NEWS LETTER · 2018-10-09 · educated manpower. It is Pakistan's first specialized institution...

BUSINESS AND ECONOMIC NEWSFLASH

URDU GLOSSARY

MARKETS IN REVIEW

QUOTES AND JOKES

TERMS OF THE MONTH

VOLUNTARY PENSION SCHEMES IN PAKISTAN

NEWSLETTER SEPTEMBER 2018

Institute of Financial Markets of Pakistan

The name of the institute has been changed

from Institute of Capital Markets to

Institute of Financial Markets of Pakistan

Contact Us

Address: Building 9-A, 2nd Floor,

P.E.C.H.S Block No. 6, Shahrah-e-Faisal,

Karachi. Tel: +92 (21) 34540843-44

MESSAGE FROM THE CEO

INTRODUCTION TO THE INSTITUTE

IFMP ACTIVITIES

TERMS OF THE MONTH

BUSINESS AND ECONOMIC NEWSFLASH

URDU GLOSSARY

QUOTES AND JOKES

MARKETS IN REVIEW

ARTICLE ON

INVESTING IN EXCHANGE-TRADED FUNDS

00 CONTENT

Message from the CEO

Introduction to the

Institute

IFMP

Activities

Article:

ARTICLE

Urdu Glossary

Quotes and Jokes

Business and Economic

Newsflash

Page: 3 Page: 4

Page: 7 Page: 11

Page: 15 Page: 16

www.ifmp.org.pk 92 (21) 34540843-44 [email protected]

Terms of the Month

Page: 10

Page: 5

Markets in Review

Page: 17

01

Message from the Chief Executive Officer

◊ September 2018 IFMP Newsletter ◊

he last few years have seen a rapid growth in size, quality and

sophistication of financial markets, because of changes in the

policy and regulatory environment, the entrepreneurial initiatives

of individuals and institutions, and the availability of trained man-

power. The continuing growth of financial markets is further adding

to the demand for well-trained professionals.

Institute of Financial Markets of Pakistan is dedicated to the profes-

sional development of financial markets and research on financial markets as well as the

well being of financial markets by educating the professionals about the norms and ethics

being practiced in the markets. IFMP has had a pioneering role in meeting the demand for

educated manpower. It is Pakistan's first specialized institution devoted to the education

and updating of knowledge of manpower for financial markets. It will provide high-

quality educational standards for all types of financial market participants; investors,

brokers, mutual funds, investment banks and policy makers.

The Institute's main activities are (1) Licensing the professionals working in the financial

markets by certifications. The institute’s key responsibility is to educate the professionals

working in different financial markets of Pakistan through examining their knowledge in

their relevant field of work; (2) Studying the latest developments in the financial markets

in order to discover whether there is such a thing as an ideal market economy; and (3)

Contributing to the development of financial markets in Pakistan. By means of these three

activities the Institute seeks to communicate its ideas to the audience both at home and

overseas. The Institute's research is intended, first and foremost, to be neutral, profes-

sional and practical. Rooted in practice, it aims to contribute to the healthy development

of Pakistani financial markets as well as to related policies by conducting neutral and pro-

fessional studies of how these markets and the financial system are regulated and orga-

nized and how they perform.

The economy is changing all the time. The Institute hopes that, by responding to these

changes positively, it can contribute to the dynamic development of the country's finan-

cial markets as well as of the economy itself.

Mr. Muhammad Ali Khan

T

02

Introduction to the Institute


The Institute of Financial Markets of Pakistan (IFMP), Pakistan’s first

securities market institute, has been established as a permanent platform to de-velop quality human capital, meet the emerging professional knowledge needs of

financial markets and create standards among market professionals. The Insti-tute has been envisioned to conduct various licensing examinations leading to

certifications for different segments of the financial markets. IFMP develops a pool of trained and certified professionals, skilled not only to deal in convention-

al instruments but also to trade in new and complex financial market products.

◊ FEE STRUCTURE ◊

Candidate Registration Fee Rs.10,000

Examination Registration Fee Rs.7,000

Membership Fee (Annual) Rs.5,000

Study Guide (Hard Copy) Rs.800

◊ EXAMINATION SCHEDULE ◊

Sun, September 30, 2018

Sun, November 25, 2018

Sun, January 27, 2019

Sun, March 31, 2019

PROGRAMMES

LICENSING CERTIFICATIONS INSURANCE CERTIFICATIONS SPECIALIZED CERTIFICATIONS

Fundamentals of Capital Markets Certification

Pakistan’s Market Regulations Certification

Stock Brokers Certification

Mutual Funds Distributors Certification

Commodity Brokers Certification

Financial Analysts Certification

Mutual Funds Basic Certification

Securities and Futures Advisors’ Certification

Programme (Basic and Core Modules)

General Takaful Agents

Certification

Family Takaful Agents

Certification

Life Insurance Agents

Certification

Non-Life Insurance Agents

Certification

Bancassurance Certification

Bancatakaful Certification

Financial Derivative Traders Certification

Compliance Officers Certification

Clearing and Settlement Operations

Certification

Risk Management Certification

Capital Budgeting and Corporate Finance

Certification

Investment Banking and Analysis Certification

Islamic Finance Certification

Fixed Income Certification


IFMP Activities 03

IFMP announced ‘Diploma in Capital Markets’ with NUST, Islamabad

◊ September 2018 IFMP Newsletter Page 5 ◊

IFMP Activities 03

04


Article

Investing in Exchange-Traded Funds

What Is an Exchange-Traded Fund?

An exchange-traded fund (ETF) is an investment fund that is traded on exchanges. This fund is similar to a closed-

end mutual fund. Usually, these funds track an index, a commodity, a sector, a sectoral fund, etc. These funds pool

investors' funds and invest them in various assets like stocks, commodities, bonds, etc. ETFs are investment prod-

ucts that share the features of both mutual funds and stocks. The benefits offered by these products, such as low

transaction charges, tax efficiency, etc., have made ETFs popular among the exchange-traded products.

Different types of ETFs are available.

Equity Index ETFs:

These funds invest in a wide range of equity securities, which replicate the performance of an index. These funds

offer the benefit of diversification like an index. Investors can buy and sell units of this fund as a share.

Global ETFs:

Global ETFs track the index of a particular country and manage broad portfolios by making investments in a wide

range of securities of a country. By investing in this ETF, investors can gain exposure to the securities that reflect the

economic growth of a country without having to individually invest in every security of the country. For instance, if a

country is performing well in comparison to other countries, investors can invest in the global ETF.

Sector ETFs:

These funds specifically invest in the securities of a particular sector and track sectoral indices. These funds offer ex-

posure to the entire sector and help investors hedge price risk related to investments in the given sector. If a sector

is performing well compared to other sectors, investors can invest in sector-based ETFs with a small amount of capi-

tal and benefit from the returns offered by that sector.

Currency ETFs:

Currency ETFs invest in a wide range of currencies or a number of currency-denominated debt instruments. Inves-

tors can gain exposure to the currency markets by investing in currency ETFs rather than having to invest in individu-

al currencies or in futures. Currency markets, being the most volatile markets, can help investors benefit from the

price movements.

05


Article

Commodity ETFs:

These funds invest in a particular commodity or in a commodity index. For instance, gold ETFs. Investors can benefit

from investing in these instruments without having to invest in the commodity directly. In case of gold ETFs, inves-

tors can accumulate gold ETF units and can sell them while purchasing gold jewelry items, etc.

Liquid ETFs:

Liquid ETFs invest in money market instruments like government bonds, treasury bonds, etc. These funds offer mod-

erate returns with low risk for the investors.

Benefits of ETFs

ETFs offer you the following benefits:

Diversification

ETFs offer you exposure to a wide range of securities like an index and are traded like a stock. ETFs help you spread

investment risk over a number of securities and reduce stock-specific risk. Investment in ETFs can be looked at as a

part of hedging strategy. Depending upon the ETF scheme, you can gain exposure to a range of stocks, countries,

sectors, commodities, etc. in a single transaction.

Transparency

Most of the ETFs track an index and this would mean passive management for the fund house to maintain the ETF

portfolio. This makes it easier for the investor to know the performance of the ETFs.

Portfolio Management

ETFs help fund managers manage the constant inflow and outflow of funds. ETFs are liquid investment products that

fund managers can easily buy and sell on exchanges. This helps in effective portfolio management for the fund man-

agers.

Convenience

You can buy and sell ETF shares with ease on exchanges by looking at the market prices available on the trading por-

tal. ETFs are listed on exchanges that are well regulated. This has contributed to transparency in trading ETFs. Also,

investors who are unsure of which investment product to choose can invest in index ETFs, which will provide them

exposure to the market.

06


Article

Lower Transaction Charges

ETFs can be traded at much lower costs than what you would incur on other index tracking products. Investors who

are unsure of which stock to invest in can invest in a sector-based ETFs and benefit from the sectoral growth by in-

vesting a small amount of capital.

Tax Benefits

Dividends from ETF schemes are tax exempt for investors. If an investor sells units before 12 months, he is liable to

pay short-term capital gain tax at the rate of 10 percent. At the time of redemption, investors need not pay tax.

They are also exempt from wealth tax. However, at the time of redemption investors would need to pay securities

transaction tax (STD at 0.25 percent on the value of redemption).

Arbitrage Opportunities

ETFs, being index tracking products, can be used to generate profits out of price differences between ETFs and other

index products like futures, etc.

**********

07

Terms of the Month


Get Yourself Registered!!

Last Date for Registration for 25th November, 2018

Examination

2nd November, 2018

Advocate

An advocate entered in any roll under the provisions

of the Legal Practitioners and Bar Councils Act, 1973

(XXXV of 1973).

-The Companies (Appointment of Legal Advisers) Act,

1974

Body Corporate

It includes a company incorporated outside Pakistan,

but does not include—

(i) A corporation sole; or

(ii) A co-operative society registered under any law

relating to the registration of co-operative societies;

or

(iii) Any other body corporate, not being a company

as defined in this Ordinance, which the Federal Gov-

ernment may, by notification in the official Gazette,

specify in this behalf.

-The Companies Ordinance, 1984

Islamic Financial Services

Financial services as defined in clause (ka) of sub-

section (1) of section 2 of the Securities and Exchange

Commission of Pakistan Act, 1997 (XLII of 1997) that

are certified by a Shariah Advisor as Shariah compli-

ant. -Shariah Advisors Regulations, 2017

Lead Investor

A company which holds at least twenty percent of the

paid up capital of the bond pricing agency and takes

the lead role in the establishment and management of

a bond pricing agency.

-The Bond Pricing Agency Rules, 2017

Mortgage

An interest or lien created on the property or assets

of a company or any of its undertakings or both as se-

curity.

-The Companies Act, 2017

08

Business and Economic Newsflash


State Bank increases interest rate by 100 basis points to 8.5pc for next two months

The State Bank of Pakistan on Saturday announced to increase its main interest rate by 100 basis points to 8.5 per

cent for the next two months, citing rising inflation and economic worries over the large fiscal and current account

deficits .

The central bank, while issuing the monetary policy statement, said “concerns on the economic front continue to

persist on the back of rising inflation and large twin deficits ...(and) are likely to compromise the sustainability of the

high real economic growth path”.

The widening current account deficit has fuelled widespread speculation that Pakistan may need another bailout

from the International Monetary Fund.

The newly announced interest rate will be effective from Monday for the next two months.

Earlier this week, the SBP had said that a number of factors, including increasing inflation and volatile commodity

markets, are a threat to financial stability in the next six months.

Current account gap widens to $2.7bn

The current account deficit for 2MFY19 further widened by 10 per cent, compared to the same period of last fiscal -

indicating that the deficit trend is still on the rise.

The State Bank of Pakistan (SBP) reported that the current account deficit during July-August FY19 increased to

$2.721 billion as against $2.477bn in the corresponding period of last year.

In FY18, the current account deficit jumped 33 pc to $18bn while the FY17 figure stood at $12bn.

This massive increase and size of the deficit has put enormous pressure on external front of the economy with new-

ly elected government taking a number of steps to cut the size of this deficit. The government on Tuesday intro-

duced new measures to reduce the import bill such as increasing duties, particularly on import of luxuries.

The exports during the two months rose by $177m to $4.096bn while imports increased by $987m to $9.959bn. As a

result, the balance of trade in goods clocked in at negative $5.863bn.

Similarly, the trade deficit in goods and services collectively rose to $6.625bn during the period under review.

08



ECC okays up to 143pc increase in gas tariff

In a major decision, the government finally approved up to 143 per cent increase in natural gas tariff with immedi-

ate effect on Monday having a cumulative financial impact of about Rs116 billion.

The decision to increase gas rates for all consumer categories was taken at a meeting of the Economic Coordination

Committee (ECC) of the cabinet in a manner that partly shifted the burden from residential consumers to all other

consumer categories — commercial, industry, power, fertiliser, cement and CNG sectors. The meeting was presided

over by Finance Minister Asad Umar.

Average gas price had been increased by more than 35pc instead of 46pc determined by the Oil and Gas Regulatory

Authority (Ogra) and it would yield Rs95bn for the gas companies. About Rs16bn revenue would flow to the federal

government on account of general sales tax. The impact of Rs58bn determined by the regulator but not passed on

to the consumers would be carried forward in the next price adjustment, the official said.

Minister for Petroleum Ghulam Sarwar Khan, who announced the ECC decision at a press conference along with In-

formation Minister Fawad Chaudhry, said the two gas companies — SSGC and SNGPL — were operating in profit

when the Pakistan Muslim League-Nawaz assumed power in 2013, but it left behind a deficit of Rs152bn after five

years. He said it was a difficult decision for the new government in view of higher gas purchase price which could

not be sold cheaper.

He claimed that 60pc population was using liquefied petroleum gas (LPG) for which import taxes had been rational-

ised to reduce cylinder price by Rs200, while only 23pc population was using natural gas for which rates had been

increased.

Ghulam Sarwar said LPG would now attract only 10pc GST instead of existing 17pc, in addition to 5.5pc advance in-

come tax and regulatory duty at a rate of Rs4,669 per tonne. The price of 11kg gas cylinder, he hoped, would come

down to Rs1,400 from Rs1,600 because of supply imbalance.

In view of the political challenge, the government decided to create seven slabs for residential consumers instead of

the existing three slabs. The domestic consumers falling in the two highest slabs would be the worst off as they

would be charged the highest rate among all consumer categories. Their price has been equalised with imported

LNG.

08



The price for the 6th slab of up to 500 cubic metres and 7th slab of more than 500 cubic metres has been increased

by 143pc to Rs1,460 per mmbtu (million British thermal unit) from Rs600. The monthly gas bill of 500 cubic metres

will surge from Rs12,500 to Rs30,340 and further up to Rs35,500 with addition of GST. Only two per cent or 226,129

consumers fall in this category.

Likewise, the monthly bill of more than 500 cubic metres will increase from Rs15,000 to Rs36,400 and further be-

yond Rs42,520 with addition of GST.

A new slab of 50 cubic metres consumption has been created. The monthly tariff for this slab has been increased by

10pc to Rs121 from Rs110 per mmbtu. The monthly bill, excluding taxes, will increase from Rs252 to Rs275. In nor-

mal circumstances (other than winters), 3.56 million or 38pc consumers fell in this slab, the minister said.

The price for the next slab of 100 cubic metres has been increased by 15pc to Rs127 from Rs110 per mmbtu and its

monthly bill is estimated at Rs551 instead of Rs480. About 2.638m or 28pc consumers fall in this slab.

The tariff for the third slab of up to 200 cubic metres involving 1.74m or 19pc domestic consumers has been in-

creased by 20pc to Rs264 from Rs220 per unit. The monthly bill without GST will be Rs2,216 instead of Rs1,850.

The price for the 4th slab of up to 300 cubic metres (0.436 million or 5pc consumers) has been by 25pc to Rs275

from Rs220 to Rs275 and their monthly bill from Rs2,764 to Rs3,449.

The 5th domestic slab of up to 400 cubic metres (524,391 or 6pc consumers) will see a 30pc increase — from Rs600

to Rs780 per unit. Their monthly bills will jump from Rs10,000 to Rs13,000 and go further up to Rs15,300 with addi-

tion of GST.

Likewise, the gas sale price for commercial consumers, including Tandoors, has been increased by 40pc to Rs980

from Rs700 per mmbtu. In fertiliser sector, the gas sale price for feedstock (old consumers) has been increased by

50pc to Rs185 from Rs123 per unit and that for fuel stock by 40pc to Rs780 from Rs600. The petroleum division re-

ported to the ECC that estimated impact of these revisions would be Rs128 per 50kg bag of urea.

The gas price for industrial and captive power plants for registered manufacturers or exporters of five zero-rated

sectors — textile (including jute), carpets, leather, sports and surgical goods — was kept unchanged at Rs600 per

mmbtu. A new category for these industrial consumers will be created.

The gas sale price for general industrial and captive power plants has been increased by 40pc to Rs780 from Rs600

per unit and that for the power sector by 57pc to Rs629 (which is average prescribed price of SNGPL) from Rs400

per unit.

The gas rate for the cement sector has been increased by 30pc to Rs975 from Rs750 per mmbtu. Rates for the CNG

sector in Sindh and Khyber Pakhtunkhwa have been raised by 40pc to Rs980 from Rs700 per unit.

08



The petroleum minister said CNG stations in Punjab were already using imported LNG which was on the higher side.

Ogra had originally recommended an 186pc increase for the first two slabs of domestic consumers to bring half the

average cost of gas to discourage its wastage and a 30pc increase for most of other categories in industry, commer-

cial, power sectors, etc. The government, however, diverted the burden from domestic to electricity, industry, com-

mercial and fertiliser sectors that would indirectly spread out to all consumers and categories.

The ECC decisions will formally be endorsed by the federal cabinet on Tuesday and then sent to Ogra for formal no-

tification. The enhanced rates would be effective immediately but become part of the next month’s bills, the infor-

mation minister said.

************

09

Urdu Glossary


Bonds تمسکاِت قرض

Deadline مقررہ وقت

Economic Analyst معاشی تجز یہ کار

Financial Instability مالیاتی عدم استحکام

High-Risk Assets زیادہ خطرے واےل اثاث

Joint Venture Subsidiary کہ وینچر یک ذییل کمپن مشتی

Liability Limit محدو دذمہ داری/واجبہ

Methods of Indexing اشاریہ سازی ےک طریقی

Offering Documents پیش کردہ دستاویزات

Partnership Agreement ات معاہدہ شیر

Rebuttal Evidence ترد یدی شہادت

Service Charges معاوضہ خدمت

Terminal Bonus اختتایم بونس

Unpaid Interest غتر اداشدہ سود

10

Quotes and Jokes


11

Markets in Review


◊ Monthly Review ◊

Crude Oil

(WTI)$

Beginning 69.89

Ending 73.37

Change 3.48

KIBOR

(6 Months)

Bid % Offer %

Beginning 7.81 8.06

Ending 8.34 8.59

Change 0.53

Pakistan

Stock

Exchange

100 Index

Beginning 41,742.24

Ending 40,998.59

Change -743.65

Gold

10 Grams

Beginning Rs. 49,125

Ending Rs. 50,454

Change Rs. 1,329

Silver

10 Grams

Beginning Rs. 685.87

Ending Rs. 703.00

Change Rs. 17.13

Foreign Exchange Rates

Interbank Market (buying)

GBP (£) EURO (€) USD ($)

Beginning Rs. 161.67 Rs. 145.29 Rs. 124.30

Ending Rs. 162.24 Rs. 144.59 Rs. 124.20

Change Rs. 0.57 Rs. -0.70 Rs. -0.10

Contact Us

www.ifmp.org.pk 92 (21) 34540843-44 [email protected]

NEWS LETTER · 2018-10-09 · educated manpower. It is Pakistan's first specialized institution...

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Transcript of NEWS LETTER · 2018-10-09 · educated manpower. It is Pakistan's first specialized institution...