PRO 30-08-2012_Layout 1 8/30/2012 12:57 AM Page 1
Thursday, 30 August, 2012
Pakistan looks northwards, eastwards then skywards Pakistan looking towards ‘high-saving’ India, China for portfolio investment g KSE team due to meet MSCI Board on Sep 3 for category revisit g KSE-30 index to trade at Lahore Stock Exchange g AKD Securities appointed first market-maker for SIFC g
KARACHI
T
ISMAIL DILAWAR
hE policymakers at Pakistani stock exchanges have finally shifted their focus from the recession-hit western investors to that of the “high-saving” emerging economies like India, China and Middle Eastern countries. Also, a KSE delegation is due on September 3 to meet the MSCI Board for convincing the latter on placing Pakistan back into the category of emerging markets from the frontier market. Further, a Memorandum of Understanding (MoU) is due next week between the front regulators of Karachi and Lahore stock exchanges for the launch of KSE-30 index at the Lahore stocks. This was stated by Karachi Stock Exchange (KSE), MD, Nadeem Naqviwhile declaring the appointment of AKD Securities as a first market-maker for the Stock Index Future Contract (SIFC). he said KSE, the front regulator of country’s largest share market that has recently been demutualized, was in talks with the stock exchanges of India, Abu Dhabi and Dubai for cross-border listing of each other’s indexes.
“We have always been seeking investment from the west. If we focus on high-saving countries like India and China we would see great liquidity flowing into Pakistani markets,” said Naqvi. Sensex would be traded at the KSE counter, he said, adding the Abu Dhabi and Dubai stock exchanges were also in contact for the same contract. Naqvi termed the “cross border listing” as his dream. Appreciative of the Reserve Bank of India’s recent announcement to allow Pakistani portfolio and direct investment on the Indian markets, the KSE MD called upon the Pakistani central bank to replicate the same. Also, he said, his side was working with the New York Stock Exchange for the trading of KSE30 index at the latter. Further, he said MoU was due next week between the front regulators of Karachi and Lahore stock exchanges for the launch of KSE-30 index at the latter. Naqvi said the trading of KSE-30 benchmark would start at LSE within next 6-8 weeks. “A MoU is ready for next week,” he added. About the demutualization of the KSE, the managing director said 40 percent of the total shares have already been transferred in the members’ account. Of the remaining 60
PSO circular debt increases to Rs 431b ISLAMABAD ONLINE
The Ministry of petroleum and Natural resources has failed to control the circular debt of the Pakistan State Oil (PSO) that has been increased to 431 billion raising threat for fuel supply in the country. According to official data the oil giant total payables to local and international fuel suppliers have touched Rs 186 billion mark while receivables from power sector and other sectors stand at Rs 244 billion. Sources in the Pakistan State oil told online that agency is supplying oil to the different sectors according to their demand however monthly payback from departments is meager due to which state oil agency outstanding dues are increasing constantly. Sources told circular debt of PSO is increasing at the rate of Rs15-20 billion per month due to inefficiency, nonrecoveries and subsidies. According to official data power sector is main defaulter of PSO with Rs 212 billion outstanding. hub Power Company Limited (hUBCO) is the leading defaulter of PSO with Rs 109 billion outstanding followed by Wand Power Development Authority (WAPDA) with Rs 63 billion and Kot Addu Power company (KAPCO) with Rs 38 billion. The company has to receive two billion from Pakistan International Airline (PIA), Rs 524 million from Oil and Gas Development Company Limited (OGDCL), Rs 10 billion from Karachi Electric Company (KESC), Rs 1.447 billion from Pakistan Railways.
percent shares, he said, 40 percent would be offered to offshore investors and 20 percent to general public through Initial Public Offerings. In his briefing, Sani-e-Mehmood Khan, general manager product development at KSE, said the market-makers would make sure that besides entry point the investors could also have the exit way from the market. he said at least half a dozen applications were pending with the KSE for market makers job. Naming the Faysal Bank and Topline Securities, the product manager preferred not to name other applicants. Discussion with Faysal Bank, Sani said, was on the advanced stages. “More market-makers would be ap-
NA body turns director ISLAMABAD APP
The National Assembly Standing Committee on Commerce has recommended to the Ministry of Commerce (MoC) to include measures in the new trade policy 2012-15 to encourage small and medium enterprises (SMEs) and entrepreneurship among women, youth and business people in less developed areas (LDA) of the country. The meeting of the committee, held in-camera under the chairmanship of MNA Engineer Khurram Dastgir Khan also directed the ministry that any support or subsidy to any sector should be designed carefully in order to ensure that the subsidy reaches its specific target and not abused. Moreover, the ministry was directed to develop measurement criteria in order to objectively assess the output of the new trade policy on a regular basis.
ISLAMABAD ONLINE
LPG prices rose up by 18 to 20 rupees per/kg across the country due to increase in price of LPG in the international market Wednesday. Now LPG price has risen from $775 to $946 per/kg in the international market, after increase of $19000 per ton. The LPG marketing companies have increased its prices due to price hike in the international market, according to that price of LPG for Balochistan and Sindh went up to Rs 130 per/kg, Punjab Rs 139 per/kg and Rs145 per/kg for Azad Kashmir and Northern Areas. While for house and commercial consumption the price has been raised to Rs 244 and 883 respectively. Whereas chairman of the LPG Distribution Association Irfan Khosa has termed it as ‘public foe’ and demanded of the government to review the recent LPG price hike.
Directs MoC to encourage SMEs, entrepreneurs in new trade policy Discussing in detail the structure of trade policy, the committee expressed the concern that the commerce ministry was unable to measure in any objective manner of the output of 2009-12 trade policy. Pakistan’s exports have risen during 200912, yet the trade deficit has also risen simultaneously, therefore nullifying the overall benefits to Pakistan balance of trade, observed the committee. The committee emphasized that the trade policy should also concern itself with Pakistan’s domestic market, specifically encourage large sectors of manufacturing and trade to enter the formal economy in order to eventually enable these manufacturers and traders to trade internationally.
ADB to brief media on Private Sector Operations in Pakistan on Friday ISLAMABAD APP
The Asian Development Bank (ADB) is organizing a briefing for media regarding banks Private Sector Operations in Pakistan by ADB’s Director General of Private Sector Operations Department (PSOD), Phillip Erquiaga, here on August 31. According to bank sources the ADB’s private sector operations in Pakistan began in 1983 and as of yearend 2011, cumulative approvals in 30 projects amounted to $1.07 billion. “As of 30 June 2012, total outstanding balances and undisbursed commitments to private sector projects in Pakistan amounted to $623 million representing 10.1% of the total portfolio administered by ADB’s PSOD Asia-wide”, the sources added. It further said that the ADB’s investments in Pakistan’s private sector encompass several industries. ADB has, in the past, successfully lent to leasing companies, investment banks, mutual funds, a fertilizer plant, an oil terminal distribution company, a power distribution company and three (thermal and hydro) power plants. In 2011, a $97 million loan was approved for the construction and operation of a 147megawatt run-of-river hydropower plant on a build-own-operate-transfer basis. The partial credit guarantees totaling $66.6 million approved in 2011 for two wind projects in Pakistan are ADB’s first ever shariah-compliant debt financings.
Euro mixed in Asian trade TOKYO AFP
The euro was mixed in Asia on Wednesday after two eurozone bond auctions buoyed the embattled unit amid rising speculation that the European Central Bank (ECB) would restart a bond-buying programme. The European common currency bought $1.2556 and 98.69 yen in Tokyo morning trade, against $1.2565 and 98.68 yen in New York on Tuesday. The dollar was at 78.60 yen from 78.49 yen in US trade. Weak German business confidence data had weighed on the euro earlier this week, but the currency won some support after two debt auctions on Tuesday saw hardhit Spain and Italy pay sharply lower borrowing rates.
‘Cotton production can be increased by 62.5%’ ISLAMABAD ONLINE
LPG price skyrockets by Rs 18 –20 per kg
pointed in next few days,” said Sani. To a query, Sani termed the liquidity as a root cause of all the diseases. he said the market was not getting enough liquidity because of the trust deficit created in the wake of 2005 and 2008 market crashes. “The investors’ confidence has to be restored through awareness campaign that is underway countrywide by the SECP with the financing of Asian Development Bank,” he added. AKD Securities, chief executive officer, Muhammad Farid Alam told the reporters that all the brokers and members of the Exchange would do trading under the SIFC same like the normal share trading. “We as a market-maker would trade 100 contracts at start and 500 at the end in case no activity is there,” he said. Quoting the proverb that “a hundred miles journey begins with a single step”, Farid was upbeat that the new product would add more volumes and value to the stock market that if not interrupted would soon regain its past glory. “Volumes have improved to $ 91 million and we can chase the $ 100 million mark,” said the AKD executive who deemed a good operator necessary for the demutualized market.
Here’s how private sector should operate
The country’s cotton production can be increased by 62.5 per cent by developing seed industry, controlling weeds and pests and adopting improved crop management techniques, sources say. The Punjab Cotton Control Ordinance 1966 amended up to 2002, further needs to be amended to provide mandatory marking of cotton grade, staple length on each cotton bale for the improvement of the standard and quality of cotton. The rules may also be amended to restore the administrative control of Agriculture Department over the District Officers Agriculture and Deputy District Officers Agriculture, Agriculture Officer Extension and Cotton Inspectors instead of present setup of administrative control of District Government/District Nazims. The government keeping in view the international quality standards may introduce hVI test-
ing and marking system on the cotton bales so as to be able to compete in international market. For this purpose a time frame may be allowed to the ginners to upgrade their ginning factories and adopt hVI classification. The Government may revise the Agricultural pesticides Rules 1973 to give powers to the Inspector to seal the store of pesticides with the pesticide companies or dealers if the Inspector/s has/have sufficient grounds to believe that the pesticide in question is of sub-standard or outdated.
Such companies should be heavily fined and black listed and the chemical may be destroyed. In this regard cotton commissioner Dr
Khalid told online that seed legislation is pending from last ten years therefore industry is suffering a lot. he said that country’s seeds requirement is about forty thousand metric ton while only ten percent seed available on the time of cultivation. he said that state of art and latest technology should be adopted to complete the requirements of the country. he said that Seed Act 1976 and Seed (Amended) Act 2005 be made more effective and the rules may be amended and the extension staff of Agriculture Department may also be empowered under Seed Act to regulate effectively the sale of approved quality seed. he said that seventy percent pesticides are used on cotton therefore amendments are required in Pesticides act to enhance the capacity of industry and to improve the situation. Dr Khalid also pointed out the shortage of manpower and said that our seed industry has not sufficient manpower to handle demand of seeds therefore illegal and substandard seeds are sold in the market.