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Performance Measurement of KMI 30 and KSE 30 Index in Karachi Stock Exchange

In: Leadership, Innovation and Entrepreneurship as Driving Forces of the Global Economy

Author

Listed:
  • Ali Salman

    (Lecturer at University of South Asia)

Abstract

There is a dramatic shift in the investment preference of investors from conventional to Shariah-complaint companies in the last decade. This study provides evidence on the performance measurement of Karachi Meezan Index which represents Shariah-complaint stocks in comparison to KSE 30 which represents conventional stocks registered under Pakistan Stock Exchange formerly known as Karachi Stock Exchange. Daily index prices are incorporated in the analysis from 21 March 2012 to 7 September 2015. Independent sample t-test model is employed to measure the difference in the risk and return of each index. Regression analysis is used to study the relationship between stock return and financial ratios. Results showed that KMI stocks generate higher average return and lower risk as compared to KSE 100 index. Moreover, KMI 30 index shows higher risk-adjusted return of Treynor ratio as compared to conventional counterpart. In regression analysis, net income margin shows a significant negative relationship with KSE 30 index return. However, DER shows negative relationship with KMI 30 index but not significant.

Suggested Citation

  • Ali Salman, 2017. "Performance Measurement of KMI 30 and KSE 30 Index in Karachi Stock Exchange," Springer Proceedings in Business and Economics, in: Rachid Benlamri & Michael Sparer (ed.), Leadership, Innovation and Entrepreneurship as Driving Forces of the Global Economy, chapter 0, pages 795-807, Springer.
    • Handle: RePEc:spr:prbchp:978-3-319-43434-6_71
    DOI: 10.1007/978-3-319-43434-6_71
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