income earned by U.S. citizens working overseas, but does include factors such as the rental
value of owner-occupied housing. In December 1991, the Bureau of Economic Analysis began
using the GDP rather than the GNP as the primary measure of United States production. Thisfigure facilitates comparisons between the United States and other countries, since it is the
standard used in international guidelines for economic accounting.
GNI (formerly GNP) is the sum of value added by all resident producers plus any product taxes
(less subsidies) not included in the valuation of output plus net receipts of primary income
(compensation of employees and property income) from abroad. Data are in current U.S. dollars.
GNI, calculated in national currency, is usually converted to U.S. dollars at official exchange
rates for comparisons across economies, although an alternative rate is used when the official
exchange rate is judged to diverge by an exceptionally large margin from the rate actually
applied in international transactions. To smooth fluctuations in prices and exchange rates, a
special Atlas method of conversion is used by the World Bank. This applies a conversion factor
that averages the exchange rate for a given year and the two preceding years, adjusted for
Finance report: | Federal Urdu university Gulshan campus Karachi
6 Security analysis and portfolio management
differences in rates of inflation between the country, and through 2000, the G-5 countries
(France, Germany, Japan, the United Kingdom, and the United States). From 2001, these
countries include the Euro area, Japan, the United Kingdom, and the United States.
GNI (formerly GNP) is the sum of value added by all resident producers plus any product taxes
(less subsidies) not included in the valuation of output plus net receipts of primary income
(compensation of employees and property income) from abroad. Data are in current U.S. dollars.
3.Interest rate spread (lending rate, %):
Interest rate spread is the interest rate charged by banks on loans to prime customers minus the
interest rate paid by commercial or similar banks for demand, time, or savings deposits. Thedifference between the average yield a financial institution receives from loans and other
interest-accruing activities and the average rate it pays on deposits and borrowings. The net
interest rate spread is a key determinant of a financial institution’s profitability (or lack thereof).
In simple terms, the net interest spread is like a profit margin. The greater the spread, the more
profitable the financial institution is likely to be; the lower the spread, the less profitable the
institution is likely to be. While the federal funds rate plays a large role in determining the rate at
which an institution lends immediate funds, open market activities ultimately shape the rate
spread.
4.Foreign direct investment, net (Bop, current US$):
FDI provides an inflow of foreign capital and funds, in addition to an increase in the transfer of
skills, technology, and job opportunities. Many of the East Asian tigers such as China, South
Korea, Philippines, and Singapore benefited from investment abroad. A recent meta-analysis of
the effects of foreign direct investment on local firms in developing and transition countriessuggest that foreign investment robustly increases local productivity growth. The Commitment to
Development Index ranks the "development-friendliness" of rich country investment policies.
Foreign direct investment is net inflows of investment to acquire a lasting management interest
(10 percent or more of voting stock) in an enterprise operating in an economy other than that of
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7 Security analysis and portfolio management
the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and
short-term capital as shown in the balance of payments. This series shows total net, that is, net
FDI in the reporting economy from foreign sources less net FDI by the reporting economy to the
rest of the world. Data are in current U.S. dollars.
5.Foreign Reserves:
Foreign reserves (also called Forex reserves or FX reserves) in a strict sense are only the foreign
currency deposits and bonds held by central banks and monetary authorities. However, the term
in popular usage commonly includes foreign exchange and gold, SDRs and IMF reserve
positions. This broader figure is more readily available, but it is more accurately termed official
international reserves or international reserves. These are assets of the central bank held indifferent reserve currencies, mostly the US dollar, and to a lesser extent the euro, the UK pound,
and the Japanese yen, and used to back its liabilities, e.g. the local currency issued, and the
various bank reserves deposited with the central bank, by the government or financial
institutions.
6.Karachi Stock Exchange:
In the first four years of the twenty-first century, Pakistan's KSE 100 Index was the best-
performing stock market index in the world as declared by the international magazine “Business
Week”. The stock market capitalisation of listed companies in Pakistan was valued at $5,937
million in 2005 by the World Bank. But in 2008, after the General Elections, uncertain political
environment, rising militancy along western borders of the country, and mounting inflation and
current account deficits resulted in the steep decline of the Karachi Stock Exchange. As a result,
the corporate sector of Pakistan has declined dramatically in recent times
Karachi Stock Exchange 100 Index (KSE-100 Index) is a stock index acting as a benchmark to
compare prices on the Karachi Stock Exchange (KSE) over a period of time. In determining
representative companies to compute the index on, companies with the highest market
capitalization are selected. However, to ensure full market representation, the company with the
highest market capitalization from each sector is also included.
The index was launched in late 1991 with a base of 1,000 points. By 2001, it had grown to 1,770
Finance report: | Federal Urdu university Gulshan campus Karachi
8 Security analysis and portfolio management
points. By 2005, it had skyrocketed to 9,989 points. It then reached a peak of 12,285 in February
2007. KSE-100 index touched the highest ever benchmark of 14,814 points on December 26,
2007, a day before the assassination of former Prime Minister Benazir Bhutto, when the index
nosedived. The index recovered quickly in 2008, reaching new highs near 15,500 (citation
needed) in April. However, by November 22, 2008 during the global financial crisis of 2008 it
had fallen to 9,187.
Automobile industry:
1. Pak Suzuki Motors Co. Ltd.
2. Hino Pak motors Ltd.
3. Millat tractors Ltd.4. Atlas Honda Ltd.
Pak Suzuki Motor Company Limited was formed as a joint venture between Pakistan
Automobile Corporation and Suzuki Motor Corporation (SMC) - Japan. The Company was
incorporated as a public limited company in August 1983 and started commercial operations in
January 1984. The initial share holding of SMC was 12.5% which was gradually increased to
73.09%. Pak Suzuki is pioneer in Automobile Business having the most modern and the largest
manufacturing facilities in Pakistan with an Annual production capacity of 150,000 vehicles. The
vehicles produced include cars, small vans, Pickups, Cargo vans and Motorcycle. Pak Suzuki
holds more than 50% Market Share. Following the aggressive policy of Indigenization, Suzukivehicles have a healthy local content upto 72%. This was made possible by strong support of our
vendors. Pak Suzuki has the largest Dealers network offering 3S (Sales, Service and Spare Parts)
facilities across Pakistan. Caring for the Environment Pak Suzuki was pioneer in introduction of
Factory fitted CNG vehicles. Pak Suzuki always endeavors to go aggressively for the sound
