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Bulls finally return to KSE with continued gas supply Page 4
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profit.com.pk
Friday, 09 December, 2011
Petroleum Ministry to raid CNG stations g
NA body asks govt to release Rs80b immediately to keep PSO afloat
Ministry, OGRA reluctant to grant permission to APCNGA for cylinder and kits testing g 2 CNG cylinders explode recently during gas filling ISLAMABAD
t
AMER SIAL
RagiC loss of life in two recent incidents of blazed vehicles which were using compressed natural gas (CNg) as fuel has forced government to take some steps but planned measures are set to fail. Petroleum Ministry has held only CNg stations responsible for these incidents and plans to conduct raids to penalise gas stations filling gas in vehicles having substandard CNg kits and cylinders. a meeting held to find root causes of incidents related to blazing of vehicles was attended by officials of Petroleum Ministry, oil and gas Regulatory authority (ogRa), Hydrocarbon Development institute of Pakistan (HDiP), representatives of Chief inspector of Explosives (CiE). a statement issued after the meeting said, while taking serious notice of recent incidents of blazed vehicles wherein huge loss of life occurred, Secretary Petroleum Ejaz Chaudhry has directed to conduct raids on CNg pumps that provide gas to vehicles that are installed with substandard CNg kits and cylinders. He directed ogRa to devise and implement a comprehensive inspection plan for CNg stations and take strict punitive action against those CNg pumps which did not practice safety measures. it was decided that joint teams comprising of representatives of
ministry, ogRa, HDiP and CiE would conduct surprise checking of CNg stations to ensure compliance of CNg Safety Rules (Production and Marketing), 1992. any CNg station found filling gas to any vehicle that contains sub-standard CNg cylinder or fitting it, would be immediately penalised and sealed off. Ministry would also communicate to provincial governments to implement CNg safety rules. Moreover, concerned departments were directed to launch public awareness campaign to educate general masses regarding installation of quality CNg kits and cylinders from licensed and authorised vendors and to insist upon public transport operators to install quality CNg kits and its regular safety inspection. terming the announcement as an attempt to hoodwink the government and people, Chairman all Pakistan CNg association (aPCNga) ghiyas abdullah Paracha said petroleum ministry instead of accepting weaknesses in the policy, regulations and implementation has tried to evade all its responsibilities by putting all the blame on CNg stations. He said gas stations have no mechanism to check at the spot the quality of CNg kits and cylinders. aPCNga, he said, had sought permission from petroleum ministry five years back to set up CNg kits and cylinders quality certification laboratory that would have provided free of cost service to people. However, he said for the last many years, ministry has never bothered to
inform the association on progress on their proposal. He said ministry, ogRa and department of explosives under ministry of industries were all involved in an internal fight to take control of proposed CNg kits and cylinders testing lab as it will allow minting of money from the people. He said under the rules CNg stations could be inspected but he was not able understand how a gas station could be fined for supplying gas to a vehicle having substandard kit or cylinder when there were no rules which make their checking mandatory after a specific period from a certifying lab. it is important to mention that National assembly Standing Committee on Petroleum was recently informed by ogRa officials that their investigations show that two CNg cylinders have exploded during gas filling while rest of the tragic incident happened due to other reasons. a report of ministry of petroleum submitted to Prime Minister mentions factors responsible for accidents in CNg fitted public vehicles includes poorly trained drivers; sub-standard maintenance of vehicles and improper certification by motor vehicles examiners; installation of sub-standard CNg cylinders and kits and control equipment by the un-authorised conversion workshops; increased number of cylinders in public service vehicles without considering design specifications or axle loading to contour impact of gas load shedding and non-compliance with safe re-fueling procedure at CNg stations.
ISLAMABAD STAFF REPORT
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atioNal assembly Standing Committee asked government to take immediate measures to resolve issue of circular debt of the Pakistan State oil (PSo) and help it in recovery of Rs80 billion outstanding dues to keep the company afloat. this direction was given by the committee in its meeting held in Karachi. Committee was chaired by Sardar talib Hassan Nakai, says a press release of National assembly Secretariat. Committee expressed grave concern over circular debt and feared that if the issue was not resolved the state owned strategic company would meet with disaster and in turn spreading chaos and confusion among the public. MD PSo informed the committee that circular debt problem was resulting due to delay in payments by power sector. However, PSo was bound to make continuous supplies to power sector in national interest to avoid power crises. PSo demanded immediate release of Rs80 billon to keep the company afloat. Committee also constituted a sub-committee under convener-ship of Chaudhary Muhammad Barjees tahir to examine the inquiry report and help PSo to recover the amount from management of Zaqsoft technologies on which a penalty was imposed because of supplying low-priced computer accessories to PSo at exorbitant rates. the sub-committee would also examine cases of recruitment made in PSo since 2001 to till date. the meeting was attended by Nawab ali Wasan , Mian abdul Haq alias Mian Mitha, Nawab Muhammad Yusuf talpur, Syed anayat ali Shah, Ch. asghar ali Jatt, Sheikh aftab ahmed, Ch. Muhammad Barjees tahir, abdul Waseem, Syed Haider ali Shah and Muhammad Usman advocate and by senior officers of ministry of petroleum and PSo.
MD PSO informed the committee that circular debt problem was resulting due to delay in payments by power sector
China to provide $4b for Diamer Bhasha dam project g
World Bank non committal on providing any assistance for project g Avoidance of flood damage cost to be much more than Rs2.3 billion per annum ISLAMABAD
C
AMER SIAL
HiNa has assured Pakistan that it will be providing financial assistance up to $4 billion for 4500 MW Diamer Bhasha Dam project to be built on indus River in Diamer district in gilgitBaltistan. an official source said assistance from China will be in the form of project financing for various
components of the $11.2 billion project. He said assurance from China has helped expedite the project which will have gross capacity storage of 8.1 million acre feet (MaF) of water. He said construction activities of main project will commence from next fiscal year and will take nine years for completion. government has allocated Rs18 billion for land acquisition during current fiscal year. government has also allowed the executing agency, Water
and Power Development authority (WaPDa) to raise funds of Rs20 billion under the government guarantee from market through tFCs or Sukuks. it will be repaid by WaPDa from its own resources. asian Development Bank (aDB) had also committed to finance the project and was working on standard procedures to provide funding for the project. Similarly, he said, islamic Development Bank (iDB) has also agreed to partially finance the
project. US officials have already said that financial matter for the project will be decided by US Congress. However, he said World Bank was non committal on providing any assistance for the project. WaPDa, he said was discussing financing of the project with Saudi Fund for Development and Japan Bank of international Cooperation (JBiC). Project will help save $2.85 billion in foreign exchange for production of equivalent electricity on imported oil. live storage of
6.4 MaF of water of the project will help in supplementing irrigation supplies. it will help to mitigate downstream flood losses. avoidance of flood damages cost would be much more than Rs2.3 billion per annum. the reservoir will act as silt trap, which will have direct effects on existing and proposed reservoirs on indus downstream of Diamer Basha Dam Project. it is expected to enhance potential life of tarbela reservoir by 35 years.
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Friday, 09 December, 2011
debate
Inflation risks back on the radar a
WAqAr HAMzA
FtER cumulative rate cuts of 200bps at its previous two meetings, State Bank of Pakistan (SBP) has struck a note of caution about the government’s medium-term outlook, warning that inflationary pressures are building again. this was anticipated by Sayem ali and Nagraj Kulkarni of Standard Chartered Bank in their global Research preview. at its 30 November meeting, SBP kept policy rates on hold, with the overnight deposit and lending rates unchanged at 9 per cent and 12 per cent, respectively. SBP says macroeconomic risks have increased since the october meeting, with inflation remaining high and the Pakistani rupee (PKR) coming under renewed pressure. Headline inflation printed at 11 per cent y/y in october, up from 10.5 per cent in September. according to SBP, inflation will accelerate in 2012 because of a weaker PKR, rising electricity tariffs, and a higher wheat support price (the price at which the government will buy from producers). there is also a risk that the government will resort to printing money to finance its large deficit as markets demand higher premiums on treasury bills and Pakistan investment Bonds (PiBs). the global economy has also deteriorated, leading to a sharp slowdown in export growth and capital inflows. the government has had to shelve plans to tap credit markets, kickstart the privatisation programme and attract investment through the auction of 3g licenses. FX reserves declined to USD 13.3bn in November from USD 14.8bn in June. PKR has come under renewed pressure, trading at 88.75 to the US dollar on 30 November versus c.86.00 at end-June. it is likely to face more headwinds in 2012 because of large external debt payments, including repayments to the international Monetary Fund (iMF). Markets were pricing in a 50bps cut and yields would likely inch higher in response to such a decision by SBP. in our view, the rateeasing cycle has come to an end, with little room in the near future to bring rates down further. ‘We expect SBP to keep rates on hold in Q1-2012, with a strong possibility that rising inflation will force it to hike as early Q2-2012,’ they added.
GROWth OutlOOk ReMAiNS WeAk the analysts say that the growth outlook remains weak: iMF projects 3.5 per cent y/y growth in FY12, lower than the government target of 4.2 per cent. the key concern is the
slowdown in export growth owing to a decline in cotton prices and weak credit growth. Despite 200bpsworth of policy rate cuts since July 2011, private-credit growth had slowed to 1.6 per cent y/y by 11 November, from 5.5 per cent y/y at the end of 2010. this is primarily because of heavy government borrowing from banks, leading to a crowding out of private-sector credit. Private-sector investment spending declined to 8.5 per cent of gDP in FY11 (year ending 30 June 2011), from 15 per cent in FY08, mainly owing to a debilitating power crisis, political and security concerns and risk aversion by banks. after posting record export growth of 29 per cent y/y in FY11, Pakistan’s exports have slowed markedly so far in FY12. Export growth fell to 8 per cent in october 2011, mostly owing to a decline in commodity prices (exports are heavily concentrated in cotton and textiles) and the weak global economy. the analysts believe that ‘export receipts are likely to decline to USD 24.2bn in FY12, down 5 per cent y/y from USD 25.4bn in FY11. this will impact manufacturing sector output and lead to lower growth. Hence, in 2012, SBP will have to balance inflation risks against concerns about weak growth.’
PkR WeAkNeSS iS the GReAteSt CONCeRN
WeAk fiNANCeS POSe iNflAtiON RiSkS
after a strong H1-2011, PKR has come under significant pressure so far in H2 on a widening trade deficit and large external debt payments. a slowdown in private capital flows and aid inflows from the US government and multilateral institutions has also increased pressure on PKR, which has depreciated 5 per cent year-todate to 88.8 (30 November) against the USD, from 84.5 in December 2010. ‘We anticipate a further 6per cent correction in 2012, and forecast USD-PKR at around 94.0 at end-2012. the C/a deficit widened to USD 1.6bn during July-october 2011 from USD 541mn in the same period last year. this was mainly caused by a sharp drop in commodity prices, with Pakistan’s exports heavily concentrated in cotton and textile products. in FY12, we expect export receipts to decline by 5 per cent y/y to USD 24.2bn from USD 25.5bn in FY11,’ they said. However, expansionary fiscal policy and an accommodative monetary policy are leading to higher import demand. the import bill increased to USD 13.4bn during Julyoctober, up 23 per cent y/y from USD 10.9bn in the same period last year. Pakistan’s external vulnerabilities arise mainly from the growing demand for energy; the oil bill rose sharply by 55 per cent y/y during July-october owing to rising prices and growing reliance on oil imports to meet energy demand. at its 30 November meeting, SBP warned that the widening C/a deficit is higher than its earlier forecasts and financing it will remain a challenge, owing to a slowdown in FDi and official aid inflows. SBP FX reserves declined to USD 13.3bn at end-october from USD 14.8bn in June, and will also come under pressure in FY12 because of higher external debt payments, including repayments to the iMF of USD 1.2bn. total debt repayments are a hefty USD 4.2bn in FY12, and could rise to USD 5bn in FY13. Pakistan will struggle to both retire the iMF loan and maintain its FX reserve position.
Markets’ main concern is the sharp build-up of debt and the government’s inability to meet its budget targets. the government is likely to overshoot the FY12 budget target of 4 per cent of gDP; we forecast a deficit of at least 6.5 per cent if revenue measures do not yield the desired results. Financing this large deficit will be a challenge, especially with official aid flows slowing and the privatisation programme stalled. government borrowing from banks increased sharply to PKR 631bn (3 per cent of gDP) from July to 18 November 2011, higher than PKR 606bn borrowed during FY11. this level of borrowing has been possible because of SBP’s liquidity injection of PKR 304bn (1.5 per cent of gDP). However, SBP says this has developed the “characteristics of a permanent nature”, and will fuel inflation going forward. With rates kept on hold at the 30 November meeting, markets will now demand higher premiums to hold government paper. this could force the government to print money to finance its large deficits, fuelling inflation.
With rates kept on hold at the 30 November meeting, markets will now demand higher premiums to hold government paper. This could force the government to print money to finance its large deficits, fuelling inflation
iNflAtiON tO PRiNt hiGheR iN 2012 Headline inflation has declined so far in H2-2011 mainly because of the base effect of high inflation in the same period last year, owing to flood damage to food crops. Changes introduced in the benchmark consumer price index (CPi) index are also a factor; these include a reduction in the weightings of food and energy commodities –the key inflation drivers over the last four years. Headline inflation declined to 10.5 per cent y/y in September 2011, its lowest level in the last two years. However, SBP notes that inflation has remained high, with rising core inflation indicating a build-up of inflationary pressure. in october, CPi inflation accelerated to 11 per cent y/y from 10.5 per cent in September. SBP is “uncertain” that inflation will come down to single digits in 2012, as targeted by the government, and has maintained its FY12 inflation forecast at 12 per cent. this implies that CPi inflation will rise in 2012, driven mainly by a weaker PKR and an expansionary fiscal policy. Decisions such as a 10.5 per cent increase in the wheat support price will add to food inflation.
MARketS diSAPPOiNted the rates market – which had been expecting monetary easing to continue –responded negatively to the policy announcement. the benchmark 10Y PiB yield spiked by c.60bps and the curve bear steepened by c.40bps. they say we see this response as a recalibration of the rates market’s expectations on the trajectory of policy rates. although the central bank has switched its focus to price stability, we do not expect the next rate hike before Q2-2012. Until then, concerns about the impact of fiscal slippage on market borrowing will likely keep the market vigilant. if the recent trend of increased government dependence on domestic funding sources – particularly envisaged from commercial banks – to finance the deficit slippage continues, then the banking system will likely demand a further premium to absorb the additional supply. We note that the banking system’s excess holding of government securities (beyond mandated) is at a threeyear high. We expect yields to remain range-bound ahead of the next rate hike, as expectations of continued supply are likely to offset the implied support generated by the stable policy-rate environment.
Expansionary fiscal policy and an accommodative monetary policy are leading to higher import demand
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Friday, 09 December, 2011
ShARi’A MAtteRS
EDITORIAL
Insurance and Shari'a
Fruits of central borrowing
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HE remarkable 87 per cent plunge in bank advances to the private sector (during first five months of the ongoing fiscal) is exactly what should happen when the centre refuses to address its ridiculous addiction to cheap money. Expect the projected 4.2 per cent gDP growth target, unimpressive to begin with, to be compromised. Expect also increased unemployment to pressure an already depressed market. it’s the strangest of ironies. Despite being strangely decoupled from the lingering international downturn, we have achieved low savings, insignificant investment and high unemployment completely on our own. Still there are no signs of the government’s borrowing stopping anytime soon, making a joke of central bank autonomy and letting a precious opportunity to stimulate local and lure foreign investment go begging. the banking sector’s position is no less passive. Just when they should have
postured towards unprecedented efficiency, so their examples could lend weight to the PSE-privatisation argument, they have let risk-aversion have the better of them, at least for the time being. instead of tending to the worrying NPl count, they probably figure the government’s dependence on borrowing could not have come at a better time for the private financial elite. From their point of view, lending to a hungry government obviously makes a lot more sense than betraying more fault-lines in their collective risk-management credentials. Yet their deliberate disconnect from the real economy bodes ill not just for eventual growth, but also for their own future. Sooner or later, they will have to return to real lending. and sooner rather than later, private sector investment will have to be facilitated if any manner of growth is to be attained. But should we continue directionless, islamabad will play host to a very different variety of politicians after the next poll.
Weak politics
Will Pakistan default in 2012?
indian Rupee has depreciated by over 20 per cent over the last year. We have to depreciate Pak rupee vis-a-vis our competitors. We have seen Pakistan's economy suffer worse, like after the nuclear tests and it also went through imposition of sanctions thereafter. there has never been a default and likelihood of it is still very low. Yes the present government has not been able to manage the economy but the reason is a politically weak government which is the result of divided mandate and hence so many compromises. i hope that a politically powerful government comes in order to stablilise economy; since weak politics leads to weaker economy.
We have devastated the economy in the last four years. Starting from March 2007 to date, we have ruined the living standard of the common man in Pakistan. the insight in the article and the in depth analysis is worth commending. the analysis is ruthless and i agree with you Shan that our strategic leadership rests with general ashfaq Kiyani who is trying to save this country. Hats off to our military bosses. our economy needs attention at this point. this is not the matter of slow decision making it’s a matter of willingness. Shan, you have raised good points. god bless Pakistan.
tArIq
USMAn SHAHID
Hamayon Dar
W
Is it the right time for takaful companies to develop a pure cooperative business model to serve communities
kARAchI
LAhORE
itH the widespread availability of financing after the liberalisation of financial sector, insurance is fast becoming a necessity in Pakistan. Car financing, for example, by banks and other forms of lending by banks and other financial institutions require the borrowers to buy insurance on the items purchased through financing. While shari'a compliant financing is now widely available from the fully-fledged islamic banks like Meezan, Dubai islamic, Bank islami and others and from conventional banks like Muslim Commercial Bank, Bank al Falah etc, the same cannot be said for shari'a compliant insurance, which is still at an initial stage of development. although there are five takaful companies operating in Pakistan, their market share in the insurance market remains insignificant. takaful, supposedly a shari'a compliant version of cooperative or mutual insurance, is being provided by a small number of players in Pakistan. While takaful is being presented by the proponents of islamic insurance, as a mutual or cooperative form of insurance in line with the shari'a requirements, it remains a fact that takaful business by and large is not cooperative in its governance structure and operations. all takaful operators in Pakistan (five in number) are set up as joint stock companies and not as mutual organisations. this raises a fundamental question whether takaful business is actually cooperative and follows principles of mutuality. From shari'a viewpoint, conventional insurance has problems because it is interest-based and involves elements of gambling and contractual uncertainty. How? an insurance arrangement can be defined as a contract between two parties whereby one party (the insured) pays an amount of money (either in a lump-sum or in easy instalments during a certain time period) to another party (the insurer) who undertakes to pay cer-
tain amount of money (significantly larger than the money received from the insured) if and when the insured suffers a loss due to happening of an event in which the insured has a real interest. thus, a person who buys car insurance pays a certain amount of money called insurance premium (either in a lump-sum or instalments) to an insurance company who undertakes to pay a certain amount of money in case the car's value suffers a loss due to an accident or fire, or indeed is stolen. Many insurance policies also pay for the third party damages. this arrangement is in effect exchange of unequal amounts of money between the insured (who pays less than what he receives) and the insured (who may actually get all the premia and pay nothing if no valid claim is made or pays a significantly higher sum following a valid claim by the insured). this is by definition a case of the prohibited interest or what is known as riba in islam. Similarly, there are elements of gambling in the conventional insurance. the very fact that someone may receive a large sum of money by paying a relatively small "entry fee" (premium), dependent upon occurrence of a random event in its nature is gambling. given that insurance is now modern time commercial necessity, it was deemed important by the shari'a community to agree on a shari'a compliant alternative to this vital economic institution. thus, cooperative insurance was deemed more in line with shari'a than the conventional insurance, which is commercial in its nature and practice. the consequent takaful model that emerged is, however, also commercial in nature. Modern takaful businesses have a two-tier structure: a cooperative pool of funds and a commercial entity called takaful operator, which manages the takaful funds. in practice, it is the takaful operator that takes the lead role in takaful business, and hence controls all aspects of the business, which makes it more in line with the commercial insurance than cooperative takaful. in Pakistan, prominent shari'a scholars like Mufti taqi Usmani have for long emphasised on the need for a pure cooperative takaful business, based on the institution of waqf, but it has yet to emerge as a significant business activity in the country. given the near failure of islamic banks to commit themselves meaningfully to social responsibility, is it the right time for takaful companies to develop a pure cooperative business model to serve the communities rather than profiting from the market forces? if takaful companies fail to take this challenge, it will be a lost opportunity for which the stakeholders in the industry may have to regret for a long time to come. The writer is a Shari’a advisor to a number of banks and financial institutions and can be contacted at humayon@humayondar.com
Leveraging support prices
I
Sajid Khan Lodhy
N a recent move the government has announced to increase the support price of wheat crop across the country in a bid to help farmers ward off inflationary impacts on agriculture. While most of the farmers do agree to and readily accept the support price, arguments against and in favour need be heard before any such decision is made. Pakistan being an agrarian country has high stakes in how the delicate equation of agrarian
economy is kept afloat. one way or another, it has to look after the needs of its large populace whose major chunk is still reeling under poverty. Pakistan’s agriculture sector abounds with problems. they may be as varied as a lack of trained human resource to profiteering by the middlemen. But nothing stands out as a worse downside factor than the totally uneven distribution of prime farmland in the country. on one hand, we have landlords with large land holdings while on the other, we find only sustenance farmers, owning not more than 20 acres of land. this huge difference leverages unjustly to the farmers with large land tracts. Complicating the situation, this huge unbalance creates certain problems that run even deeper. a small time farmer is forced to care for his household, his family, his cattle, and pay for the amenities that are at his disposal besides his share of income
tax, land revenue, property tax among other needs of routine life. What complicates the situation for him is the fact that he is ultimately sucked in to the trap of the loan sharks. Support prices for agricultural produce are used all over the world as a guarantee against the inflationary trends, natural disasters, high yield, and as an incentive to lure the farmers into farming a certain crop, and wean away from certain other cash crops. Beneficial as it may be, there are strong arguments against it too as it may make the farmers choosy about a certain crop, causing a severe dent in the balance of demand and supply of crops in the market. Moreover, it may totally be useless to sustenance farmers. to illustrate the above statement, here is a case in point: say a small farmer has 10 acres of land in a fertile district of Punjab. He cultivates wheat
ShAhAB JAfRy Business Editor
kuNWAR khulduNe ShAhid Sub-Editor
BABuR SAGhiR Creative Head
Ali RiZvi News Editor
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hAMMAd RAZA Layout Designer
Will increase in support price of wheat yield required results?
as one of the two crops in a year. Even with an average of 40 maunds per acre yield (Punjab’s official average is around 26 maunds per acre), he is only able to earn 42,000 rupees per acre per year. Experts put the production cost of wheat crop per acre in between its 60-70 percent of its total sale price. this leaves him with only 13,000-15,000 rupees in savings per acre per year. Multiply it with 10 acres and we get a meager amount of 130,000-150,000 per 10 acres per year, which is in fact nothing less than a slap in his face for the effort. logically, we are forced to ask as to how he makes it through the year. He is forced to look towards other crops which are in fact his life support. Come May-June and he will be looking forward to grow cash crops such as potato or corn. With a bit of luck and
no flooding, he can usually save enough to sustain and move on with his next year’s plans. Unsettling as it is, this is but only half the story. as huge tracts of prime farmland are owned by the big fish, the ones with thousands of acres, it is they who benefit the most from government’s support prices for they can then afford being lethargic and not experiment with gMC or high-yield varieties of crops. Farmer exploitation and farmer discrimination takes place in many ways, some not as apparent as this. it is in this perspective the support price offers a unique incentive to farmers to grow certain crops. But, maybe the government needs to revise its policy of support price in a more targeted manner. The writer is sub-editor Op-Ed, Pakistan today
For comments, queries and contributions, write to: MuNeeB eJAZ Layout Designer
email: profit@pakistantoday.com.pk Ph: 042-36298305-10 fax: 042-36298302 Website: www.pakistantoday.com.pk
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04
news
By equipping the young generation with modern knowledge, we will not only overcome the problem of unemployment but put the country on the road to progress
Punjab Chief Minister, Shahbaz Sharif
KSE members veto SECP-backed move KArACH
a
ISMAIL DILAWAR
N overwhelming majority of the members of Karachi Stock Exchange (KSE) rejected the idea of what sources said was partly implementing the provisions of Companies ordinance 1984. Voting was made as years after the formulation of the exchange’s articles of association (aoa) the front and apex regulators at the helm of KSE and Securities and Exchange Commission of Pakistan (SECP) came to know that relevant provisions in the two pieces of legislation were “inconsistent”, especially on the tenure of KSE’s Board of Directors. it is interesting to note that whereas the said ordinance sets three-year tenure for the compa-
nies’ boards the KSE’s articles provide that the KSE Board would be elected for one year. officials at SECP and KSE board, however, have now sensed discrepancy and are now out to amend the exchange’s relevant rules. thursday saw only 59 of the total 200 KSE members attending the Extraordinary general Meeting (EogM) to vote for or against SECP-backed move to extend the board’s oneyear term at least for two years. according to an attendee, an overwhelming majority of the 59 participating members vetoed the proposal saying the one-year election mode be retained or, what a senior broker said, relevant company laws be implemented in total. the attendee said only four of the members raised their hands in favour of the proposal with the remaining 55 rejecting it. to make an amendment in
aoa KSE board requires threefourth of the total participating members to vote for a resolution. in total 44 votes were required for the passage of today’s resolution, said a senior broker who also opposed the move. “You can not implement the company law selectively means adopting those which suit interests of the regulator,” the broker said. according to the broker, SECP should execute the company laws in full and not partially. “the company laws say no nominee directors and chairman at the KSE and that the chairman be elected by the KSE Board,” he said. “You can not do cherry picking,” commented another broker. Many of KSE members are still opposed to the appointment of four nominee directors and a chairman at KSE board by SECP in the name
kSe board oblivious to SeCP ‘concept paper’ KARACHI: the oft-referred bureaucratic lethargy shown by the management of Karachi Stock Exchange (KSE) led to, an easily avoidable confusion between the front and apex regulators of the country’s stock markets. Wednesday saw the regulators at Securities and Exchange Commission of Pakistan (SECP) rushing to the KSE to brief its annoyed Board of Directors, the elected ones of course, on what the sources said was a “concept paper” with regard to implementation of the years-old proposed “Broker Registration Regime”. according to well-placed sources, the KSE directors remained ignorant for over a month and a half of the concept paper sent by the SECP to the Exchange for their review and input in the proposed document. the sources said the Commission had sent the paper to the KSE management back in october but the latter had not bothered to share the same with the board members. “the SECP by end-october had sent the paper to KSE management for fine-tuning, but the management sat on it for over a month instead of taking the Board in confidence on the document,” a senior broker confided to Profit on thursday. the broker said the KSE directors, during their meetings with the SECP officials last month in November, were time and again rendered confused whenever the SECP officials made a reference to the concept paper. “the KSE directors were then totally ignorant of what the SECP officials were talking about,” the broker said adding “the KSE directors were left confused each time the SECP officials quoted clauses of the concept paper.” When members of the board were acquainted with the fact, the broker said, the directors “reacted strongly” and convened an urgent board meeting on Friday, December 2, to discuss the happening. the broker tended to agree when asked if he deemed the KSE management’s lukewarm response towards the SECP’s reforms-based document was a clear show of the traditional bureaucratic lethargy in Pakistan. “the KSE management should not have withheld the document for so long,” he commented. this, the broker said, made the SECP rush to KSE and brief the directors about the proposed plan. the apex regulator, in a joint statement issued Wednesday, stressed the need for continuing the “consultative process” and adopting a “coordinated approach” in future to ensure implementation of various market reform measures. “the concept paper was sent to the Exchanges for soliciting comments and the regime will be finalised after giving due consideration to the concerns and feedback of the stakeholders,” the statement clarified to the directors. Wednesday’s meeting was told that the “Broker Registration Regime” was designed to improve trading volumes and enhancing retail participation in the stock market. and that the new regime would help the regulators strengthen the market by allowing only fit and proper brokers to operate. ISMAIL DILAWAR
uS embassy discusses economy related issues with lCCi
of “public interest” that, the broker said, was to be determined by judicial courts and not the government institutions. a former elected member of KSE board said how those having zero stakes at stock market could be expected to prioritise interest of brokers. SECP argues that one year was not enough for board members to fully comprehend the market affairs. But the members don’t buy the argument saying whereas the elected directors needed no extra time to get acquainted with the market issues, the nominee directors could be appointed by the SECP for another year term. “i think the one-year tenure is enough as the proposed three years would allow the directors, specially the nominee ones, to stretch well and do less,” the exKSE member said.
lPGdA approaches PM on fresh price hike KArACHI STAFF REPORT
F
RESH increase in liquefied Petroleum gas (lPg) price by almost Rs5 per kilogram is unjustified as profiteers in lPg marketing sector have enhanced prices while sidelining ministry of petroleum and oil and gas Regulatory authority (ogRa). little increase in international price of the gas is being touted as an excuse. lPg marketing companies have enhanced the price by five times in the country which is highly unjustified, Muhammad irfan Khokhar Chairman lPg Distributors association (lPgDa) told Profit. Reacting over the fresh development which would cause an increase of almost Rs60 in the price of a domestic cylinder and Rs240 per commercial cylinder, lPgDa has written a letter to Prime Minister of Pakistan to immediately take notice of the issue.
‘Continued gas supply’ fuels Karachi Stock Exchange bulls Karachi Staff report
W
itH optimism of continued gas supply to the fertiliser sector through the rest of December versus the initial reports of a mid month shutdown, sector scripts staged a strong rally as the KSE-100 index gained 108 points to close at 11,392 points. Volumes were also on the up-tick as 50m shares were traded in today’s session with fertiliser stocks accounting for 13.6m of the total. the KSE 100 index closed at 11392.57 levels with the gain of 108.68 points, while total volume stood at 44,005,915 along with the total value of 2,453,791,067. the KSE 30 index
bagged 173.95 points to close at 10618.22 levels, and all Share index closed at 7890.19 levels after gaining 71.33 points. total 121 scrips advanced 90 declined and 102 remain unchanged out of total 313 scrips traded.
in light of strong Year to Date off-take numbers, the cement sector also joined the winners circle as both lUCK and DgKC closed 3 per cent higher than yesterday’s closing. as the recent beat down driving the
index to the ground, key scripts have unwittingly seen their valuations become highly attractive creating a prime opportunity for bargain hunters to scoop them up in time for the upcoming year end results season.
LAHORE: Jimmy R Mauldin, Second Secretary, US embassy, called on lCCi President irfan Qaiser Sheikh and discussed all economy-related issues with particular focus on trade with india. lCCi Senior Vice President Kashif Younis Meher and Commercial officer in US lahore Consulate Shahid abbas were also present in the meeting. lCCi President gave the US official a detailed briefing about his recent visit to india. He informed him that both the governments need to tackle core issues as well to achieve desired results out of MFN status to india. lCCi President was of the view that MFN status to india would definitely create a win-win situation for both sides but the indian side would have to address reservations expressed by certain sectors including pharmaceutical, automobile, cooking oil and ghee, etc. lCCi President said a huge untapped potential exists in both countries therefore apprehensions of the business community must be removed at the earliest. irfan Qaiser Sheikh also said Nontariff Barriers are the biggest impediment in the way of bilateral trade between Pakistan and india and they should be dismantled on priority basis. Speaking on the occasion, the US official said that United Sates of america is desirous of a prosperous Pakistan and is ready to take every possible step in the regard. STAFF REPORT
Pakistan pitches for trade in first Pakistan-ukraine business forum KARACHI: trade Development authority of Pakistan, in collaboration with Pakistan Embassy in Ukraine, organised the first Pakistan-Ukraine Business Forum at Kyiv. Mr tariq Puri, Chief Executive tDaP, who is leading a trade delegation to Ukraine, highlighted features of bilateral trade. He stated that our exports to Ukraine have shown a substantial increase over the last eight years and average export during this period is 53 per cent. in 2003, Pakistan’s export to Ukraine was $7.45 million which reached $66.52 million in 2010. However, the 116 products which Pakistan exports to Ukraine have the market share of 5.1 per cent of range of products which constitutes 2.2 per cent of Ukraine’s total imports worth $61 billion. He highlighted that Pakistan could increase its share by adding value in its supply chain and product diversifications. He informed participants, leading entrepreneurs and investors of Ukraine, that World Bank’s ‘Ease of Doing Business index’ has ranked Pakistan as Number one in South asia. Discussing the agriculture sector, Mr Puri apprised that Pakistan is the second largest buffalo meat producer; second largest buffalo milk producer; third largest cottonseed producer; third largest chilies producer; fourth largest goat meat producer; fifth largest mango producer; seventh largest wheat producer, but has not been able to optimise its strengths for capturing a larger share in global processed food market. STAFF REPORT
SeCP registers 248 companies in November ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) registered 248 companies in the month of November. However, private companies have the biggest share in new incorporations totaling 210, followed by 27 single-member companies, four non-profit association, three foreign companies and public unlisted companies each and a trade organisation. according to press note issued by SECP, out of three foreign companies, a company belonging to turkey was registered in lahore while two foreign companies from US and New Zealand each are registered at islamabad. Foreign investment by nationals from Cyprus and South Korea was observed in two new local companies in engineering and textile sector each. STAFF REPORT
Brick lining, canal rehabilitation underway LAHORE: Brick lining and rehabilitation of canals is underway with an amount of Rs9 billion in six districts of the province under Punjab irrigation System improvement Project. this was informed during annual development project review meeting of irrigation Department chaired by Minister agriculture and irrigation Punjab ahmed ali aulakh. the meeting was told this project is being completed with the help of Japan international Cooperation agency (JiCa) in Jhang, Hafizabad, Faisalabad, Rajanpur, Dg Khan and Bahawalnagar districts. the meeting was also told rehabilitation of Multan Branch with an amount of Rs127 million, Bhowana Branch Jhang with an amount of Rs272 million and Naugran Flood Bund with a sum of Rs130 million would be completed during current fiscal year. STAFF REPORT
PRO 09-12-2011_Layout 1 12/8/2011 10:55 PM Page 5
Friday, 09 December, 2011
Euro zone's EFSF rescue fund should remain the main tool to fight bond market contagion, despite the limits of its leverage.
news
eCB President Mario draghi
How does WTO membership affect Russia and Europe? If one were to discern the vocalisations on the European front, one gets the impression that the partially wounded, partly crippled European hunters had been on bear hunt for quite some time; and ostensibly they have finally hit the bull’s eye g
KUnWAr KHULDUne SHAHID
a
FtER 18 long years, the Russian bear has finally entered the Wto cage – or is on the verge of doing so. georgia was the last stumbling block en route to Wto membership for Russia as tbilisi insisted on customs control between Russia and abkahazia and also between Russia and South ossetia. Both the aforementioned dominions separated from georgia in august 2008 and Moscow has since gone on to acknowledge both of them as sovereign states as the rest of the world
acknowledged them as veritable part of georgia. However, with that particular thorn plucked out, it has paved the way for Russian entrance into Wto; and with the final decision expected in mid-December, some believe that it was about time! Wto membership is being touted as the opening up of Russia to the rest of the world, hence making things facile for European and american hierarchies to ameliorate their commercial interests in the area. Kremlin might have conjured up a political triumph, but there are fears – most notably via the noise that Prime Minister Vladimir Putin has been generating – that such a
maneuver would limit Kremlin’s hegemony over Russian economy. as things stand Kremlin dictates matters pertaining to foreign investment, and moulds it in synchrony with its personal benefits. However, the accession would connote that there would be an independent framework of rules and regulations and hence the government’s stranglehold over domestic matters would weaken. Experts opine that such an absence of foreign exposure and the government’s grip over domestic matters has ensured that Russian industries have suffered and more often than not their productivity has stalled for prolonged periods. Energy industry especially is being touted to benefit from the Wto accession, as competition from foreign market would mean that the prices would be reduced considerably; hence ensuring social stability. Russia has suffered on a multitude of fronts owing to its isolation from the world market, and now with the seemingly inevitable accession on the horizon, there is every cause for sanguinity in Moscow; especially considering the fact that Russia is joining the Wto on some incredibly lenient terms. if one were to discern the vocalisations on the European front, one gets the impression that the par-
tially wounded, partly crippled European hunters had been on bear hunt for quite some time; and ostensibly they have finally hit the bull’s eye. With the European financial quagmire become all the more menacing day by day, it is understandable that they’d be clutching at any straws that they could find – not suggesting that this is the case here, Russia actually does give Europe genuine cause for buoyancy. it goes without saying that mutual cooperation between Europe and Russia would boost with the latter joining Wto, and most of this would be the logical corollary of the presence of a more predictable trade market in Russia – considering the capricious situation in the finances of most global realms, this is a blessing without any disguise whatsoever. Russia has synchronised its trade laws, with the international laws and hence stable profit-making is a safe bet in the Russian market. With the transparency in the Russian investment climate becoming all the more conspicuous one should expect a blitzkrieg of European investment, as the euro zone vies to dig itself out of the financial fix. growth of European exports to Russia also insinuates that there would be a precipitous ascent in job opportunities in Europe. Considering the fact that as many as 10.3 per cent of the people in euro zone are being jettisoned in the bin of unemployment; that’s one huge part of the jigsaw sitting right there in front of us. The writer is sub-editor, Profit. He can be reached at khulduneshahid@gmail.com
05
investors cautious over foreign selling at Pakistan bourse KARACHI: With abnormally low volumes and uncertainties on the local political front, there is a growing concern amongst investors investing in Pakistan stock about trend of foreign selling. investors’ concern, analysts believe, had turned grimmer especially after huge selling in emerging and other markets during the month of November. local investors, they said, seemed cautious despite the fact that local stock market was now trading at FY12E PE of 6.1x with an average dividend yield of 10 per cent. analysts said foreigners with 29 per cent market shares in the free float of Karachi exchange were playing a key role. “Currently their shares are worth $2.6 billion,” said Farhan Mahmood of topline Securities. the analyst said peak holding of offshore investors was $5.1 billion, 27 per cent of free float, in april 2008 and the lowest was $1 billion, accounting for 17 per cent of free float, in March 2009. With prolonged European debt crisis, he said, MSCi asian emerging markets (ex China and Malaysia) saw net outflow of $7.5 billion in the month of November as investors’ fear a possible slowdown in global economy and exports by emerging markets to European Union. During the previous month, Farhan said, the best performing asian markets of 2010 and the darling of foreign funds, namely india and thailand, had also seen a net selling of $0.8 billion and $0.4 billion by the offshore investors where other asian emerging markets, like taiwan and Korea, recorded selling of $1.8 billion and $3 billion, respectively. With huge outflow in emerging markets, benchmark MSCi EM index, which tracks 21 emerging economies, had posted a negative return of 19.4 per cent in 2011YtD, the analyst said. He said out of 21 markets in MSCi EM index, Egypt remained the worst market with negative 43 per cent return followed by india with negative return of 30 per cent. “thus with huge selling in last couple of weeks, emerging markets are trading at one-year forward PE of 9.2x which is less than the four-year average multiple of 12.2x,” the analyst said citing data compiled by Bloomberg. Compared to huge selling last month, he said, Pakistan saw net outflow of $4.2 million in the month of November with year-todate (YtD) net selling of $103 million in 2011 that included $68 million selling in Hubco. interestingly, MSCi Pakistan with negative return of 13.3 per cent return during 2011YtD was so far the best performing market in MSCi asian Frontier markets beating other markets with a handsome margin, Farhan said. However, he said, this was posing a concern amongst local investors that Pakistan market might de-rate as it was now trading at 35 per cent discount to emerging markets on earnings multiples compared to last 10 years average of 40 per cent. STAFF REPORT
CORPORATE CORNER dawlance gains stronghold in foreign markets
was also informed that a sum of Rs18 billion has been allocated in PSDP for the project during the current fiscal year. PRESS RELEASE
KARACHI: Dawlance made its presence felt at the Big 5 exhibition held in Dubai recently. at the exhibition, Dawlance stood out from the crowd as the only Pakistani home appliances company that managed to impress a fair number of foreign countries in the MENa region and other african countries. Exploring export opportunities in the Middle East and african region, Dawlance showcased its refrigerators and freezers at the exhibition. talking on overseas expansion, Mr Hasan Jamil, Head of Sales and Marketing, Dawlance said, “We at Dawlance are proud to be a Pakistani appliances company operating in Dubai and are also looking at other gulf countries such as Saudi arabia, Bahrain, Qatar and different parts of africa and East africa for new business opportunities.” PRESS RELEASE
JS Bank holds successful Customer Satisfaction Survey
AdB mission discusses diamer Basha dam financial plan with WAPdA LAHORE: asian Development Bank (aDB) Consultation Mission, headed by the Director Energy Division Rune Stroem, visited WaPDa house and had a meeting with WaPDa Chairman Shakil Durrani and members of the authority to discuss the matters relating to financing Diamer Basha Dam Project. Experts from USaiD and the project consultants were also present. Chairman said that WaPDa is implementing several projects to cope with the increasing demand of water and electricity in the country. among the projects, he said, 4500 MW-Diamer Basha Dam is vital, as this mega project will usher in accelerated socioeconomic development in Pakistan. the mission
KARACHI: JS Bank limited has recently conducted a comprehensive Customer Satisfaction Survey (CSS) for the year 20102011. the idea of the survey was to engage the customers’ satisfaction with the bank’s product and service levels. to ensure that the CSS adhered to the highest levels of integrity and the results of the survey accurately reflected customer impression of service levels at the bank. JS Bank hired one of the leading independent and well-reputed research agencies working in Pakistan with a proven track record of conducting such exercises for a number of leading banks and financial institutions. as a gesture of gratitude towards customers who had participated in the CSS with their valued feedback, JS Bank held a lucky draw for a chance to win a widescreen lCD tV. the lucky draw was won by Ms Raheela, a customer of the bank’s branch in Moro, Sindh. the prize was
given by Mr Nooruddin Shaikh (area ManagerSouth iii Region). PRESS RELEASE
doubles, ladies singles, boys (under 18 and 14) singles, veteran’s and mixed doubles. PRESS RELEASE
Samsung electronics to mass produce ‘Optical Sensor in Pixel’ lCd panels
Abacus Consulting creates strategic alliance with Oracle Systems Pakistan
LAHORE: Samsung Electronics Co ltd has recently begun mass production of 40-inch ‘optical Sensor in Pixel’ lCD panels, which feature highly advanced optical sensors. the optical Sensor in Pixel lCD panel detects reflected images of an object on the panel, using infra-red sensors that are built into the panel. With optical sensor in each pixel of the panel, it can assess touch sensitivity much more accurately, compared to existing touch panels. this product will transform the paradigm for massively interactive communications, compared to the older one-way communications of today’s kiosk touch panels. MD Samsung Pakistan, Mr Hee Chang Yee said, “this innovation has overcome the limitations of touch functionality that hampered the effectiveness of most interactive displays.” PRESS RELEASE
LAHORE: abacus Consulting has signed a strategic alliance with oracle Systems Pakistan to become its Education Reseller Partner for Pakistan. the new venture being abacus learning Services will provide oracle certified training in areas such as finance, supply chain, customer relationship management and system administration of oracle’s proprietary ERP system, at its state of the art facility. abacus learning Services is offering the certification at highly subsidised rates compared to the global market to facilitate the local student and develop a base of knowledge professionals in Pakistan. abbas ali Khan, Senior Partner at abacus Consulting stated, “We believe that this partnership will help to create opportunities across the entire ecosystem of the industry” PRESS RELEASE
uBl to organise international hard Court tennis Championship 2011 KARACHI: United Bank ltd (UBl) in association with Pakistan tennis Federation (PtF) and Sindh tennis Players association is organising the “UBl international Hard Court tennis Championship – 2011”. this tournament will be a first of its kind in the city of Karachi and will comprise of top seeded Pakistani as well as international tennis players. the championship will be held at the courts of Karachi gymkhana from 18 to 24 December, 2011. the championship carries one of the highest prize money for a hard-court event held in Pakistan. the events that will be played are men’s singles and
LAhORE: Governor Punjab Sardar Muhammed Latif khan khosa and chairman Evacuee Trust Syed Asif hashmi is laying the foundation of Lawyers’ hospital at Dyo Samaaj Road, Lahore. PRESS RELEASE
PRO 09-12-2011_Layout 1 12/8/2011 10:56 PM Page 6
Friday, 09 December, 2011
06 Markets top 10 sectors
49% 09% 10% 04% 04%
Chemicals
01% 03% 01% 02% 17%
Real Estate & Investment
Construction & Materials Electricity Banks
Fixed Line Telecommunication
Oil & Gas
Financial Services
Personal Goods
Equity Investment Instruments
STOCK MARKET HIGHLIGHTS Index 11392.57 2908.62 2594.7
KSE-100 LSE-25 ISE-10
Change +108.68 +80.76 +41.33
Volume 44,005,915 1,099,351 95,971
Market Value 2,453,791,067 28,793,991 2,178,025
top 5 perForMers sector wise
Major Gainers Company UniLever Pak Ltd. National Refinery Pak Oilfields Ltd. Attock Petroleum Attock Refinery
Open 5412.84 242.06 353.88 402.20 110.95
High 5475.00 254.16 368.29 412.00 116.49
Low 5351.00 241.50 352.90 401.10 109.85
Close 5445.00 254.15 364.24 410.36 115.68
Change 32.16 12.09 10.36 8.16 4.73
Turnover 27 361,960 1,321,225 15,765 1,393,882
2566.41 603.29 69.39 141.10 75.39
2579.99 580.00 66.00 141.25 76.00
2445.01 580.00 65.93 138.00 74.10
2452.55 580.00 65.93 139.13 74.10
-113.86 -23.29 -3.46 -1.97 -1.29
128 90 144 1,245 600
Volume Leaders Jah.Sidd. Co. Fauji Fert D.G.K.Cement Fatima Fert.Co. Bank Al-Falah
5.25 50.53 19.75 22.44 11.53
5.24 52.79 20.44 23.35 12.00
5.06 49.75 19.31 22.15 11.25
5.12 52.44 20.34 23.14 11.87
-0.13 1.91 0.59 0.70 0.34
6,369,041 4,386,192 3,994,673 3,608,729 3,098,523
Bullion Market Gold 24K Gold 22K Silver (Tezabi) Silver (Thobi)
Per Tola (PKR) 58,116.00 51,608.00 1,090.00 1025.00
Per 10 Gm (PKR) 49,878.00 44,245.00 936.00 880.00
Per Ounce US$ 2,911.00 – 35.05 –
hiGh
lOW CuRReNt
409.80 119.90 22.06 7.00 92.00
402.00 115.40 21.15 6.87 90.05
ChANGe
vOluMe
Oil and Gas Attock Petroleum Attock Refinery Burshane LPG Byco Petroleum Mari Gas Co.
402.21 115.99 22.06 6.89 90.36
Arif Habib Co SD Biafo Ind. Clariant Pakistan Dawood Hercules Descon Chemical
28.05 69.39 153.64 35.89 1.49
5.13 3.19 0.00 0.06 0.55
94,034 1,798,600 289 278,943 26,862
20.00 1.40 8.61 30.05 10.24
29.00 69.39 153.64 37.50 1.50
28.15 66.50 152.50 35.85 1.50
28.87 69.39 153.00 36.45 1.50
0.82 0.00 -0.64 0.56 0.01
1,689,569 10 1,804 101,880 2,982
1.80 52.69 14.27 7.61 19.94
20.79 1.46 8.79 31.00 10.10
20.00 1.35 8.63 29.60 10.00
20.00 1.35 8.66 30.05 10.00
0.00 -0.05 0.05 0.00 -0.24
1 6,507 1,100 414 9,012
25.82 3.60 40.34 7.70 20.50
Ados Pakistan AL-Ghazi Tractors Ghandhara Ind. Hinopak Motor K.S.B.Pumps
89.2847 140.4537 1.1540 119.6325
5.25 161.88 7.49 78.54 26.95
1.97 53.00 14.30 7.98 20.53
1.83 51.02 13.27 7.70 19.90
1.83 53.00 14.13 7.87 20.44
0.03 0.31 -0.14 0.26 0.50
3,101 64,581 2,536 903 1,419,943
US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal Australian Dollar
International Oil Price WTI Crude Oil
Sell 89.30 119.78 140.36 1.1499 89.58 11.51 24.33 23.81 93.21
Brent Crude Oil
Atlas Battery Ltd. Bal.Wheels Dewan Motors Exide (PAK) General Tyre
170.00 23.60 2.20 177.10 16.00
27.10 4.10 40.50 8.59 20.50
25.15 3.26 40.01 7.70 19.48
25.90 3.90 40.50 8.43 20.50
0.08 0.30 0.16 0.73 0.00
8,219 151,477 2,251 3,414 125
5.99 161.99 7.95 79.95 26.95
4.60 158.50 6.66 74.62 25.61
172.89 23.70 2.20 178.50 16.83
169.00 23.70 2.05 173.00 15.71
110.49 111.43 150.02 150.00
5.25 158.63 6.66 74.65 26.95
$109.53
171.50 23.70 2.20 177.10 16.80
109.00 111.18 145.05 145.58
Dewan Sugar Engro Foods Ltd. Habib Sugar Mills Habib-ADM Ltd. Ismail Industr
2.25 23.95 27.23 13.30 65.00
2.49 24.25 27.48 13.69 64.99
AL-Abid Silk Mills Diamond Ind. Hussain Industries Pak Elektron Ltd. Tariq GlassXD
23.34 8.20 3.90 4.20 8.65
23.60 9.03 3.90 4.40 8.89
(Colony) Thal Ali Asghar Textile Amtex Limited Artistic Denim Mills Azam Textile
1.40 0.56 1.29 20.10 1.35
1.40 0.55 1.33 21.07 1.39
AHCL-DEC ANL-DEC ATRL-DEC DGKC-DEC ENGRO-DEC
28.90 3.50 121.61 20.25 126.68
28.60 3.47 119.49 20.25 123.99
Abbott Laboratories Ferozsons (Lab) Ltd. GlaxoSmithKline Pak. Highnoon (Lab) IBL HealthCare XD
100.37 76.20 67.51 28.20 12.74
101.60 76.90 68.00 29.25 12.50
0.00 -3.25 -0.83 -3.89 0.00
30 730 2,005 809 45
1.50 0.10 0.00 0.00 0.80
2,700 500 213 38 1,313
0.69 -4.44
1,170 203
P.T.C.L.A Pak Datacom LtdXD Telecard Limited Wateen Telecom Ltd WorldCall Telecom
10.80 34.50 0.96 1.85 1.11
2.25 23.98 27.40 13.19 64.97
0.00 0.03 0.17 -0.11 -0.03
3,000 19,195 179,447 1,775 1,504
23.34 8.20 3.80 4.20 8.65
23.34 8.20 3.90 4.25 8.65
0.00 0.00 0.00 0.05 0.00
2 2 6 8,650 10
1.40 0.55 1.26 20.15 1.16
1.40 0.55 1.30 20.98 1.35
0.00 -0.01 0.01 0.88 0.00
511 500 1,802 13,064 52
28.00 3.36 116.55 19.76 121.00
28.21 3.46 117.30 20.09 122.70
-0.69 -0.04 -4.31 -0.16 -3.98
220,500 629,500 165,000 55,000 454,500
100.00 76.31 68.00 29.25 12.30
-0.37 0.11 0.49 1.05 -0.44
2,094 1,113 10,200 7,001 14,060
100.00 75.99 67.99 28.00 12.00
10.95 34.50 1.00 2.00 1.17
10.70 34.00 0.89 1.82 1.05
10.74 34.50 0.90 1.88 1.06
-0.06 0.00 -0.06 0.03 -0.05
873,286 50 179,056 2,098,153 74,429
0.28 36.50 0.61 1.63 41.70
0.37 36.55 0.67 1.68 41.90
0.37 36.02 0.60 1.62 41.26
0.37 36.08 0.64 1.65 41.30
0.09 -0.42 0.03 0.02 -0.40
9,500 851,435 98,815 25,551 54,238
60.24 10.31 5.57 11.87 29.53
59.20 10.45 5.75 11.98 29.90
59.00 10.20 5.46 11.66 29.46
59.00 10.28 5.55 11.80 29.50
-1.24 -0.03 -0.02 -0.07 -0.03
6,927 25,619 422,339 805,934 182,086
Banks Allied Bank Ltd Askari Bank B.O.Punjab Bank Al-Falah Bank AL-Habib
OPeN
hiGh
lOW CuRReNt
ChANGe
vOluMe
Non Life Insurance 2.20 23.63 27.25 13.15 62.01
Electricity Genertech Hub Power Co. Japan Power K.E.S.C. Kot Addu Power
SyMBOl
Adamjee Ins Ask.Gen.Insurance Atlas Insurance Cres.Star Insurance EFU General Ins
43.20 8.00 36.50 2.00 35.80
43.78 8.50 36.75 2.20 36.00
42.12 8.00 35.99 2.00 34.46
42.76 8.42 36.51 2.00 35.96
-0.44 0.42 0.01 0.00 0.16
13,373 1,218 1,993 1,065 747
13.50 1.40 65.53
14.50 1.40 65.53
0.00 0.00 0.00
2 1 157
0.32 16.30 15.17 1.00 0.80
0.02 0.00 -0.02 -0.25 -0.01
12,419 101 36,007 5,008 90,802
Life Insurance American Life East West Life Assur EFU Life Assur
14.50 1.40 65.53
14.50 2.34 68.80
Financial Services AMZ Ventures A Arif Habib Investmen Arif Habib Ltd. Dawood Cap.Man XB Dawood Equities
0.30 16.30 15.19 1.25 0.81
0.33 16.79 15.59 1.00 0.96
0.27 16.30 15.00 0.80 0.70
Equity Investment Instruments 1st.Fid.Leasing Mod Allied Rental Mod Atlas Fund of Fund B.R.R.Guardian Cres. Stand.Mod
1.63 21.64 5.78 2.24 0.42
1.60 21.64 5.90 2.32 0.44
1.60 20.90 5.78 1.92 0.37
1.60 21.64 5.85 2.24 0.44
-0.03 0.00 0.07 0.00 0.02
6,000 125 250,001 101 503
12.51 32.05 34.50 31.65 13.01 65.00 1.35 63.00 3.25 6.01 3.80 12.11 8.20 22.36 57.00 28.00 15.51 1.92 10.25 0.73 1.50 0.98 16.61 18.15 68.00
12.99 32.05 35.09 31.72 13.19 66.59 1.43 63.20 3.50 6.01 4.08 13.08 8.26 22.39 58.00 29.39 16.45 1.94 10.34 0.80 1.75 1.00 16.94 18.85 69.99
-0.01 -0.17 -0.91 -0.45 -0.38 0.00 0.06 0.03 0.25 0.00 0.02 0.97 -0.24 -1.11 0.00 0.00 0.00 0.00 -0.04 0.00 0.09 -0.03 0.07 0.49 1.97
1,525 1,600 7,204 520 5,204 27 97,01 3,818 1,500 101 18,506 623 702 2,925 3,071 194 10 19,506 1,398,503 97,466 468,336 486,633 13,443 16,217 3,984
Miscellaneous Century Paper Pak Paper Prod. Security Paper Pakistan Cables P.N.S.C. Pak.Int.Con. SD TRG Pakistan Ltd. Murree Brewery Shakarganj Food Hala Enterprise Pak Elektron Ltd. Singer Pakistan Tariq Glass Ind. Grays of Cambridge Pak Tobacco Co. Shifa Int.Hospitals Hum Network Ltd. P.I.A.C.(A) P.T.C.L.A Telecard Limited Wateen Telecom Ltd WorldCall Telecom Sui North Gas Sui South Gas EFU Life Assur
13.00 32.22 36.00 32.17 13.57 66.59 1.37 63.17 3.25 6.01 4.06 12.11 8.50 23.50 58.00 29.39 16.45 1.94 10.38 0.80 1.66 1.03 16.87 18.36 68.02
12.99 32.10 36.65 32.00 14.00 69.00 1.45 64.99 3.50 7.00 4.28 13.08 8.48 23.50 58.00 29.39 16.45 2.03 10.40 0.84 1.80 1.05 17.24 18.89 70.25
Mutual Funds fund
$100.94
vOluMe
Fixed Line Telecommunication
Beverages Murree Brewery Co. Shezan Int’l
ChANGe
Pharma and Bio Tech
Automobile and Parts Buy 88.80 118.04 138.44 1.1375 87.03 11.23 24.07 23.59 90.33
lOW CuRReNt
Future Contracts
General Industrials Cherat Packaging ECOPACK Ltd Ghani Glass Ltd MACPAC Films Merit Pack
hiGh
Personal Goods
Construction and Materials Al-Abbas Cement Attock Cement Berger Paints Cherat Cement D.G.K.Cement
OPeN
Household Goods
Industrial metals and Mining Crescent Steel Dost Steels Ltd. Huffaz Seamless Pipe Int. Ind.Ltd. Inter.Steel Ltd.
SyMBOl
Food Producers 407.34 119.18 22.06 6.95 90.91
Industrial Engineering
Interbank Rates US Dollar UK Pound Japanese Yen Euro
OPeN
Chemicals
Major Losers Nestle PakistanXD Colgate Palmolive Biafo Ind. Sanofi-Aventis Ferozsons (Lab) Ltd.
SyMBOl
Alfalah GHP Cash Fund Askari Islamic Asset Allocation Fund Askari Islamic Income Fund Askari Sovereign Cash Fund Atlas Income Fund Atlas Islamic Income Fund Atlas Money Market Fund Atlas Stock Market Fund Crosby Dragon Fund
Offer 501.2900 114.7196 103.6501 100.6900 519.3500 519.0900 516.9700 453.1500 82.9800
Repurchase 501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500
NAv 501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500
fund
Offer
Repurchase
HBL Money Market Fund HBL Multi Asset Fund HBL Stock Fund IGI Income Fund IGI Stock Fund JS Principal Secure Fund I JS Principal Secure Fund II KASB Cash Fund
100.2768 87.0103 97.6745 101.8987 112.3545 121.5000 104.1200 0.0000
100.2768 85.3042 95.2922 100.8898 109.6141 111.5200 96.5000 0.0000
NAv 100.2768 85.3042 95.2922 100.8898 109.6141 117.3900 101.5800 100.1087
PRO 09-12-2011_Layout 1 12/8/2011 10:56 PM Page 7
Friday, 09 December, 2011
Coming two years are going to be a trouble due to energy crisis, particularly four winter months from November to february must be switched with alternatives
news
07
dr Asim hussain, federal Minister Petroleum
Tobacco Control Cell registers case against Philip Morris MAhEEn SyED, ALI RIzvI
N a landmark development, the tobacco Control Cell has commenced legal proceedings against cigarette manufacturer Philip Morris Pakistan limited for violation of binding stipulations concerning tobacco advertising.
GOOd PReCedeNt talking to Profit, Deputy Project Director of the tobacco Control Cell Dr Ziauddin islam said, “For the first time ever a police case has been registered and sent to the magistrate against any tobacco company on violation of tobacco control laws in Pakistan.” this case has been registered in Faisalabad and Dr Ziauddin said it would set a good precedent for future cases. However in this case, under section 11B, the first time offender would be liable to pay a fine of Rs5,000 with up to three months in prison, while subsequent offenders will be subjected to a Rs100,000 fine along with the three-month sentence. Unfortunately, multi-national companies have time and again indulged in practices that are in blatant disregard of existing laws and Philip Morris Pakistan limited (formerly known as lakson tobacco Company) has taken it a step further by openly advertising their cigarette brand, Marlboro, in numerous magazines with full page glossy adverts, promoting the brand in gross violation of SRo 882(i)/2007, issued under Section 7 of the Prohibition of Smoking and Protection of Non-smokers Health ordinance 2002, which states that with effect from May 31, 2007, tobacco advertisements will not be more than one square inch (with 20 per cent of this covered by a health warning).
Civil SOCiety ACtiON it is learnt that the advertisement campaign in question cost Philip Morris approximately Rs50 million, in gross violation of law prohibiting just such an act. Yet authorities did not take appropriate legal measures till the transgression was reported by civil society activists. it is common knowledge that cigarette companies have been barred from indulging in advertising campaigns, something that even the common man is aware of. But despite the action, campaigners are dissatisfied with the Rs100,000 fine as “not nearly enough” to discourage such discourse. “this is a ridiculous penalty. it is unlikely to deter the company or set a viable precedent. the punishment must be stricter,” said an anti-smoking activist while talking to Profit. interestingly, the worth of the brand being promoted by the company itself is in millions of rupees. the Director general of Health Services academy and in charge of tobacco Control Cell, Dr asad Hafeez, earlier said he issued notices to Philip Morris Pakistan for illegally advertis-
KArACHI ISMAIL DILAWAR
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LAHore
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Rupee drops by 7 per cent against major currencies
ing cigarette print media so that anti-tobacco ordinance could be implemented. the Prohibition of Smoking in Enclosed Places and Protection of Non-Smokers Health ordinance, 2002, governs multiple areas of tobacco control, including restrictions on public smoking, sales to minors, and tobacco advertising, promotion and sponsorship. according to the Presidential ordinance, “Notwithstanding anything contained in any other law for the time being in force, no person/company shall advertise tobacco and tobacco products in any media, in any place and any public service vehicle.” this makes the recent promotional advertisements by Philip Morris, a clear violation of these rules and regulations.
POOR JuStifiCAtiON the tobacco Control Cell in an issued statement, said, “it is the practice of the M/s Philip Morris international (PMi), Pakistan, to first violate the tobacco control laws, and then give poor justification on these violations. this company has already been served a legal notice on violation of Section 7 of ‘Prohibition of Smoking and Protection of NonSmoker’s Health ordinance, 2002 by offering free incentives on tobacco products. on this violation, tobacco Control Cell issued a legal notice to the company on 22nd June, 2011. to clarify the guidelines, the matter was again discussed in the tobacco advertisement guidelines Committee. in this meeting, representative from M/s PMi, Pakistan (M/s lakson tobacco Company) assured to follow the guidelines. this means no more excuses shall be accepted.” When questioned over the effectiveness of the tobacco Control Cell, Ziauddin said, “We are merely concerned with the legislation aspect, while the implementation and enforcement of legislations rest with law enforcement authorities.” letters have been issued by Provincial Police officers of all provinces to ensure the implementation of tobacco control law in
their respective jurisdiction.
uNCONditiONAl APOlOGy in response to the blatant violation of law, Philip Morris Pakistan deemed it fit to tender an unconditional apology to the tobacco Control Cell, citing that they were unaware that the law also prohibited the company from publishing adverts in magazines. However, it is clearly mentioned in the Presidential ordinance 2002, that no cigarette manufacturing company will advertise in any media, in any place or public service vehicle. the law also stipulates that “tobacco advertising is prohibited in publications intended for young people.” Clearly the magazines where adverts were published had a significant youth target market as well. in their official statement, tobacco Control Cell said, “Full page advertisements of Marlboro cigarette appeared in the following Newspapers: Sunday magazine of Express tribune on 13th November, 2011, Sunday magazine Daily times on 13th November 2011, Newsweek Pakistan on 11-18th November, 2011, Herald November 2011, Sunday magazine, Daily times 20th November 2011, and Sunday Magazine Jang, 21st November 2011 and Sunday Magazine of Jang 28th Nov, 2011.” What is most unfortunate is that yet again, Philip Morris despite an unscrupulous violation of law will be allowed to run free, setting a precedent for other companies to follow suit.
NeWSPAPeR ReSPONSiBility While talking to a civil rights activist, he said “it is the responsibility of newspapers to ensure that such advertisements that are in blatant violation of the sovereign law of Pakistan are discouraged by print media.” He added that he was shocked to see leading stakeholders of the industry not reacting strongly, or refusing to print advertisements by Philip Morris.
itH currency experts foreseeing tough days ahead, Pakistani rupee mainly remained weaker and during current financial year cumulatively depreciated by 0.14 to 7 per cent against major international currencies. according to official data, during last six-month period, ranging from June 2011 up to 29th November 2011, exchange rate for rupee on local currency market against international currencies, particularly US dollar, remained down. Data showing rupee’s parity with US dollar, UK pound sterling and Japanese Yen depict that local currency devalued against these currencies, respectively, by Rs2.27, Rs0.18 or 0.14 per cent and Rs0.06 or 5.66 per cent during the period under review. official data shows that on 29th of November rupee was traded against these currencies, respectively, at Rs88.24, Rs137.53 and Rs1.13 as against Rs85.97, Rs137.35 and Rs1.07 in June this year. Rupee remained more volatile against greenback and saw an accumulative devaluation of 2.57 per cent during review period. Even on Kerb market, where trading takes place outside official market hours, rupee-dollar parity was in the latter’s favour at Rs88.20 on 29th November compared to Rs86.03 a month earlier. this marks a depreciation of Rs2.17 or 2.47 in percentage terms. an annual account of rupee-dollar parity shows that during FY10, FY11 and FY12 rupee hit highs as well as lows of Rs85.58 and Rs81.40, Rs86.50 and Rs83.93 and Rs88.38 and Rs85.79 against dollar, respectively. Euro, however, was an exception as European currency depreciated against rupee by 5.63 per cent to Rs117.91 compared to Rs124.54 in June 2011. Daily Nominal Effective Exchange Rate (NEER) of rupee increased to
Rs50.35 against Rs49.75 previously with the premium standing lower at Rs0.04 from Rs0.06. the month of November proved tougher for local currency which depreciated by over Rs2 to dollar owing to a widening current account deficit and a constant contraction in the dollar-hungry country’s foreign exchange reserves. imbalanced by a huge import bill, which inflated by over $3 billion to $13.4 billion during July-oct FY12, Pakistan’s current account balance deteriorated to $1.5 billion against a negligible $541 million of last corresponding period in FY11. the country’s holdings of greenback is persistently going down and has depleted to Rs16.88 billion after touching the record $18 billion a few months back. “Rupee has weakened against US dollar in November as demand for dollar increased with the widening of current account deficit,” observed State Bank in its monetary policy information compendium released last month. another reason for the rupee depreciation, central bank cited, is “outflows from financial market” that saw a cumulative flight of capital worth $ 37 million and $ 43.5 million respectively in october and November (2011). Currency experts believe that rupee would continue to lose face against US dollar and would dip as low as Rs90 by the end of this financial year. Reports that the central bank was following a regional trend of devaluing the local currency to give some relief to exporters have led to panic buying on inter-bank market where importers are said to have resorted to forward booking of dollar at a six-month exchange rate of Rs93 to further possible losses in case of future depreciation. open market, however, stands stable with a smooth supply and demand with money exchangers surrendering around $5 to $6 million of their daily surplus supplies on the dollar-scarce interbank market.
dollar reserves shrink further to $16.67b KArACHI STAFF REPORT
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aKiStaN’S liquid foreign exchange reserves continue to deplete and contracted by 1.2 per cent up to 2nd December, central bank reported. During the week under review, State Bank said, country’s foreign exchange reserves fell to $16.678 billion, $206 million down from $16.884 billion the country held last week that ended on 25th November. Central bank’s holdings of the greenback also shrank by $257 million or 1.9 per cent to $12.865 billion against the preceding week’s $13.122 billion. Contrary to it, commercial banks’ liquid foreign exchange reserves witnessed an upward trend for the second consecutive week and rose to $3.813 billion compared to $3.762 billion they possessed in the previous week. against last week’s $4 million or 0.1 per cent increase, current week saw banks’ reserves registering a growth of $51 million or 1.3 per cent on the back of, what official and unofficial observers believe to be, increased deposits. analysts attribute current fall in the country’s dollar reserves to burgeoning import payments and retirement of external debts that, according to SBP data, have aggregated to $62 billion.
integrated approach needed for sustainable water quality: expert ISLAMABAD
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STAFF REPORT
N integrated approach for water quality protection, to maintain biological integrity and to better address water pollution in urban environments for a sustainable future is essentially needed. Dr Xavier Swami Kannu, US FulbrightNehru Environmental leadership Fellow, Central Pollution Control Board, New Delhi said this while giving a special lecture on “Sustainability concepts for water quality protection” at Sustainable Development Policy institute (SDPi).
Dr Xavier while talking on ‘Storm water Runoff Pollution’ which is produced from a developed landscape during storms maintained that it accumulates and transports much of collective waste of urban environment into surface water sources and becomes the primary source of impairment in rivers, lakes, and estuaries. He expressed that urban land areas and land development are increasing at a rapid pace as urbanisation has altered hydrological patterns and a radical difference has been observed in water flow regimes after urbanisation. He cited some implications of urbanisation
on water quality such as loss of waterretaining and evapo-transpirating functions of soil and vegetation in urban landscape. He also proposed measures for water quality protection and to better manage water pollution in urban environments. He suggested nonstructural controls such as better site design, retrofitting, downspout disconnection and conservation of natural areas to dramatically reduce the volume of runoff and pollutant loading from a new development. He emphasised on efforts to control pollution at the source rather than to treat regionally. He also urged to
promote aquatic resource conservation design during land development to maintain predevelopment hydrology. During the question-answer session, participants urged Capital Development authority to learn from North american urban water management experiences. they also questioned the hypothesis of relationship between storm pollution and surface water, relevance of atmospheric pollution with urban storm and surface water hypothesis, high concentration of persistent pollutants in cotton growing areas of Pakistan and their negative implications for populations, overpumping of water through tube-wells in
indian Punjab and their implications on adjacent Pakistan areas with reference to saline water of Faisalabad drifting towards lahore and limited use of arsenic in Pakistan. Dr Xavier Swamikannu, US Fulbright-Nehru Environmental leadership Fellow, Central Pollution Control Board, New Delhi, india is an expert on regulatory control of urban water pollution. He holds a Doctorate degree in environmental science and engineering from University of California and also served as Chief of the Storm Water Program at California Environmental Protection agency’s (CalEPa) until January 2010.