August 31, 2006	Thursday	Sha'aban 6, 1427

KARACHI, Aug 30: Pakistan's main stock exchange said it planned a new top-30 index reflecting the size of the constituents' free-floating share capital, rather than just total stock market value, in a bid to boost investor appeal.

The Karachi Stock Exchange's (KSE) existing benchmark indexes are dominated by state-controlled firms, the vast bulk of whose stock sits un-traded in government hands.

Officials said the new KSE-30 index, the first in Pakistan to be based on a free float, would be a better gauge for investors.

“The index will bring the exchange in line with international trading norms,” said Yacoob Memon, general manager of the KSE on Wednesday.

Mr Memon said the index would be launched on September 1, though some officials said technical issues might delay it.

The KSE is a tiny market with a total capitalisation of only about $46 billion, about a tenth the size of Taiwan's benchmark index. The market is highly volatile but was the second-best performing market in Asia last year, gaining nearly 54 per cent, growth only bettered by South Korea.

The new index will be based on free float available, market capitalisation, and trading performance. “It will prevent undue influence of large but closely held companies on the market movement,” said Khalid Iqbal Siddiqui, head of research at Invest Capital and Securities.

“The KSE-100 index is lopsided because three blue-chips carry a weighting of over 45 per cent,” Mr Siddiqui said. He was referring to Oil and Gas Development Co Ltd, which is 95 per cent state-held, and Pakistan Petroleum Limited and Pakistan Telecommunication Co Ltd, each of which is about 85 per cent government-owned.

The new index, which has yet to be assigned a Reuters code, will begin from a base of 10,000 points and will be revised twice a year. It will co-exist with the market capitalisation-based KSE-100 share index and the KSE All Share Index.

The KSE said Muslim Commercial Bank would top the index, with a weighting of 11.06 per cent, followed by the National Bank of Pakistan, with 7.85 per cent, and Pakistan Oilfields Ltd, with 7.65 per cent.

Pakistan Petroleum Ltd, Oil and Gas Development Co Ltd, Pakistan Telecommunication Co Ltd, Fauji Fertiliser Co Ltd, Pakistan State Oil and Hub Power Co Ltd will be among the top 10 companies in the index.

—Reuters