ABAMCO-30 index to go live from September this year is aimed at true reflection of the share prices, whereas the present Karachi Stock Exchange benchmark index is tilted towards a few stocks, easily manoeuvred by market players. Najam Ali, chief executive officer of ABAMCO at a press conference on Thursday said that KSE-100 index does not reflect the true weightage of the companies and is heavily tilted towards a few companies such as PSO, OGDC, PTCL.
"Any movement in these companies or manipulation from some of the punters made the index extremely volatile, and in the past, we have seen several wild fluctuation in the index because of these few companies", he said.
On several fora we have suggested the KSE and the SECP to restructure or revamp the index, to rectify distortion of the index, but the process is slow and the KSE is working on a price sensitive index.
Substantiating his claim, Najam said that on Thursday the market went down by 157 points and the contribution of four companies ie PTCL, OGDC, PPL and PSO worked out to be 126 points, indicating that the prices were dragged down and did not show the true picture of overall market.
"But our company has decided to launch a more dynamic index to start functioning from Monday and after completing all the technicalities the index would go live from September this year", he said.
Ali Raza Siddiqui, handling the technique and module of the index, said that ABAMCO 30 is based on an advanced free float-adjusted market capitalisation factor.
This computation methodology only takes into account that part of the share capital of a company, which is readily available for trading in the market, eliminating unnecessary weight allocated through the share capital strategically held by the government or other investors.
Representing only the investable portion of the market, ABAMCO 30 is further calibrated to include stocks of companies with fundamentally sound business prospects showing a viable degree of market liquidity.
Najam said that we need to have a benchmark index, which would be consistent one, investors would have confidence on its daily movement and would not be misleading in any way.
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