Equity market keeps breaking records in hope of ‘pro-business’ govt

01

BUSINESS

BSaturday, 11 May, 2013

ISLAMABAD

AGENCIES

FOREIGN aid is a viciouscircle, and Pakistan iswallowing in the midstof it. The biggest chal-lenge for the newlyelected government shall

not be the militants hiding in its territorybut potential bankruptcy and the conse-quences attached with trying to avoid it.

Lingering on the brink of the next bigeconomic crisis, Pakistan needs a newstrategy to rescue it from being perpetu-ally dependant on foreign agencies. Suchstrategies are hard to come by, and thereis little doubt that whichever party makes

the government will agree to a multi-bil-lion-dollar bailout from IMF as the easyway out.

Yet this easy path will have severerepercussions of its own. Although talkshave already begun for the provision ofanother transfusion to keep Pakistan’s fi-nances from drying up in the next sixmonths, IMF’s conditions for any dealwill make the country sweat.

The IMF may stump up around $5 bil-lion, Pakistani officials say, just enough torepay the outstanding debt on an earlier$11 billion package that was suspended in2011 after economic and reform targetswere missed.

The new IMF loan would likelyspread repayments over five to 10 years,said Shahid Amjad Chaudhry, financialadviser to the pre-election interim govern-ment.

Pakistan requires between $6-$9 bil-lion to avoid a balance of payments crisis,the Asian Development Bank said.

For the extra money, Islamabad looksset to turn to the ADB, World Bank andother multilateral lenders, along withcountries with whom it has compellingforeign policy ties like the United States,China and Saudi Arabia.

IMF likely to be nextPakistan govt’s first stop

Lingering on the brink ofthe next big economic

crisis, Pakistan needs anew strategy to rescue itfrom being perpetuallydependant on foreign

agencies. Such strategiesare hard to come by, andthere is little doubt thatwhichever party makes

the government will agreeto a multi-billion-dollarbailout from IMF as the

easy way out

KARACHI

ISMAIL DILAWAR

The Karachi Stock Exchange (KSE) onFriday hit another all time high on the backof what the market observers believe in-vestors’ hope for the formation of a “pro-business” government as a result ofSaturday’s historic general elections in thecountry.

With Friday’s historic hike, the ana-lysts say, the volume of Pakistan’s equitymarket has neared the $50 billion mark.

The analysts are expecting the coun-try’s largest bourse breaking more recordsahead as Friday saw the benchmark KSE100-share index peaking to a record19,916.27 points, gaining 254.81 points or1.30 percent compared to Thursday’s19,661.46 points.

“This is not the all time high. It is yetto come,” senior stock broker and a KSEboard of director Muhammad YasinLakhani told Pakistan Today.

Declining to predict the numbers forindex’s future upsurge, the former KSEchairman attributed Friday’s hike to the in-vestors’ optimism for the formation of a“pro-business” government in the countryand good corporate results.

“The market participants are upbeatthat the new government’s economic poli-cies would be pro-business,” said Lakaniwho sees lawlessness, energy crises and in-ternational image-softening as major chal-lenges facing the future electedgovernment in Pakistan.

The broker, however, warned the in-vestors against being misled by the currentspirals in index. “The people should investkeeping in view performance of the indi-vidual scrips,” he added.

Other analysts were happy about thecurrent upward trend that, they estimate,has augmented the country’s market capitalbeyond $ 50 billion.

The day under review witnessed mar-ket capitalization standing above Rs 4.889trillion compared to Rs 4.836 trillion of theprevious trading session.

“Pakistan market is now worth approx-imately $ 50 billion,” rejoiced MohammadSohail, an equity market analyst and CEOTopline Securities.

Ahsen Mehanti, a director at ArifHabib Securities, said investors’ sentimentsremained bullish amid higher trades in thepre-election rally.

“Stocks closed yet again at all timehigh led by stocks across the board on re-newed foreign interest and speculationsahead of general elections tomorrow,” said

the analyst.The investors’ hope for early resolution

of the lingering crisis of circular debt, hav-ing accumulated to Rs 537 billion as ofApril (2013) in energy sector, the issue ofgas supply to fertilizer and textile sectorson political commitments had played as acatalyst on Friday.

Mehanti also viewed strong oil salesdata for the month of April, strong valua-tions in oil, cement and fertilizer sectorsand easing political uncertainty as majorattributable factors for a bullish market.

He seconded Lakhani in citing betterquarter-end earning announcements by thelisted corporate entities as one of the posi-tives for KSE.

The political election-related develop-ments in the country, however, remained atthe central stage in defining direction of thestock market in recent weeks.

“Investors in Pakistan market are curi-ous to know what news will trigger themarket after the May 11 elections,” said theanalysts at Topline Research.

Hoping for change in the political set-up beyond May 11 general elections hadbeen the major theme for 2013, the analystsaid.

Other positives for the stocks market,

they said, included continuous foreign buy-ing, as net buying standing at $198 millionin 2013YTD and a sharp reduction in theSBP’s discount rate to nearly 7-years lowof 9.5 percent that compelled the equityinvestors to shift their funds from fixedincome to equities.

The analysts are expectingthe country’s largest bourse

breaking more recordsahead as Friday saw the

benchmark KSE 100-shareindex peaking to a record19,916.27 points, gaining

254.81 points or 1.30 percentcompared to Thursday’s

19,661.46 points

Rs 537 billion circulardebt to decide fate ofOMCs in new budget

KARACHI

STAFF REPORT

The market observers foresee the circulardebt in the energy sector playing a key rolein defining the upcoming fiscal budget(FY14) as the lingering credit has balloonedto an alarming Rs 537 billion as of April-13.This, the analysts say, is compared to Rs144 billion in 2008, implying an increase of273 percent.“As per our expectations, partial resolutionof circular debt in the budget would im-prove the liquidity situation of OMC sec-tor,” viewed M. Irfan Saeed, an analyst atInvestCap Research.Thus, he said, lower the financial chargeswhich have been pulling down OMCs bot-tomlines.Being part of the highest revenue contribu-tor (indirect taxes), PDL on petroleum prod-ucts is an essential element contributing tothe government’s source of revenue, saidthe analyst.“Considering declining POL volumetricsales and actual PDL collection meeting tar-get for FY13 still being a question mark, weexpect the reinforcement of PDL in its pres-ent form with a range bound of Rs3-14/litreon various petroleum products and thus sta-tus quo to prevail,” said Saeed.However, he said if international oil pricesremained flat or fall from current levels asper expectation, one could not rule out thepossibility of the government raising PDLby Rs3 to 5 per litre translating into a PDLtarget of Rs.150-160 billion in the upcom-ing budget.In budget FY13, the government had set adividend target of Rs450 million, dividendof Rs7.15/share, from PSO. “We expect 70percent of the target (dividend ofRs5.0/share) to be achieved in FY13,”Saeed said.Moreover, the analyst also expects the gov-ernment to set the dividend target ofRs630mn (Rs10/share) in the upcomingbudget for FY14 led by partial settlement ofcircular debt.In the upcoming budget, the extent of reso-lution of circular debt is expected to definethe intensity of positivity that the budgetfetches for the OMC sector.“Overall, we expect that the upcomingbudget impact on OMC sector is neutral topositive,” said the analyst.

KARACHI

STAFF REPORT

A spokesman of All Pakistan CementManufacturers Association (APCMA)Friday said the domestic consumptionof cement posted healthy rise of over 6percent in first 10 months of this fiscal.

This upward trend, the spokesper-son said, could be impacted if the man-ufacturers were forced to bear highertransportation charges for coal, its basicfuel and for transportation of cementbags.

He said the sector dispatched27.664 million tons of cement duringthe first 10 months of fiscal year 2012-2013 that is 4.09 percent higher than thedispatches of 26.576 million tons dur-ing the corresponding period of last fis-cal year. He said that in April 2013, theindustry dispatched 3.123 million tons

of cement that was 3.8 percent higherthan the dispatches in April 2012.

He said that exports of 0.755 mil-lion tons cement in April 2013 were2.28 percent less than the exportsachieved during the corresponding pe-riod last year. However, he added, thedomestic consumption of cement dur-ing the period July 2012 to April 2013reached to the level of 21 million tonsdepicting an increase of 6.03 percent.

APCMA has appealed to the federalgovernment to relax the axle load limitupto 10% of the maximum cargoweight on National Highways.

After the implementation of axleload, timely supply of raw materials andfinished goods to destinations is beingdelayed. In line with the axle load re-strictions trucks must have a load of 80tons when leaving the port. This ismade up of 50 tons of cargo and 30 tons

of the own weight of the truck. Trucksare weighed at the Karachi Port weighbridge while leaving the Port. Thesemeasurements are not accurate as theKPT instruments are not calibrated andare very old.

Beyond the Karachi Port weighbridge there is another private weighbridge called Babar Kanta where trucksare also weighed before starting theironward journey. This Kanta is more ac-curate, so that generally there is a dif-ference in the weight shown by the KPTKanta and this one.

The extra load, if any, is eithertaken off at this point or trucks go backto the KPT yard and reduce the loadthere. All this activity as can be imag-ined, involves loading and un-loading,and extra handling, and also loss ofweight of a commodity like coal assome of it flies as dust.

Cement consumption swellsbeyond 6pc in 10 months

SBP extends farm loans tenorto five years

KARACHI: Thecentral bank Fri-

day extendedagricultureloans tenorfrom three tofive years for

Small and RuralEnterprises (SREs),

the regulator reported.The farm loans are disbursed by the banksunder the Credit Guarantee Scheme of theState Bank of Pakistan (SBP) to facilitateeligible farmers for purchase of tractorsand other agriculture implements.“To avoid portfolio concentration in tractorand other implements financing, the aggre-gate financing under this category shall notexceed 20 percent of the total allocatedguarantee limit of the bank,” warned anSBP circular issued Friday. STAFF REPORT

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BUSINESSSaturday, 11 May, 2013

Certificate distributionceremony of FWBl-GePKARACHI: Anis Haroon Minster for Women

Development & Human Rights Government of

Sindh lauded the role of the First Women Bank in

Women’s economic empowerment by helping them

to promote their skills and talents. Addressing the

certificate distribution ceremony for participants of

FWBL’s Capacity Building & Skill Development

Training Program she said that a revolving fund is

being created to provide soft loans to women

through First Women Bank Ltd. There can be no

meaningful progress if women, who comprise half

of society, remain out of the mainstream of society

and do not have access to opportunities, including

those of quality education, healthcare,

employment, protection from violence, and

participation in decision-making processes in

society, as well as ensuring their rights, she said.

Earlier in her welcome speech Mrs. Shafqat Sultana

President said that FWBL will continue to offer

Capacity building and Skill Development trainings

and other services as a key means of training and

facilitating future women entrepreneurs and for

providing opportunities for enhancing women’s

employability in various sectors. Around 75 trainees

of four programs were awarded the certificates in

the areas of Fashion Designing, Computer Skills

and Beauty. Aurat Foundation has awarded a grant

of Rs. 13.8 million to First Women Bank Ltd. under

the Gender Equity Program supported by the

American people through USAID. The pilot project

is covering two FWBL Business Development &

Training centers (BD & TC) in Karachi and Lahore

for a period of 02 years. The main objectives of the

program are to enhance women’s entrepreneurial

development and employability through capacity

building and skill development, to provide trainings

in core subjects related to women’s

entrepreneurship/employment and to facilitate

access to loans through FWBL to successful

trainees for initiating entrepreneurial activity. More

than 400 women have so far completed training in

the areas of Business Entrepreneurship, Marketing

& Product Packaging, Food Production, Tailoring,

Fashion Designing, House Keeping, Computer and

Beauty. GEP is a 5 years program implemented in

Pakistan by Aura Foundation in collaboration with

‘The Asia Foundation’. The program aims at

advancing women’s human rights and

empowerment in pursuance of the gender policies

and aims of the Government of Pakistan. PR

NBP receives Consumers’Choice Award

KARACHI: It is a proud moment for National Bank

of Pakistan that a public sector enterprise has been

declared recipient of Consumers’ Choice Award.

The Organizers have chosen National Bank for

Consumers’ Choice Award 2012 in the category of

“Best Bank”. These awards are conferred every

year to those companies offering their

products/services to the best interest of the

consumers. Nominations for the Award were made

through a comprehensive and objective survey

conducted by volunteers and polling was also done

through website. In Pakistan, there are more than

two dozen commercial banks offering freedom of

choice to consumers to deal with a bank backed by

long-lasting reliability, trust and confidence. The

confidence of all the stakeholders in National Bank

is re-endorsed various parameters. The

shareholders’ equity as on December 31, 2012

exceeded Rs116 billion, which may be termed as

the highest amongst all the banks listed at the local

stock exchanges in Pakistan. PR

Pakistan Steel CeO welcomes bailout package

KARACHI: CEO PSM Maj. General (r) Muhammad

Javaid H.I. (M)has welcomed the Rs 11 billion

bailout package to PSM. The CEO further ensured

all the stakeholders that now it is his and the PSM

staff’s duty to take the organisation from the ebb

to apex. The CEO seconded the PM’s opinion that

PSM is a national asset and has a pivotal role in

national economy. The CEO said that standard

operating procedures (SOP) will be introduced for

the operation of the escrow account to ensure

that salaries and pension of the employees of PSM

are not affected. The only purpose for the

opening of this account is to move PSM towards

the path of revival and use the amount for the

purchase of raw material which is the dire need of

the corporation. Moreover, the CEO stated that

the recent bailout package of Rs 11 billion given

through a single tranche in a shape of soft loan is

being provided by NBP under guarantee of the

federal government. PR

CORPORATE CORNER

02

B

Major Gainers

COMPANY OPEN HIGH LOW CLOSE CHANGE TURNOVERWyeth Pak Ltd 1446.15 1518.45 1499.99 1514.87 68.72 1,200Rafhan Maize XD 4417.50 4638.37 4196.63 4459.90 42.40 780Service Ind.Ltd.XD 271.78 285.36 273.00 285.36 13.58 21,700Indus Dyeing 499.97 512.00 511.00 512.00 12.03 500MCB Bank Ltd. 237.56 249.43 243.85 249.43 11.87 747,000

Major LosersShezan Inter. 674.77 708.50 641.04 641.04 -33.73 7,200Island Textile 653.00 622.00 621.00 622.00 -31.00 200MithchellsFruit 438.00 431.09 417.00 420.67 -17.33 2,300Gillette Pak 337.36 320.50 320.50 320.50 -16.86 500National Foods 387.90 387.90 380.00 380.35 -7.55 1,400

Volume Leaders

Fauji Cement 9.93 10.40 9.92 10.18 0.25 24,615,500P.T.C.L.A 18.19 19.19 18.85 19.02 0.83 16,609,500Japan Power 1.69 2.20 1.66 2.11 0.42 12,372,000Telecard Limited 4.77 5.60 5.30 5.34 0.57 10,903,000National Bank. 40.15 41.50 40.35 41.39 1.24 10,425,500

Interbank RatesUSD PKR 98.4183GBP PKR 151.4756JPY PKR 0.9720EURO PKR 127.9635

ForexBUY SELL

US Dollar 99.70 99.95 Euro 128.31 128.52 Great Britain Pound 152.03 152.27 Japanese Yen 0.9740 0.9842 Canadian Dollar 97.48 99.19 Hong Kong Dollar 12.53 12.77 UAE Dirham 26.85 27.10 Saudi Riyal 26.35 26.60

ISLAMABAD

APP

THE governmenthas so far releasedRs158.900 mil-lion for five majorprojects of theTextile Industry

Division under its Public Sector De-velopment Programme (PSDP), of-ficial sources said Friday.

The total cost of all these projectshas been estimated at Rs.2081.440,out of which Rs227 million would bereleased during the ongoing year(2012-13). Giving break up, thesource said that an amount ofRs64.400 million has been releasedfor the Faisalabad Garment City Proj-ect and Rs62.300 million for LahoreGarment City Company.

The actual cost of FaisalabadGarment City project and LahoreGarment City Company has been pro-jected at Rs498.8 million and 586.8million respectively, of which Rs92million and 89 million would be re-leased during the current fiscal year.

The government also released

Rs14.700 million for Pak-KoreanGarments Technology Training In-stitute, Karachi the source saidadding the total cost of this projectis Rs300 million, out of which Rs.21million would be released this year.

Similarly, out of Rs15 millionfunds allocated for Extension in Ex-port Development Plan Implementa-

tion Unit during current year, thegovernment released Rs10.5 millionso far. The total cost of this projectis 59.2 million.

The government also released7 million for Providing and Layingof Dedicated 48 inch Diametermild Steel Water Pipeline for Tex-tile City Karachi.

The total cost of this project isRs636.6 million, of which Rs10 mil-lion have been earmarked in fiscalyear 2012-13, the sources added.

The sources said that the Plan-ning Commission of Pakistan has sofar released Rs170.3 billion for alldevelopment projects under the Pub-lic Sector Development Programme(PSDP) against the total allocationsof Rs233 billion for the fiscal year2012-13.

An amount of Rs86.2 billion hasbeen released for 347 infrastructuredevelopment projects and Rs78.2billion for 715 social sector projects.

Similarly, Rs1.9 billion has beenreleased for 77 other projects andRs4 billion for the Earthquake Re-construction and Rehabilitation Au-thority (ERRA).

The total size of the PSDP forthe year 2012-13 is Rs360 billion,including Rs100 billion foreign aidcomponent, which is managed bythe Economic Affairs Division andRs27 billion special programmes,release of which are made by theCabinet Division or the FinanceDivision.

TexTIle INDuSTRyGIveN RS 158.9M

ANKARA

NNI

Pakistan Pavilion established in the 11th Interna-tional Defence Industry Fair (IDEF) 2013 beingheld atIstanbul from 7-10 May, is attracting a largenumber of visitors and prospective buyers. Pak-istani stalls are one of the most visible and fre-quently visited.

Leading defence manufacturing companiesfrom Pakistan are participating in the fair. Partici-pating companies include: Pakistan Ordinance Fac-tories (POF), National Engineering and ScientificCommission (NESCOM), Heavy Industries Taxila(HIT), Defence Export Promotion Organization(DEPO), Pakistan Aeronautical Complex (PAC),Military Vehicles Research & Development Estab-lishment (MVRDE), National Radio And Telecom-munication Corporation (NTRC), Global Industrial

& Defence Solutions (GIDS), etc.Pakistan’s Secretary for Defence Production

Lt. Gen. (Retd) Shahid Iqbal is leading the Pak-istan delegation to the event. The delegation alsoincludes Chairman NESCOM Mr. MuhammadIrfan Burney, Chairman POF Lt. Gen. MuhammadAhsan Mahmood, Chairman HIT Lt. Gen. SyedWajid Hussain, Chairman PAC Air Marshal SohailGul Khan, Ambassador of Pakistan to Turkey Mr.Muhammad Haroon Shaukat, Managing DirectorMVRDE Maj. Gen. Rehan Abdul Baqi, and otherhigh officials. Members of the Pakistan delegationare holding meetings with their Turkish counter-parts and other visiting delegations from the Mid-dle East, Africa and Europe. Pakistan’sparticipation in the fair came on the heels of a suc-cessful defence exhibition “International DefenceExhibition and Seminar” or IDEAS 2012 it re-cently organized in Karachi.

Pakistan pavilion at IDEF-2013Istanbul attracting visitors

New gas discovery tohelp meet energy needs

ISLAMABAD: The Eni Pakistan, in a jointventure with the PPL and KUFPEC, has re-cently made a new discovery of gas show-ing potential to efficiently meet thecountry’s energy needs. “The productiontesting gas flowed 33 million cubic feet perday is highlighting an excellent potential forthe future for energy needs of the country,”says an official source. The new gas reser-voir was discovered in the Kirthar Foldbelt,Sukhpur. The discovery will be appraisedand sub-sequentially be commercializedthrough an early production scheme, makingpossible the gas supply within three years,the official source added. The Minister forPetroleum and Natural Resources has alsoappreciated the efforts of Director General(Petroleum Concessions), Eni Pakistan andits partners on the discovery of the new gasreservoirs and said that this discovery was agood news for the nation and the energysector of the country. APP

Sanitation, hygiene-relatedinterventions can prevent loss of 2.05 % of GDPISLAMABAD: Sanitation and hygiene-related interventions couldmitigate 52 per cent of economic impacts which amounts to 2.05 percent of Gross Domestic Product (GDP). This was stated by CountryCoordinator, Water and Sanitation Programme (WSP) World Bank,Fahim Sami. “The main cause of this loss is the open defection inthe country which has spread the diseases in the country and it is de-creasing by 1.3 per cent every year but not satisfactory and it wouldtake years to be eliminated from the country, if it goes at this speed,he said. Moreover, the population is also increasing by 2.9 per centevery year and about 1.2 million people are being added for thisneed. “If we succeed in eliminating open defection, it would be help-ing us in achieving Millennium development goals and also helps usin the growth of GDP,” he added. The interventions that could becarried out to mitigate economic losses due to poor sanitation willnot only reduce the sanitation related losses but may also provideimprovements in non-sanitation areas such as water supply, Samisaid. Country Coordinator said that improved access to adequatequantity and improved quality of water could mitigate 30 per centand 36 per cent of economic losses respectively. APP

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