This is the only complete step-by-step guide to investing online in KSE shares or Pakistan Stock Exchange and also make money while you are at it. For that, you’d have to read this document carefully.
PRO TIP 1
Keep this check list as a hard copy with you as no one really tells you these things, unless you learn the hard way.
How to invest in Pakistan Stock Exchange
This “how to guide” is for all those men and women that do not want to rough it out in Pakistan’s summer heat and Corona Virus situation,
but need the money to live decently, working at home.
So, let my dive right in…
Essential items to make money online through the Pakistan Stock Exchange
You just need to have
- A lap top,
- reliable Wi-Fi service,
- keenness to research annual financial statements, and
- a love for real-time data. Oh, and
- you need to love MONEY!
Do I need a finance degree to trade on Pakistan Stock Exchange?
Nope, you just have to have the basic commons sense to follow the checklist I have given you down below and chose the right script, at the right price and be patient.
Isn’t the Pakistani Stock Exchange too volatile and run by colluding criminals?
Maybe, how does it matter as long as you find the right stocks to buy and eventually make a profit out of your investment?
You’d probably never have to meet Abdul Kareem Dhedhi or Jahangir Siddiqui in person — the blue whales of stockbrokers.
Besides, they need small investors to keep people in the game, so they let you make money on the side.
Which Pakistani Stock Exchange is better?
I have personally used the KSE-100 index and have made money when the stock market rose.
I feel there are more professional people there and there are more stakeholders interested in seeing KSE-100 do well.
Why not invest in foreign stock exchanges, instead of Pakistan?
Well, technically, as a Pakistani, you could and might make some money, but as my checklist will show you, you need to know the ins and outs of your preferred company.
Also, Pakistan Stock Exchange has already gone global in the MSCI index and is now categorized as an emerging market;
if you know KSE or ISE, you’d handle foreign portfolios better.
Do I need an office to start trading on PSE?
Not at all; everything is done on your laptop.
Online registering and trading is a very convenient platform to make money if you follow this guideline.
How much money should I have to start online trading in PSE?
Well, you can even start with PKR 25000, but I recommend Rs 100,000
So that you get used to the concept of percentages, multiples, commission calculations, dividend percentages, investment percentages, and stock value calculations.
Rs 100,000 can easily be broken down into a percentage from 1-100 to calculate values quickly on your feet
This will help you gain experience of handling fractions later on.
When will I start getting returns on my investment online?
If you gain enough knowledge and experience, you can start making money from day-1
which is very unlikely.
You should not expect any return on your investment for at least the first year that you buy your stocks unless they pay you dividends in the mid or end of the year.
Dividends are not enough to live by anyways so, don’t expect much too soon. Be very patient.
How can I withdraw my money from my online account with PSE?
You can easily sell your scripts any day that you need the money and transfer the balance to your personal bank account online.
Will the stockbrokers steal my money?
That’s why it is important that you read my checklist.
What percentage return on investment can I expect from Stock Trading in Pakistan?
I would believe somewhere between 10-15 percent every year cumulative if you buy the right stock at the right time.
Checklist for Investing online in Pakistan Stock Exchange
I’ll go over the checklist of steps required to complete the process of getting rich investing in Pakistan Stock Exchange in my Ultimate guide, so here it goes:-
Money is made by buying cheap
Right off the bat, money in stock exchanges is made in buying right, not selling — never forget that.
Read investment books
Read “The Intelligent Investor” by Benjamin Graham, which is also recommended by Stock market Guru Warren Buffet.
Just go over the summaries and try to get the gist of what the guy wants to say.
It would help you get a foothold on how the stock market people think and not waste your effort in dimes and nickels.
Chose a less volatile stock Exchange KSE
- Islamabad Stock Exchange (ISE),
- Lahore Stock Exchange (LSE) and
- Karachi Stock Exchange (KSE),
combined to be named Pakistan Stock Exchange (PSE) — how original.
But KSE has been around more than the rest and has more people vying for it to succeed so, I’d choose that one.
Do not jump into stocks purchasing or selling without understanding it first.
Purchasing has to be immaculately conceived;
Otherwise, you’d be out of the game immediately for several years, while the stock rises again.
Selling can be sloppy, and
you might survive the scare to fight another day.
Stick to your prized stock like they are your only child, not your maidservant.
Chose a stock reputable stock broker
Choose one amongst
- AKD Abdul Karim Dhedhi,
- Arif Habib,
- Jehangir Siddiqui JS Global and
As everyone knows their owner and have a good reputation as professional money makers, not thieves.
Listed Companies Share Prices
You can get real time data on the listed companies share prices from the portal of PSE or AKD, KASB, Arif Habib, JS.
Register with the stock broker
Online registration doesn’t cost much at all and takes very little time.
You’d have to park some money in your account exclusively for stocks i.e. Rs 25000 onwards.
Registration requires your
- last payslip, and
- bank credentials.
Their website even has an app to use on your cellphone.
You’d be good to go in one week max.
Place money into your account
Transfer money online to the brokerage house account.
Place only the amount that you have no fear of losing permanently.
After all, you are a rookie, yet.
Learn to Navigate the Stock Trading Portal first
First study how to navigate your stock portal page and options available on the tabs
Get to know your online trading site; you don’t want to be looking for the ‘sell’ button when the stock is at a juicy price.
Choose your top 5 investment script by reading extensively their annual reports
Where can I get all the Listed Companies of Pakistan Stock Exchange?
Follow this criterion to select top 5 scripts for your portfolio
Diversify in 5 different sectors, namely,
- Oil & Gas,
All investments should be a blue chip.
To get some idea on Pakistani banks, you can read this.
Top Companies in Pakistan Stock Exchange
I will narrow down the search for you, my besties.
Start reading up on
- Hub Power Co,
- Lucky Cement,
- Mari Petroleum,
- Mehran Bank,
- Fauji Fertilizer FFC
- Nishat Power.
- Mari Petroleum
What to find in the Annual Financial Statements
You can get the annual financial statements of all these companies from their websites, and also from pk site.
Now, in the companies’ annual reports, check out their:-
- Dividend yield not decreasing
- Dividend history 10 years not decreasing
- Earnings per Share (EPS) staying + ve at least last 3 years
- Cumulative EPS in last 10 years 30%
- Current Ratio (Current Asset / Current liability) >2
- Consistent Dividend growth in 10 years
- Price per Book Value P/B < 22.5
- Price to Earning (P/E) Ratio < 15
- Capital gain, book value per share consistently positive
- Company float, market capitalization huge
- Profits and revenues consistently high
- Debt to Asset Ratio < 20
- Good backers or sponsors of the company like Nishat, Packages group, Tabbas, Dawood Hercules, etc.
- The quality of management, especially CEO and CFO; Multinationals generally pick out the best of the local lot.
After Shortlisting Top Companies in PSE
Once you have shortlisted your Top 7 companies, now call or email your broker ask for his opinion on why you chose them.
- Drop two more companies and get ready to purchase stocks of your top five.
- Do not invest as yet; watch the stock markets movement and political scene
- Decide what amount of money you can afford to lose forever
- Only invest when the stock hits rock bottom and take money out when the stock rises
- When the stock keeps rising, wait for it to fall significantly before investing again. Do not invest while the stocks are rising.
- In the meantime invest in government securities and bonds, which are one of the highest in the world, but still lesser than stock returns. In Pakistan, you can buy bonds ranging Rs 100- 40,000, with returns in the millions of rupees.
- Now Invest in the long term by clicking the buy button on your stock online portal, in 5 difference scripts, all together with some cash left in your account.
Tips on Investing in Pakistan Stock Exchange
- Invest in the long term only.
- Keep buying stocks from your monthly savings, while the stock is still its lower side
- Never buy stock on hearsay or impulse
- Never indulge in short selling or booking short term profits
- Don’t invest in Global Exchange MSCI ETF (symbol PAK) stocks abroad yet, till you master the art in Pakistan. Pakistan Stock Exchange that has merged all the stock exchanges in Pakistan is registered with MSCI index and has been upgraded to emerging stock status from frontier stock since 2017
- Listen to you broker but decide yourself finally
- Read the business pages of financial papers daily for news on the parent sector of your stock
- Invest even when their blood on the streets, even if it’s your own
- Keep one stock exchange, don’t jump
- Keep the profits of sale inside your stock account and invest again, all of it.
- Go for booking profits when stocks are high, don’t wait for dividends
- After Corona fever is over, travel companies in Pakistan, like this one, will go into overdrive
- Bitcoins market is yet not mature yet.
Can women invest in Pakistan Stock Exchange?
The stock market does not discriminate between genders, but it does between common sense.
Even women can trade in online stocks in Pakistan easily.
Can I make an income by investing in PSE from my home?
Yes, if you consistently keep updating your knowledge, you can do online trading and build consistent income – full time from your home.
Investing in Pakistani Stock Market is easy and simple. The only catch is that you have to read into to your choice of the company thoroughly. So, get your financial reports now and start making money online.