Author: Shabbir Kazmi

United Arab Emirates (UAE) continues to be major investor and a key trading partner of Pakistan. It also played a key role in supporting Pakistan’s economy after the loss of its eastern wing. The latest investment pledge by UAE has come at a time when the Government of Pakistan is trying to fast-track economic growth. This boost has been facilitated by Sheikh Nahyan bin Mubarak Al Nahyan, the UAE Minister of Culture and Knowledge Development, during his recent visit to the Pakistan Stock Exchange (PSX) in Karachi. UAE continues to make substantial investments in Pakistan helping shape the country’s vibrant…

Over the years United Arab Emirates has become a wonderland. It is busy in constructing the monuments which people from around the world come to see. Nearly half a century back it was considered a landscape full of sand dunes, but over the years the entire landscape has been changed and now considered one of the most modern place to live, trade with and a tourist attraction. Yas Island Yas Island is one of the most spectacular projects of UAE. Located strategically off the city of Abu Dhabi, the entertainment destination of Yas Island will eventually occupy a total land…

Wall street gains on robust november. hiring data Wall Street indexes gained on Friday as US employers added more jobs than expected in November, cementing the case for an interest rate hike next week and adding to optimism about the economy heading into 2018. Nonfarm payrolls rose by 228,000 jobs last month amid broad gains in hiring as the distortions from the recent hurricanes faded, Labor Department data showed. At 12:25 p.m. ET (1725 GMT), the Dow Jones Industrial Average was up 92.82 points, or 0.38 percent, at 24,304.3 and the S&P 500 was up 12.91 points, or 0.49 percent,…

[dropcap]P[/dropcap]akistan got independence from British Raj in 1947 and till early nineties its energy sector remained under state control. The policies were driven on the whims of the governments and support by the multilateral lenders rather than needs of the country, in complete disregard to the cost of doing business and above all facing no competition. The landscape changed drastically with the change in lending policy of the multilateral lenders to private sector from public sector, pressure on the Government of Pakistan to initiate process of liberalization, deregulation and privatization. Since the program was imposed and lacked ownership the economy…

[dropcap]A[/dropcap]nalysts had termed creations of independent power plants (IPPs) as putting the cart before the horse. It was true that power generation plants were not very efficient, but real losses were due to highly inefficient distribution companies. There was rampant pilferage, reported as high as 40% that was clubbed under transmission and distribution (T&D) losses. Inductions of IPPs and failure to privatize distribution companies became the biggest reason for the creation of circular debt. At an average the government has been dishing out over half a trillion rupees per annum to keep the slate clean. However, the menace continues to…

MARKET GAINS SOME LOST GROUND, CAN SEE IMPROVE SENTIMENTS The 21-day long sit-in that resulted in the Law Minister’s resignation, kept the market under pressure, breaching 40,000 psychological barrier for the third time, but managed to close the week ended 30th November at 40,010pts, down by about half a percent. Apart from challenges on the political front, investors chose to remain on the sidelines ahead of the MSCI rebalancing on 30th November. Foreigners offloaded US$39.54 million worth of equities during the week as compared to a net outflow of US$6.28 million a week ago. That said, positive news flow on…

[dropcap]E[/dropcap]ven the cursory look at the performance of Pakistan’ cement industry shows highly erratic performance. Since expansion takes place in cascading manner, industry suffers from surplus capacity and low earnings per share, which improve with the passage of time. The credit for keeping capacity utilization at modest level for all goes to the cartel, which is run by a few groups that control bulk of the installed capacity. The owners continue to thrive, but consumers are forced to pay high price as the regulators are keener in protecting the interest of owners rather than the interest of consumers. The fall…

[dropcap]I[/dropcap]f anyone examines the below optimum capacity utilization of any industry in the country, the blame could only go the successive governments and policy planners. The most common complaint is high cost of doing business in the country. Some of the industries currently victim of this contentious problem are cement, fertilizer, textiles and clothing, sugar and crude oil refining. The worst affected are consumers and the shareholders of these companies and suppliers of raw material to these industries. Imposition of high taxes on one hand raises cost of finished goods and on the other hand erodes dividend payment to the…

STOCKS REMAIN UNDER PRESSURE ON STATE OF UNCERTAIN POLITICAL AND FINANCIAL SCENE During the week ended 24th November 2017, the benchmark index of Pakistan Stock Exchange lost another 596 points to close at 40,248 points (down 1.5%WoW). Distressed energy chain, down on abrupt closure of furnace oil based power plants, was the key reason behind lackluster performance of bourse during the week. However, NEPRA’s announcement later during the week regarding KEL’s Multi Year Tariff hearing triggered trading spree in the scrip (up about 12%WoW). Average daily traded volume rose to over 112 million shares with volume leaders being: KEL, TRG,…

[dropcap]M[/dropcap]ost of the discussions at experts’ level hover around poor savings rate in the country. However, they tend to completely forget that a significant percentage of Pakistan’s population live below subsistence level. If they don’t have money to buy food and other necessities of life and carry huge load of debt they just can’t save any amount. The solution is simple, government should facilitate in the creation of new job opportunities, offer soft term loans for micro and small and medium enterprises (SMEs) and follow policies that can improve competitiveness of the local producers. CREATE NEW JOB OPPORTUNITIES Pakistan suffers…

[dropcap]E[/dropcap]xperts have been consistently saying that Pakistan has one of the lowest savings rate, but the successive government have been failing in coming up with the policies that can encourage people to save. The prevailing conditions demand all the political parties, policy planners, academia and public at large to develop a consensus to encourage people to save. The situation also demands imposition of restrictions on the government’s borrowing. Despite persistent increase in tax rates to meet the budget deficit, the gap continues to widen. Analysts attribute high public debt to lavish spending, growing budget deficit, weaker tax and non-tax receipts,…

BEARISHNESS PREVAILS; SLIDING OIL PRICES, MSCI REVIEW AND VOLATILE POLITICAL STATE HOLD ACTIVITIES The benchmark index of Pakistan Stock Exchange (PSX) shed 592 points (down 1.43%WoW) during the week ended 17th November 2017 to close at 40,844 levels. MSCI’s semi‐annual review and slipping crude oil prices remained the major highlights of the week, while investors remained concerned about volatile political situation. In its review MSCI reclassified ENGRO from large cap to small cap stocks, while FEROZ, PSMC, and SHEL have been removed from small cap stocks. Prices of shares of E&P companies were impacted negatively by the declining oil prices…

[dropcap]O[/dropcap]ne of the prime focuses of economic managers of Pakistan should be ‘achieving food security’ to fill the stomach of over 220 million people living in the country. To keep the prices of eatables affordable two-pronged policy has to be followed: 1) keeping prices of inputs low and 2) offering subsidies to farmers to protect them from the adverse impact of spikes in commodity prices. Anyone who does not subscribe to this statement must examine policies being followed by other developing and even developed countries. In countries like India and China, consistent and focused effort by public sector support programs…

Interview with Mr Ahmed Ali Siddiqui – Founding Director, IBA Center for Excellence in Islamic Finance (CEIF) PAGE: WHY THE NEED WAS FELT TO ESTABLISH CENTERS FOR EXCELLENCE IN ISLAMIC FINANCE THROUGHOUT THE COUNTRY? AHMED ALI SIDDIQUI: The Islamic Finance industry in Pakistan is growing at a fast pace. Market share of Islamic banking assets and deposits in overall banking industry were 11.6% and 13.7%, respectively as of 30thJune, 2017. This exponential growth of the industry has led to a shortage of trained human resource at all levels. The State Bank of Pakistan realized this need and established three Centers…

Interview with Ms. Tahira Raza – President and CEO, First Women Bank Limited [box type=”shadow” align=”” class=”” width=””] First Women Bank (FWB) is a unique financial institution, a Scheduled Commercial Bank, set up in 1989 by the Islamic world’s first woman Prime Minister Benazir Bhutto (Shaheed), who wanted a bank that would meet the banking needs of women. Its mission is “To be a sustainable bank offering efficient, cost effective and need based financial products and services with special focus to address women’s banking needs through strategic alliances. Improve governance through capacity building and restructuring of the Bank”. Ms. Tahira…

Interview with Mr. Suresh Sidhu – CEO, EDOTCO Group [box type=”shadow” align=”” class=”” width=””]PROFILE Suresh Sidhu has been Chief Executive Officer of edotco Group since July 2014. edotco operates and manages a regional portfolio of over 26,000 towers across core markets of Malaysia, Myanmar, Bangladesh, Cambodia, Sri Lanka and Pakistan with 18,461 towers directly operated by edotco and a further 8,100 towers managed through a range of services provided. At edotco, Suresh and his team have overseen the transformation that has produced one of the fastest growing tower companies in the world in terms of towers and tenancies, with growth…

Interview with Syed Mehdi Hasnain — Chief Executive Officer, The Hunar Foundation [box type=”shadow” align=”” class=”” width=””] Syed Mehdi Hasnain is one of the leading Business, Operations Excellence and Resource Management brains in Pakistan at current. A unique career that started at grass-root level in Pakistan, with hands-on working experience in industrial manufacturing and installation projects in power, cement, oil and gas and chemical sectors. He has 25 years of experience in manufacturing, steel, automotive, retail and electronics industries which include serving Worldwide Director of Quality with APC-Schneider in US; a multi-billion dollar world leader in Data Infrastructures and UPS…

STOCKS RECOUP LOSSES, MUTUAL FUNDS AND INDIVIDUALS TO RAISE PARTICIPATION LEVELS During the week ended 10th November 2017, Pakistan Stock Exchange (PSX) recouped some of lost ground and the benchmark index inched higher to close at 41,436 points. The expectations about strong automotive sales kept OEMs in the limelight, whereas upward momentum in crude oil prices kept refiners under pressure. On the geopolitical front, the developing situation in Saudi Arabia raised concerns about an already unstable region. News flows during the week included: 1) OGRA proposing to float bids for building a 430km long oil pipeline from Sheikhupura to Peshawar,…

[dropcap]I[/dropcap]t is an undeniable fact that Pakistan suffers from two contentious problems: 1) low savings and 2) limited opportunities for investment. All the successive governments have been making efforts to lure foreign investors. However, they fail to understand that if the local investors are shy no foreign investor would be keen in investing in Pakistan. The problem is further aggravated because per capita income is low and there is hardly any incentive for saving. Those who have some money want to become rich overnight but mostly fall in the trap of cheaters and ultimately loose whatever amounts they have. The…

[dropcap]F[/dropcap]or those who may not be very familiar with Pakistan’s capital market, the small number of listed companies and shareholders’ base may seem a little disappointing. Over the last one decade the number of listed companies has come down to around 650 from more than 750. Some of the critics are happy because they believe that the number has reduced due to the mergers and acquisitions as well as voluntary delisting. But the brutal reality is that bulk of daily trading volume is confined to less than two dozen companies. Many of the state-owned enterprises are still not listed and…

ECONOMIC AND POLITICAL CONCERNS KEEP INVESTORS AWAY; UPCOMING EARNINGS REPORT MAY SUPPORT Though, political noise subsided but investors’ sentiments over prevailing external account weakness and a lackluster results season, eroded the benchmark index by 2.33%WoW during the week ended 27th October 2017 to close at 41,105 points. Average daily volume also declined by 27.14%WoW to 134.5 million shares. Key news flows during the week included: 1) US Secretary of State during a visit stressed the importance of Pakistan for United States and emphasized that the country’s leadership needs to undertake ‘certain measures’ for working together for achieving the common objectives,…

[dropcap]W[/dropcap]ith the growing menace of drug trafficking, money laundering and financing of terrorist outfit, all around the world governments want to keep a complete trail of money being transferred to and received from different countries. The rules have been made more stringent after 9/11 and imposition of economic sanctions on certain countries. Pakistan faces doubled-edged sword because of being the ‘Frontline partner in the war against terror’ if often accused of being a safe haven for the terrorists and remittances being a major source of foreign exchange. However, it has been often felt that a lot of money is coming…

[dropcap]A[/dropcap]nalysts are of the consensus that those who wish to borrow money from the commercial banks have no option but to comply with the banking regulations, others prefer to stay away from opening accounts with the banks till it becomes inevitable. This is not any exaggeration but statement of the harsh reality, which is evident from financial exclusion. Since most of the accountholders just can’t borrow money from banks, they also don’t prefer to keep their money in banks. Added to this is the prevailing perception that keeping money in banks and receiving return is violation of teaching of Islam…

POSITIVE TREND TO CONTINUE; RESULTS SEASON WILL SHORE UP ACTIVITIES Pakistan Stock Exchange (PSX) posted broad based recovery during the week ended 20th October 2017. The benchmark index mostly traded in green zone, gaining 2,241 points or 5.62% WoW to close at 42,088 points. Average daily traded volumes also improved significantly by 26.64%WoW to 185 million shares, volume leaders bring EPCL, KEL, ASL, TRG and DSL. Key news inflows impacting the market during the week included: 1) GoP hinting towards relief measures to address investor concerns over declining trend in the market, 2) GoP imposing regulatory duty on import of…

[dropcap]P[/dropcap]akistan got independence from the British Raj in 1947, but a review of the economic progress of over 70 years reveals some very disappointing facts. The worst has been the conversion of East Pakistan into Bangladesh, the biggest dent to the two nation theory that culminated at the creation of the first country on the basis of an ideology. The early death of Quaid-e-Azam, Mohammad Ali Jinnah, assassination of Liaquat Ali Khan, three marshal laws, shamble democracy and dismal economic growth have pushed Pakistan far behind those countries which got independence much later. The dismal performance can be attributed to…

[dropcap]I[/dropcap]f anyone visits hospitals and educational institutions operating in the public sector in Pakistan, highly depleted conditions establish two points: 1) paltry allocations for health and education confirm that the two sectors have remained on the lowest priority of the successive governments and 2) whatever dismal allocations are made, bulk of it is embezzled. The conditions of institutions operating under the federal and provincial administration are not different but worst are those operating in the low income urban areas and most of the rural areas. Almost all the MNAs and MPAs are allocated huge amounts for development but hardly any…

INDEX POSTS NOTABLE DECLINE AS BEARISHNESS PERSISTS OVER SHABBY ECONOMIC SCENE The growing concerns about the health of the economy became even a bigger concern as compared to the prevailing strangulated relations between the civil and military. During the week ended 13th October, the benchmark Index of Pakistan Stock Exchange (PSX) posted a decline of 1,466 points or 3.55%WoW to close at 39,847 levels. This is the first time after June 2, 2017 that the benchmark index ended all the five trading days in the negative zone. Average daily trading volume increased by 4.96%WoW to 145.79 million shares. The top…

[dropcap]J[/dropcap]uly-September 2017 quarter may be termed one of the worst spells of Pakistan stock market. It was mainly due to the ongoing political saga indicating growing conflict between the ruling Junta and the institutions. Events like imposition of penalty on Habib Bank Limited (HBL) in the United States on violations of the rules and the court’s verdict against National Bank of Pakistan (NBP) in pensioners’ case made investors jittery. The growing concerns are that very few analysts have the slightest idea about the pace at which Pakistan is inching towards default on external debt servicing, thanks to the mindset of…

[dropcap]S[/dropcap]ome of the critics raise serious concerns that Pakistan is suffering substantially due to brain drain. However, the other point of view is that Pakistanis working abroad are a major source of foreign exchange for the country. At an average, Pakistanis working abroad send more than US$ one billion per month and the amount has increased consistently. Had this source of foreign exchange not there, Pakistan would have faced serious balance of payment crisis. Therefore, it is necessary to dispassionately examine the pros and cons of Pakistani going abroad in search of employment. To begin with, let us first of…

FOREIGN PLAYERS, E&P SECTOR LIKELY TO COME INTO THE LIMELIGHT September 2017 turned out to be another volatile month for the market. Negativity prevailed during the first half of the month on penalty imposition of up to US$630 million on Habib Bank Limited (HBL) by the US authorities, later on slashed to US$225 million. However, foreign buying, resulting in an inflow (net) of US$28.9 million marked the first sizable monthly inflow during the current financial year. Sectors dominating market performance included: Pharmaceuticals, Food Producers, Chemicals, Electricity and Oil & Gas. Going forward October, foreign flows are likely to play a…

[dropcap]I[/dropcap]n Pakistan a lot is being said and talked about China-Pakistan Economic Corridor (CPEC). While some analysts term it a mega initiative by Pakistan’s ‘time tested friend’, cynics label it ‘another East India Company in Making’. Another group says, “British Raj undertook many mega developmental project in Indian subcontinent but most of these were aimed at taking the raw materials from one of its bountiful colony to the home town and sell its finished products to one of the huge markets enjoying substantial purchasing power, as against this CPEC is aimed at ushering prosperity in the rural areas of Pakistan”.…

[dropcap]I[/dropcap]ndian Ocean is the oldest and most efficient trade corridor. On its one side are hydrocarbon rich countries and on the other side are energy deficient but major energy consuming and industrially developed countries. The ships carrying goods destined for Europe using Suez Canal also passes through Indian Ocean. In order to provide security to their maritime trade navies of different countries are also present in the Indian Ocean. In the recent past pirates having safe sanctuaries in Somalia have created serious havocs, which prompted many countries to further enhance their presence in the Indian Ocean, which also included India.…

MARKET REMAINS BEARISH AMID TENTATIVE POLITICAL VIEW Political uncertainty continued to mar investors’ sentiments during the week ended 29th September 2017. The ousted Prime Minister, Nawaz Sharif returned from London to appear before Accountability Court. NAB indicted Finance Minister, Ishaq Dar that further intensified negative sentiments. The benchmark index of Pakistan Stock Exchange (PSX) witnessed erosion of 341 points and closed at 42,409 level. Average daily traded volume declined by 9%WoW to 146.3 million shares. The top volume leaders were: KEL, BOP, WTL, TRG and KOSM. Key news flows impacting the market during the week included: 1) ECC approved payment…

[dropcap]M[/dropcap]ore than 650 companies are listed at Pakistan Stock Exchange (PSX), but the number of women occupying the position of Chief Executive Officer (CEO) can be counted on the five fingers of a hand. This looks all the more pinching because more than half of population of Pakistan comprises of females. The prevailing dismal situation can be attributed the myopic vision, which consider female an inferior breed that required handholding and patronage and on top of all should never be allowed to become the decision maker. This is not unique to the third world countries; the similar mindset also prevails…

[dropcap]A[/dropcap]ll sorts of vehicles put together are the biggest source of logistics, consumer of energy products, sources of employment and contribute towards multiple economic activities. Quantifying their contribution to the economy may not be as easy as perceived by those having a myopic view. Some analysts also car the automotive industry is a burden on economy as is still remains heavily dependent on imported components and also consumes the largest percentage of total energy products, mainly imported. However, by taking a holistic view, policy planners can come up with policies that can make automotive assembly foreign exchange earner rather than…

[dropcap]P[/dropcap]akistan started assembling of brands of American and European vehicles in fifties and Japanese brands in sixties. Despite lapse of more than half a century, the industry remains heavily dependent on imported parts. Some analysts attribute the prevailing situation to bad government policies and others hold the local assemblers responsible, who have failed in developing a dependable indigenous vendor industry. It is a common complaint that over the years the government has been facilitating the assemblers and failing in protecting the interest of vehicle users. This demands a dispassionate analysis of the industry and coming up with amicable solution acceptable…

KEY NEWS HELP INDEX CLIMB; FTSE MOVE, BY-ELECTION LIKELY TO PUSH SENTIMENTS During the week ended 15th September 2017, the benchmark index of Pakistan Stock Exchange closed at 42,787 points, up 3.35%WoW. The rally was driven by 4.8% WoW increase in international oil prices and HBL saga ending with the bank agreeing to pay US$225 million against the initial expectations of US$630 million. Average daily traded volumes, though remaining dismal, was up 15.5%WoW to 157.13 million shares. The volume leaders were: WTL, ANL, TRG, ASL and BOP. The key news driving the market during the week included: 1) Country’s trade…

[dropcap]T[/dropcap]here is an old saying ‘construction is the mother of many industries’ and it seems true even today. To begin with, it employees the largest percentage of unskilled labor, consumes cement, steel, wood, glass, tiles and sanitary fittings. Domestic consumers are also the biggest consumers of gas and electricity. Therefore, it may be said that if the government is serious in accelerating the GDP growth rate of the country, it hconsas to facilitate the construction industry. If one adds construction of infrastructure, it becomes trillions of rupees industry that demands proper attention of the government. Let first of all split…

[dropcap]A[/dropcap]bout one-tenth of Pakistan’s total population lives in Karachi. Its population is growing by around 6 percent per annum due to the natural growth of about 2.5 percent and another 3.5 percent due to the influx of people from other parts of the country. Since these people come to the mega city in search of employment, they usually seek housing units with low rent, mostly located in the outskirts of the city. According to various estimates, about half a million new low cost housing units have to be constructed every year for the people falling in the category of low…

[dropcap]K[/dropcap]arachi is fast becoming a concrete jungle with the construction of high-rise buildings. Previously, multi-storey buildings were constructed in old town, but now skyscrapers are being constructed on the coastal-line also. Parks are vanishing fast and plants grown on both sides of the roads are being cut in the name of creation of clear vision for the drivers. This on one hand creates pollution and on the other hand give birth to other related health and social issues, the worst being the traffic jams on the roads. Traffic jams have become a norm mainly due to the encroachments on roads…

INDEX RECORDS MARGINAL INCREASE; MARKET TO REMAIN RANGE BOUND During the week ended on 8th September 2017, the performance of Pakistan Stock Exchange (PSX) remained lackluster. The benchmark Index increased marginally and closed at 41,401. Key news flows affecting the market included: 1) CPI based inflation for the month of August 2017 was recorded at 3.41%YoY; 2) in an out of court settlement, HBL has agreed with New York Department of Financial Services (DFS) to pay a fine of US$225 million; 3) Pakistan’s total foreign exchange reserves increased to US$20.387 billion during the week ended 31st August 2017, up by…

[dropcap]I[/dropcap]n Pakistan many of the businessmen suffer from this illusion that induction of technology can boost their business, they are partly right and partly wrong. The point to remember is that technology is only a tool and not an end. Businessmen have to revisit their business model and deploy the technology that enables their customers to review products/services along with prices, place an order, make payment and receive delivery of the order at the designated place. In this business model, the most strategic role is played by the website of the incumbent. For example, if a commercial bank wants to…

[dropcap]O[/dropcap]ne often finds negative stories about Pakistan, only because the local and global success stories are hardly shared. It is also believed that mega successes are part of the developed world. I have a strong faith that no success can be achieved without out of the box thinking, elaborate working and above all hard work. ‘Silicon Valley’ is a nickname for the southern portion of the San Francisco Bay Area, in the northern part of California in the US. The area is home to many startup organizations such as Facebook, Apple, Yahoo, Google, eBay etc. All these ventures were founded…

BEARISH SENTIMENTS TO PREVAIL, PAK-AFGHAN POLICY MAY SPOILSPORTS The incumbent government led by PML (N) already under domestic pressure, faces the external threat after a shift in Pak‐Afghan policy of the United States. The benchmark Index of Pakistan Stock Exchange closed the week ending 25th August 2017 at 42,642 points, down by one percent as compared to a week ago. During the week, investors preferred to stay on the sidelines. The average daily turnover trading volume was down by 2.00%WoW to 179.73 million shares. The top volume leaders of the week were: TRG, ANL, KEL, BOP and ASL. Major news…

[dropcap]F[/dropcap]or considerably long time Pakistan stock market has remained one of the best performing markets of the world. While there is no reason to doubt this statement, during the financial year 2016-17 volatile geopolitical conditions, election in the United States, Britain and France and Britain’s decision to take an exit from the European Union (EU) kept the foreign investors’ focus on their domestic markets, rather than venturing into the overseas markets. Initially, India under Modi’s leadership managed to attract the attention of foreign investors as well as non-resident Indians, but soon the baloon started deflating. During financial year 2016-17, the…

[dropcap]I[/dropcap]f an analyst examines Pakistan’s economy in detail a few points are evident: 1) despite many odds the country has remained a preferred destination for the foreign investors, 2) once entering into Pakistan hardly any foreign investor has left the country, 3) previously foreigners used to make direct investment in industries, but now they prefer to buy shares of blue chip companies, and 4) foreign funds/investors owns nearly one third of the total free-float of listed companies. Overseas investors have also learnt a few lessons from the sudden and abrupt changes in the policies of the Government of Pakistan (GoP).…

FOREIGN INTEREST WEAKENS OVER POLITICAL UNEASE, CURRENCY DEPRECIATION Political uncertainty raised further after the departure of Mian Nawaz Sharif. The benchmark index of Pakistan Stock Exchange posted 4.8%WoW for the week ended at 43,078 points. Average daily trading volume declined by 3.38% WoW to 183.5 million shares. The volume leaders: were ANL, ASL, TRG, BOP and KEL. Other key news impacting the market included: 1) Nawaz Sharif’s counsel filing review petition against Panama leaks case verdict, 2) NAB sending letter to Saudi authorities requesting details of the Azizia Steel Mills, 3) total foreign exchange reserves falling consecutively fifth week to…

[dropcap]F[/dropcap]or decades Pakistanis have been hearing about the geopolitical importance of their country. However, the country continues to suffer from paltry per capita income, millions of people living below the poverty line and above all the country’s domestic and foreign debt touched unsustainable level. While peeing through the distant as well as recent history shows that from the British Raj to the current global and regional superpowers wish to keep Pakistan subservient to their global agenda, directly or indirectly. In the simplest words Pakistan is rich in agriculture, minerals and even energy products. It is located on the centuries old…

[dropcap]G[/dropcap]one are the days when countries were conquered by the armies, now superpowers make the smaller countries subservient by getting control over their economies. They (superpowers) either initiate internal turmoil in the name of the change of regime or enforce ‘The New World Order’ by imposing their economic agenda. In this endeavor the multilateral lenders play the most important role. While International Monetary Fund (IMF) has been classified as the lender of last resort, it attaches conditions that plunge the borrowing countries deeper into the financial problems. Pakistan is one of the perfect case studies of borrowing for the sake…

INDEX FALLS, POLITICAL PARTIES SHOW OF STRENGTH TO KEEP INVESTORS IN CHECK The benchmark index of Pakistan Stock Exchange (PSX) closed the week ended on 11th August at 45,288 points, dwindling 3.39%WoW or down 1,589 points. Despite ongoing result season, the KSW-100 Index weighed upon political uncertainty. Key news flows impacting the markets were: 1) reduction in retail prices of MOGAS and HSD, 2) GoP disbursing Rs25-30 billion to the exporters under PM’s package, 3) auto sales surging almost 18% YoY to 20,369 units in July this year, 4) total cement dispatches growing by 44%YoY to 3.382 million tons in…

[dropcap]I[/dropcap]n Pakistan, penetration of insurance is very low, which is evident from huge economic losses caused by various eventuality, but paltry claims paid by the insurance companies. This is not an exaggeration, but an expression of the harsh reality. Three of the most disastrous events in Pakistan’s history were earthquake of 2005, killing, looting and sabotaging after the assassination of Ms. Benazir Bhutto in 2007 and torrential rains resulting in unprecedented floods in 2010 and 2011. It may be said that incidents of such magnitude are very rare. However, 9/11 has taught a lesson that people and properties are being…

[dropcap]A[/dropcap]griculture is the backbone of Pakistan’s economy. Nearly 65% of the total population is involved in agriculture. Cotton one of the largest cash crop, provides raw material for textiles and clothing industry, which has over 60 percent share in total export earnings of the country. Lately Pakistan has also attained the status of wheat exporting country. Rice is also exported in huge quantity every year. However, there are two regrets: 1) yields of various crops in Pakistan are far below the global average and 2) from 15-40 percent of agriculture produce goes stale before reaching the market. To improve the…

[dropcap]T[/dropcap]he first ever business school, Institute of Business Administration (IBA) was established in Karachi in 1955. Since then a number of other business schools have been established catering to the ever increasing demand of the corporate sector. A lot many compulsory and optional subjects have been made part of the curriculum. With the emergence of business schools at a massive it has also become necessary to independently review the performance of each entity. However, it is equally important for the students seeking admission as well as their parents to find out the strength and weaknesses of these schools. They should…

An exclusive interview with Ahmed Ali Siddiqui — Founding Director, Centre for Excellence in Islamic Finance [box type=”shadow” align=”” class=”” width=””]PROFILE The Centre for Excellence in Islamic Finance (CEIF) has been established at Institute of Business Administration (IBA) with the objective of providing a platform for discovery, enhancement and dissemination of knowledge in the field of Islamic Finance. It aims to be a world class Centre that through education and research, carries on IBA’s legacy of thought leadership in the Islamic Finance industry. CEIF offers Executive Learning Programs and Forums for discussions among various stakeholders. CEIF has signed an MoU…

BULLS STAGE COMEBACK OVER SC VERDICT; BANKS’ EARNINGS LIKELY TO SUPPORT The week ended on 28th July 2017 will be marked in the history of Pakistan due to the Supreme Court’s verdict leading to the disqualification of incumbent Prime Minister Nawaz Sharif and dissolution of the cabinet. Passing through a rough patch marred by political uncertainty and a spate of largely unsatisfactory results announcements, market witnessed high volatility last week. Despite all odds the week closed at 45,912 points, up 1.4%WoW. News flows impacting the market included: 1) Pakistan’s foreign exchange reserves declining to US$20.4 billion, 2) ENGRO’s Thar coal‐fired…

[dropcap]I[/dropcap]n the recent past Pakistan attained self-sufficiency in urea production, after having remained a net importer of the commodity for a long time. This not only helped in timely and ample availability of the commodity, but also saved the government from spending millions of dollars on its import and payment of billions of rupees subsidy. The successive governments ensured availability of gas (feedstock) at a discounted price. However, lately the operating environment has become anti-urea manufacturers with the imposition of GST and GDIC. At present the manufacturers are sitting on more than one million tons urea inventory. The government’s prejudice…

[dropcap]I[/dropcap]f one looks at the history of power sector in Pakistan, a few points are clear. These include: 1) a myth that the country has been persistently suffering due to the shortage of energy products, 2) the successive power policies have been introduced to serve the interest of local and overseas investors, 3) blatant theft of electricity and gas has been going on with the connivance of employees of utility companies, 4) regulatory authorities have failed in protecting the interest of consumers and remained subservient to the incumbent governments. ENERGY SHORTAGE Pakistan is blessed with an enormous potential of hydel…

PSX ENDS WEEK UP AMID INVESTORS WARY OF PANAMA CASE FINAL JUDGMENT Forthcoming earnings season likely to drive the market The benchmark index of Pakistan Stock Exchange posted a gain of 957 points for the week ended 21st July 2017. This translates into a 2.16%WoW gain as the market closed the week at 45,294 points. The market remained under pressure due to the news flows emanating from Panama Papers case hearing. Political uncertainty kept the investors on the sidelines. The average daily trading volume went down by 23%WoW to a little less than 134 million shares. The trading volume on…

[dropcap]T[/dropcap]he State Bank of Pakistan is the central bank of the country as well as the apex regulator of the banking sector. Prior to independence from the British Raj on 14th August 1947, the Reserve Bank of India was the central bank of the areas of South Asia, now comprising of Pakistan, India and Bangladesh. After the independence, Qauid-e-Azam, Muhammad Ali Jinnah directed creation of Pakistan’s own central bank that was named State bank of Pakistan (SBP). It was also inaugurated by the Father of Nation. At president its Head Office is located in Karachi on I. I. Chundrigar Road.…

[dropcap]B[/dropcap]anking formally started in areas now comprising Pakistan during the British Raj. After getting independence from the colonial era in 1947 a new country, Pakistan appeared on the global map. Very soon the Head Office of Habib Bank shifted to Karachi from Bombay. With the passage of time various other banks were established. After nationalization and amalgamation the commercial banks that emerged were: Habib Bank (HBL), United Bank (UBL), Muslim Commercial Bank (MCB) and Allied Bank of Pakistan (ABL). National Bank of Pakistan (NBP) was established as and still enjoy the status of a public sector entity. Prior to nationalization,…

PSX INDEX TAKES BRIEF RESPITE AS POLITICAL ANARCHY LIKELY TO SHUN INVESTORS Political uncertainty negatively impacted Pakistan’s equities market. The benchmark index of Pakistan Stock Exchange (PSX) touched a low of 43,043 points, but finally managed to close the week at 44,337, posting a decline of 1.96% WoW. Major news flows affecting the market during the week ended 14th July 2017 included: 1) KEL unveiling its US$1.00 billion investment plan to set up a new 900MW power plant, 2) cement dispatches during FY17 rising by 3.71%YoY to 40.315 million tons, 3) workers’ remittances posting a decline of 3.08%YoY were reported…

[dropcap]C[/dropcap]oke has an enviable history in Pakistan spread over decades. Over the years it has added new products to its portfolio to cater the needs of local Coke lovers. Over the years, it has changed its business model for ensuring prompt delivery of the superior quality standards. Coca-Cola entered Pakistan market in 1953. The first plant was set up in Karachi. For several years, the bottling operations were conducted by independent franchisees. Then in 1996, Coca-Cola Beverages Pakistan Limited (CCBPL) was established to acquire all the bottling plants and operate these. CCBPL is a part of Coca-Cola İçecek (CCI), which…

[dropcap]W[/dropcap]ithout mincing words, it may be said that the franchising business is still a nascent phenomenon in Pakistan. Some of the critics may not agree with the assertion as they mix it with other practices, i.e. authorized bottlers, fast food chains and manufacturing under license. This should also not be surprising because brand awareness and brand loyalty are also scanty. Often the use of products of certain brands is considered a status symbol. The users just cannot differentiate the products, if offered without the name or wrapper. Let us begin with the use of branded products, use of unpacked/un-branded milk…

FOREX RESERVES FALL AND RUPEE’S DEPRECIATION LIKELY TO MAKE INVESTORS JITTERY The benchmark index of Pakistan Stock Exchange (PSE) posted a decline of 2.88% WoW, shed 1,343 points and close the week ended 7th June at 45,222 points. Average daily traded volume dropped by 36% WoW to around 166 million. The volume leaders were: TRG, EPCL, BOP, KEL and ASL. The news affecting the market included: 1) GoP slashing retail fuel prices, 2) PACRA maintaining Bank Al Habib’s long-term and short-term entity ratings, 3) commencement of trading in Ittefaq Steel shares, 4) fertilizer manufacturers resuming sales of urea after the…

[dropcap]I[/dropcap]n the simplest words, the budget of a country expresses developmental plans for a year and measures to finance these plans. The FY18 budget is the last budget of the third term of Mian Muhammad Nawaz Sharif as the Prime Minister of Pakistan. He aspires that his political party, Pakistan Muslim League (N) wins the next election to get a chance to rule Pakistan for another 5-year term. While there seems to be nothing wrong with the wish, a lot depends on the outcome of the Panama Papers case and election manifesto presented by the opposition parties. Let us first…

[dropcap]I[/dropcap]f one reviews Pakistan’s economy, the development seems lopsided. The successive governments have experimented with different models from private sector leading the economy to nationalization of the strategic industries to liberalization, deregulation and privatization. The GDP growth rate has varied significantly. It may be said that policy planners have failed in coming up with ‘home grown plan’. This failure can be attributed to persistent dependency on multilateral financial institutions and worst of all remaining under the clutches of the International Monetary Fund (IMF). While the critics blame the IMF, they also fail to realize that nothing comes free in this…

POLITICAL ANARCHY LIKELY TO HIT INVESTORS’ CONFIDENCE The week ended on 22nd June 2017 remained highly volatile due to political uncertantity eminating from Panama Papers case hearing. The benchmark index of Pakistan Stock Exchange (PSX) touched a low of 44,914 on Tuesday, but finally managed to close the week at 46,332, posting a nominal decline of 1.1%WoW. The news flows impacting the market included: 1) net foreign direct investment exceeding US$2 billion during the 11MFY17, China emerging the top investor with US$878 million, 2) textile and clothing exports declined to US$11.23 billion during first eleven months of the current financial…

[dropcap]M[/dropcap]ost of the people working within the corporate sector in Pakistan are aware of the term CSR that stands for Corporate Social Responsibility. However, they have different connotations, perform it as a commitment to the society where they live and do business. The others may consider it an obligation imposed by the government. Therefore, the acts/actions differ, the first group takes pride in undertaking various initiatives and associate their company name/brand with the services they deliver for the society. They turn CSR into an opportunity for CSV – creating shared value. They create a mindset that generates value for society,…

[dropcap]E[/dropcap]very civilized society takes care of education, healthcare, transportation and infrastructure development. To meet the expenses it collects taxes from those who have money. Pakistan can’t be an exception. Being a Muslim majority country, it also collects money under two other heads i.e. Zakat and Usher. While some record of tax payers and amounts collected and spent is available, details about funds collected under Zakat and Usher are scanty. Even lesser details are available about how the funds collected under these two heads are being spent. During Ziaul Haq regime, the law was passed about mandatory Zakat deduction (once every…

SUSTAINABLE RECOVERY UNLIKELY AMID LACK OF TRIGGERS, VOLATILITY Pakistan Stock Exchange (PSE) witnessed volatility throughout the week ended 16th June 2017. Its benchmark index posted a decline of 5.4%WoW, wiping out gains made a week ago. Daily trading volume rose by 6.73%WoW to 255.5 million shares. The most remarkable news of the week was passing of FY18 budget by the National Assembly in the absence of opposition, which decided to walk out. The key news of the week impacting the stock marker were: 1) PSX completed the book-building process related to its 20% stake in an overextended 5‐day period at…

The Three Centres of Excellence in IBA, in alliance with top Malaysian institutes, provide research, training and development in Islamic Finance [dropcap]T[/dropcap]he Islamic banking era that started with the commencement of operations by a full-service Islamic bank, Meezan Bank Limited in Pakistan has posted robust growth during the first decade. However, subsequently its growth pace slowed down due to a number of impediments, worst being banks suffering from excessive liquidity. This issue emerged mainly because Islamic banks are not allowed to invest in government securities. Bulk of the investment of conventional banks is in interest bearing Treasury Bills and Pakistan…

Saadiq is our success, will keep expanding our services legacy through new and digital capability Interview with Mr. Shehzad Khokar – Head, Islamic and Personal Banking, Retail Banking PAGE: PLEASE TELL US ABOUT YOURSELF. SHEHZAD KHOKAR: I have been with Standard Chartered Bank since 2007 in several roles including Islamic Retail Products, Islamic SME Banking, Marketing, Consumer Banking Strategy & Service Quality. I have been in Islamic Banking for the last 7 years and have managed Islamic deposits, cards, secured financing and SME banking. I have been heading the Islamic retail business since 2015. Prior to joining Standard Chartered I…