FINANCIAL ACCESS IN PAKISTAN LOWEST AMONG DEVELOPING WORLD

Tuesday, 10 July, 2012

Pak, India todiscuss allthings petroleum

ISLAMABAD

ONLINE

Secretary Commerce Muneer Qureshi hassaid that a delegation from Pakistan wouldvisit India during this month to discussmechanism of Import of Petroleum prod-ucts and electricity from India. Talking tomedia men after meeting of Senate stand-ing committee on Commerce SecretaryCommerce said that a delegation compris-ing on representatives of different min-istries would visit India during this monthfor ministerial level talks with India for im-port of electricity and petroleum products.Secretary said that after this visit an Indiandelegation would also visit Pakistan to dis-cuss the mechanism of electricity import toPakistan. He said that after resumption ofNATO supply to ISAF forces inAfghanistan not a single convoy has notcrossed the border due to suspension ofthe supply, containers were in poor condi-tion and after necessary maintenance thesecontainers would be able to utilize.

Shares, euro slumpTOKYO

AGENCIES

Asian shares slumped on Monday aftersluggish U.S. jobs data deepened worriesabout slowing global economic growth,and reinforced risk aversion ahead ofChina inflation figures and a meetingaimed at defining steps to shore up eu-rope's banks. The euro fell to a two-yearlow of $1.2225 in early Monday Asiantrade, while commodity-linked currenciessuch as the Australian dollar and the NewZealand dollar, typically indicative of riskappetite, hit one-week lows. U.S. employ-ers added 80,000 new jobs in June, below90,000 forecast. While the data was seenas not strong enough to prompt any imme-diate action, it boosted the chances of theFederal Reserve launching a new round ofmonetary stimulus to boost growth, a pollshowed. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 per-cent after rising 1.6 percent for the firstweek of the third quarter, and Japan'sNikkei average opened down 1.1 percent.The price of 10-year Japanese governmentbond futures jumped to their highest sinceOctober 2010. The weak U.S. nonfarm pay-rolls report pushed U.S. stocks down about1 percent and european shares to posttheir worst one-day fall in around twoweeks on Friday. Borrowing costs in Spaintopped the critical 7 percent level andwhile those for Italy surged.

Sports goods export upISLAMABAD

APP

The exports of sports good from the countrywitnessed positive growth of 2.96 percentduring the first eleven months of the fiscalyear 2011-12 against the exports of same pe-riod of previous year. The exports of sportsgood were recorded at US$302.206 millionduring July-May (2011-12) as compared tothe exports of US$293.525 million duringJuly-May (2010-11), according to the dataof Pakistan Bureau of Statistics (PBS).Among the sports good, the major in-crease of 9.82 percent was recorded in theexports of footballs, as it grew fromUS$128.448 million to US$141.056 mil-lion. However, the exports of sports glovesdecreased by 7.06 percent during the pe-riod under review, the PBS data revealed.The exports of gloves stood at US$101.016million against the exports of US$108.687million in 2010-11. The exports of othersports goods also increased by 6.64 per-cent by going up from US$56.390 millionto US$60.134 million. Meanwhile, duringthe month of May 2012, the exports ofsport goods increased by 3.39 percent ascompared to the same month of last year,however witnessed decrease of 7.45 whencompared to the exports of April 2012.

KARACHI

ISMAIL DILAWAR

BeLATeDLY though the regula-tors have finally woken up froma deep slumber to mitigate thedecades-old problem of lack of

financial access in Pakistan where the 187million people’s exposure to economic in-dicators like investment, insurance, sav-ings, pension funds etc stands lowestamong the comity of developing nations.

Apparent reason of the problem is thatwhile majority of Pakistanis are financiallyilliterate the authorities concerned havedone little or nothing at all during last sixdecades to give them even a basic under-standing and knowledge of finances that, ifdone, must have enabled the former to fullyparticipate in the economic development ofthe country. A World Bank report on“Bringing Finance to Pakistan’s Poor” saysonly 14 percent of the politico-judicially-embattled Pakistanis use a financial prod-uct or service from a formal financialinstitution. This, 14 percent, share in finan-cial access is the lowest when comparedwith that of Pakistan’s competitors fromSouth and Southeast Asia like India (over40 percent), Bangladesh (30 percent),Nepal (20 percent), Sri Lanka and Thailand(60 percent), Singapore (100 percent) andChina and Indonesia (over 40 percent).

According to official data, almost 50percent of Pakistanis are completely ex-cluded from financial sector while 20 per-cent others do not know about even thesimplest form of financial services or prod-ucts available in the market. Further, acomparative analysis reveals that Pakistandespite having a bigger population has an“extremely minute” investment and savingbase compared to other developing

economies like Bangladesh, Turkey andThailand. Of the 187 million Pakistanisonly 0.170 million or 0.9 percent have aUnique Identification Number (UIN) to in-vest at the country’s stocks market against2.804 million in Bangladesh, 3.050 millionin Thailand and 4.132 million in Turkeywhere the populations, respectively, standat 158 million, 67 million and 74 million.The Collective Investment Schemes (CIS)unit holders in Pakistan account for only0.14 million against 3.6 million of Turkeyand 1.5 million of Thailand.

Pakistanis also leg behind in terms ofinsurance penetration (as a percent ofGDP) with 0.7 percent against 0.94 percentof Bangladesh, 4.1 percent of Thailand and1.28 percent of Turkey. Only 2000 or .001percent Pakistanis participate in PensionFunds compared to 3.4 million Thais and

2.6 million Turks. Turkey is the only coun-try Pakistan is ahead of in terms of savingsas only 12 percent of Turkish people areprone to savings against 13.8 percent Pak-istanis. Bangladesh and Thailand with 19and 31 percent saving base stand far aheadPakistan. “One of the main reasons forsuch low involvement in the finical marketsby Pakistanis is a lack of awareness… edu-cation,” viewed Syed Javed Hassan, chiefexecutive officer of Institute of CapitalMarkets (ICM), a non-profit organizationworking since 2009 under the ambit of Se-curities and exchange Commission of Pak-istan (SeCP) to educate the participants offinancial sector industry.

Urging the need for making efforts toraise financial literacy through structuredinvestors’ education, the ICM chief said theSeCP had devised a three-year Investors’

education Program (IeP) starting from Fri-day, July 13, at the Karachi Stock exchange(KSe) and to spread countrywide subse-quently. “Investment Basics being thetheme of it, the Program would aim at edu-cating the investors on the college and uni-versity level,” he explained.

Ideally, investment base in the 187million Pakistan must be at least 100 mil-lion. “This lower investment rate does notallow the local equity market to expand,”said Hassan who tends to agree that the2005 and 2008 market crashes had cre-ated a credibility dilemma for the stocksmarkets. He, however, lures the risk-averse investors by claiming that: “A lot ofmeasures have been taken by the apex andfront regulators to manage the risks previ-ously involved on the stocks markets.”

The ICM executive said gone are thedays when the equity market was plaguedwith speculative trading, pumping anddumping and leveraging. “In next three tofour months the stocks market would bein no one’s but in general shareholders’control,” Hassan said referring to theSeCP-backed steps like launching of a liq-uid thus more representative benchmarkindex at the KSe and demutualization ofthe stocks exchanges.

One can hope for the best as the SeCPhas eventually recognized that all of thepast initiatives it had taken on investors’education were “fragmented” and lackedcoordination with other stakeholders. Thistime, however, the IeP is being carried outon a broad scale with the SeCP partneringwith key capital market stakeholders in-cluding country’s three stock exchanges,Pakistan Mercantile exchange, CentralDepositary Company, National ClearingCompany of Pakistan Limited and MutualFunds Association of Pakistan.

Rude awakeninggOnly 14pc Pakistanis use financial products, services against 40pc Indians and 30pc Bengalis gOnly 0.170m of 187mPakistanis invest at stocks exchange g50pc in Pakistan are completely excluded from financial sector, 20pc othersunaware of even simplest financial services gPakistan’s 0.7% insurance penetration against 0.94% of Bangladesh, 4.1%of Thailand and 1.28% of Turkey gOnly 2,000 Pakistanis invest in Pension Funds against 3.4m Thais and 2.6m TurksgSaving rate in Pakistan is 13.8% compared to Bangladesh’s 19% and Thailand’s 31% g ICM chief said financial illiteracythe only reason for low financial access gSECP launching countrywide Investor’s Education Program from Friday at KSE

LAHORE

APP

Sui Northern Gas Pipe Limited (SNGPL)here Monday warned the industry of se-rious gas shortages in winter this year,while the gas tariff would also be revisedupward to speed up exploration.

The SNGP Managing Director ArifHameed disclosed this to the industrial-ists and business commuinty, whilespeaking at Lahore Chamber of Com-merce and Industry, where the LCCIPresident Irfan Qaiser Sheikh updatedthe MD about industrial meltdown dueto gas cuts, while the SVP Kashif YounisMeher, VP Saeeda Nazar, former LCCIPresidents also spoke on the occasion.

The SNGPL Chairman Mian Mis-bahur Rehman, who is also a formerLCCI President, was also present. ArifHameed said that a massive gas load-shedding awaits industrial consumersthis winter as the province faces a severegas deficit at the moment. Currently, thecountry is facing an acute shortage,which would further increase during up-coming December and January.

In the new gas policy, he said, the gastariff would be improved to facilitate gasexploration in the country, however, anumber of projects are well on way to in-troduce LPG as an alternate fuel. TheSNGPL is advising the new Housing So-

cieties to put up LPG plants as there ismoratorium on supply of gas to new in-dustrial units and residential societies.

Due to high gas tariff, the pilferage ofgas has increased but the SNGPL has in-troduced new technology to detect theft,he maintained. On Pakistan-Iran gaspipeline project, the MD said that tendersfor the said projects have already been is-sued that make the point the governmentis working on the project efficiently.

While, the LCCI President said theshortage of natural gas has become aburning issue for the industries as lastyear the industry was provided gas foronly 180 days and there is a need to findout new reserves as current gas reservesare depleting fast and it will become in-sufficient to meet the national demand infuture. He said that the SNGPL has donea good job on gas theft issue but the cur-rent line losses are over 10 percent,adding, the LCCI understands that min-imizing the pilferage can result in morerevenue collection as well as fair loadmanagement. It has been seen thatSNGPL is expanding its system withoutconsidering the increasing gap of gassupply and demand. Gas shortfall is esti-mated to reach 2.5 BCFD in 2014-15, 3BCFD in 2015-16 and 3.5 BCFD in 2016-17. Hence, the gap is likely to shoot up to5 BCFD in 2020-21, unless major gas dis-coveries and field developments are

made. Irfan Sheikh said the LCCI mem-bers often complain of the rigid behav-iour of the staff of SNGPL with regard toimposing penalties unilaterally.

Without serving any show-cause-no-tice to the clients, their meters are dis-connected for lab testing. He suggestedthe concerned clients should be informedbefore taking any action and there shouldbe third party testing or inspection.

Despite making number of com-plaints about low gas pressure, there arestill many industries that are suffering toa great extent. Their whole lot/batch getswasted and they remain under this fearwhile making productions.

He said that the investment in gasexploration and extraction is seriouslylagging behind demand trends. As aresult the country continues to relyheavily on fuel oil. He suggested re-structuring Pakistan's gas sector tomake it more efficient and to attractprivate sector investments.

The reserves at Kunar Peshaki nearHyderabad could produce 280mcf of gasper day. These reserves could be vital toimprove the supply position and bridgethe present shortfall. There are knowngas reserves at Kohlu as well. This hugereserve cannot be put on the back burnerand needs to be explored immediately asit is sufficient to meet Pakistan's energyrequirements for several years.

A winter’s taleMore gas shortage in winter, industry told

Bank depositgrowth falls amidless provisioning

KARACHI

STAFF REPORT

While overall slowdown in M2 growthhas been witnessed in 1H2011, increasein demand for money has rendered intohigher growth in currency in circulation(CIC) that has restricted deposit growthof commercial banks in the country at4% during Jan-June 2012 based on June22 data to reach Rs 6.1 trillion ($65bn).“This growth is lowest in last few yearsas average deposit growth stood at 10%in last 5 years,” said Topline analystFarhan Mahmood. In Pakistan, the ana-lyst said, deposit mobilization generallyremained higher in first half of FY12compared to the second half.Interestingly, he said, the banks ad-vances after remaining flat since lastone year posted a growth of 5 percent toRs 3.5 trillion ($37bn) during 1H2012.That said, out of Rs 250 billion addi-tional deposits generated during this pe-riod, approx.50% of the funds wereparked in advances while the rest werediverted to government securities.“This is against the trend where banksare aggressive in investing in risk freehigh yielding government securities,”Farhan said.

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02Tuesday, 10 July, 2012

Summit Bank receives

International Rock Award

KARACHI: Summit Bank received ‘The Rock Awardfor 2011-12’ from Xpress Money Services Limited in aprestigious ceremony held recently in Abu Dhabi (UAe).Mr. Farrukh Majeed, Head of Home Remittance, col-lected the award on behalf of Summit Bank for overallbest performing agent in the Middle east, North Africa,Afghanistan and Pakistan regions receiving markets.

Soneri Bank Wins CFA

Association’s Runner-Up Award

KARACHI: Soneri Bank is proud to have beenhonored by the CFA Association with the ‘2011,Best Bank of the Year’ award in the medium banks’category. This accolade marks the Bank’s impres-sive and growing performance during the last yearin transaction banking and the trade sector.

Food Prints book launch

KARACHI: Oxford University Press launched its latestpublication Food Prints: An epicurean Voyage throughPakistan—Overview of Pakistani Cuisine written byShanaz Ramzi. Pakistan is home to many diverse com-munities, each boasting a cuisine that has been influencedby the country’s rich history and varied topography.

‘EOBI above its assigned target’

KARACHI: employees Old Age Benefits Institutionhas collected Rs 900 million above its assigned targetof Rs 10 Billion for the financial year 2011-12, inspiteof unfavourable economic conditions.

Dr Asif A Brohi appointed COO NBP

KARACHI: Noted banker Dr Asif ABorhi has been appointed the ChiefOperating Officer (COO) of NationalBank of Pakistan (NBP). He is alsoappointed the Chairman of the Board

of the subsidiaries: NBP exchange Company andNBP Capital Limited . Dr Brohi has rich experi-ence of banking and administration.

‘ACE Way Forward Conference 2012’

MUZZAFFARABAD: President & CeO PTCL,Walid Irshaid, delivering inaugural keynote addressat the company’s annual ‘Way Forward Conference2012: Accelerating Customer experience (ACe),’ heldat the picturesque Pearl Continental Muzzaffarabad,Azad Jammu Kashmir on July 6-7, 2012

SL eyes expansion in Pakistan

KARACHI: Sri Lankan Airlines on Friday vowed toexpand its presence in the country with promises offrequent flights from Islamabad and Lahore in thenear future. G.T Jeyaseelan, Chief Marketing Officerof Sri Lankan Airlines, told a press conference hereat a local hotel that Pakistan was an extremely im-portant market for his carrier which operates a dailyflight between Karachi and Colombo. His remarks

came soon after Sri Lankan Airlines opened its newoffice here on Friday morning following the appoint-ment of the TCB Aviation Limited as the Airline'sGeneral Sales Agent in Pakistan.

UBL Funds announces final payout

KARACHI: UBL Fund Managers announced final pay-out for the year/period ended June 30, 2012 from itsopen-end investment schemes. The Company an-nounced a stock dividend of Rs.9.00 per units of parvalue RS. 100 from its UCIF which gave an year to datereturn of 17.75% p.a. From UBL United Stock AdvantageFund (USF), the Company announced a payout of RS.4.50 per unit of par value RS. 100. This scheme has givena year to date return of 12.43% p.a. While from UBL Prin-cipal Protected Fund-I (UPPF-I) UBL Funds announceda payout of RS. 7.50 per unit of par value of RS. 100. Thisscheme has given a year to date return of 7.90% p.a.

BusinessDon't leavecotton cropwater stressed!

MULTAN

APP

Agriculture officials have urged thegrowers not to leave cotton cropwater stressed because it was pass-ing through an important growthphase, the flower and fruit stage.eDO agriculture Sardar Moham-mad Akbar Khan told participantsof a mega farmers training pro-gramme at Kotli Najabat village ofShujabad that cotton growersshould pay special attention to ap-plication of water at this stage andkeep the fields clean from weedsand pests, says a release issued bymedia liaison unit of Punjab agri-culture department here Monday.

Crude up in Asiaon bargain-hunting

SINGAPORE

AGENCIES

Oil prices inched up in Asian tradeMonday as traders bought upcheap crude following a priceplunge late last week caused bydisappointing US jobs figures, ana-lysts said. New York's main con-tract, West Texas Intermediate(WTI) light sweet crude for deliv-ery in August, gained 38 cents to$84.83 a barrel and Brent NorthSea crude for August delivery rose55 cents to $98.74.

Bulls at LSELAHORE

APP

Lahore Stock exchange on Mon-day witnessed bullish trend bygaining 1.68 points as the LSe-25Index opened with 3641.87 andclosed at 3643.55 points. Themarket's overall situation alsocorresponded to an upward trendas it remained at 1.881 millionshares to close against previousturnover of 1.807 million shares,showing an upward move of73,448 shares. While, out of thetotal 95 active scrips 17 movedup, 61 remained equal and 17shed values. engro Foods Lim-ited, KSB Pump Company Lim-ited and Lucky Cement Limitedwere Major Gainer of the day byrecording increase in their pershare value by Rs 2.82, Rs 2.60and Rs 2.10 respectively.

CORPORATE CORNER

KARACHI: Delegation of Defence Residents Society(DRS) had a meeting with Brigadier Anis Ahmed CBCStation Commander Karachi, CBC Executive OfficerMuhammad Hayat Maher and others also present.

KARACHI

STAFF REPORT

THe bulls kept dominating Karachistocks market on first working dayof the week Monday with bench-mark, KSe 100-share index gained

69.36 points. The day saw the index closing upby 0.48 percent at 14, 379.54 points against14, 310.18 points of Friday. Pakistan stocksclosed higher on institutional support afterglobal stocks and commodities recover, asviewed by Ahsan Mehanti, Director at ArifHabib Investments Limited.

On Monday, the trading volumes at theready-counter were recorded lower at 89.542million shares against 94.336 million sharesof the previous day. The trading value in-creased to Rs 3.801 billion compared to Rs3.756 billion of the previous session. The in-traday high and low, respectively, stood at 14,397.93 and 14, 253.39 points.

He added that the Pakistan stocks closedbullish as investors speculated ahead of SeCPchairman visit to KSe to discuss pending is-sues. The market capitalization increased toRs 3.662 trillion from Rs 3.644 trillion a dayearlier. Of the total 349 traded scrips, 138gained, 100 lost and 111 finished as un-

changed. The free-float KSe-30 index went upby 52.61 points to close at 12, 504.61 pointsagainst the previous 12, 452.00 points.

Jahangir Siddiqui Company was the day’svolume leader counting its traded shares at13.497 million with the opening and closingrates standing at Rs 13.51 and Rs 14.24, fol-lowed by D.G.K Cement, engro Foods Lim-ited, Bank Al-Falah and Azgard Nine withturnover of 12.509 million, 9.827 million,3.608 million and 3.448 million shares re-spectively.

According to analyst the institutional in-terest witnessed in stocks across the boardahead of corporate earning announcementsdue next week amid hopes for recovery inglobal stocks and commodities.

On the future market, the turnover de-creased by over four million shares to 5.808million against 9.379 million shares of lastworking day of the week.

Mehanti said that hopes for improvementin macroeconomic situation after release ofUS coalition support funds kept sentimentspositive. The UniLever Food and Colgate Pal-molive, up Rs 62.75and Rs 30.84, led highestprice gainers while, Nestle Pakistan Limitedand Abbott Laboratories, down Rs 35.93 andRs 4.11 respectively, led the losers.

Monday bluesfor the bearsBulls off to a flying start this week as they takethe index from the scruff of its neck and take it up69 points. All this courtesy, institutional supportafter global stocks and commodities recover

KARACHI

ISMAIL DILAWAR

The Saudi Pak Leasing Company Limited(SPLC), one of the country’s leading leas-ing firms, has no money to clear its finan-cial liabilities amounting to over Rs528.208 million, it emerged Monday. Also,the company is planning to double its cur-rent authorized capital of Rs 1 billionthrough the creation of 100,000,000 pref-erence shares of Rs 10 each. The SPLCowes over Rs 333.2085 million and Rs 195million, respectively, to the Saudi Pak In-dustrial and Agricultural Investment Com-pany Limited (SAPICO) and the Bank ofKhyber (BOK) on account of subordinatedloan and term loan. “Due to the current fi-

nancial position it was unlikely for thecompany to meet its financial obligationstowards its lenders,” conceded Muham-mad Ali Siddiqui, SPLC’s company secre-tary, in a formal communiqué with theKarachi Stock exchange under Section160(1)(b) of the Companies Ordinance,1984. The leasing giant is, therefore, all setto convert the respective loans of theSAPICO and BOK into preference shares.

“The company has negotiated withlenders to convert their respective loansinto preference shares,” said Siddiqui.The secretary said after “successful” ne-gotiations with the lenders, the Board ofDirectors of the SPLC, in its June 11thmeeting, had considered and approvedthe Term Sheet for the purpose. The com-

pany tends to issue non-voting, non-cu-mulative convertible unlisted preferenceshares to the two lenders. The SPLC pro-poses to issue 33,320,850 and19,500,000 preference shares worth Rs10 each to SAPICO and BOK, respectively.

The leasing firm would issue one pref-erence share for every Rs 10 of debt financ-ing for a five year period with an option toconvert the preference shares into the or-dinary ones. To be issued, tentatively, onJuly 31, the preference shares would beconvertible if the lenders so will. The list-ing of the unlisted shares would also be op-tional for the lenders who may like to listthe same at time of conversion.

The move, however, requires theconsent of the company’s ordinary

shareholders, the front and apex regula-tors and the Board of Directors in theface of a resolution. The Board extraor-dinary General Meeting (eOGM) wouldbe held on the 31st of this month in thefederal capital Islamabad to discuss thetwo prominent agenda items. To facili-tate the issuance of preference shares,the SPLC propose to increase its author-ized capital from the current Rs 1 billion(divided into 100,000,000 ordinaryshares of Rs 10 each) to Rs 2 billion.

The capital would be doubled throughthe creation of some 100,000,000 prefer-ence shares each valuing Rs 10. “TheBoard of Directors has already approvedthe increase in authorized capital,” thecompany secretary said.

SPLC lacks funds to repayover Rs 528.208 million debts

Major Gainers

COMPANY OPEN HIGH LOW CLOSE CHANGE TURNOVER

Unilever Food 2687.18 2790.00 2687.18 2749.93 62.75 68Colgate Palmolive 1041.33 1093.39 1030.00 1072.17 30.84 566Mithchells Fruit 262.03 275.13 265.00 275.13 13.10 2,429UniLever Pak 7290.00 7325.00 7250.00 7302.50 12.50 313Siemens Pakistan 672.03 704.95 674.01 683.48 11.45 48

Major Losers

Nestle Pakistan Ltd. 4116.71 4100.00 4063.00 4080.78 -35.93 11Abbott Laboratories 125.93 125.00 120.01 121.82 -4.11 1,678Attock Refinery Ltd 127.30 127.50 124.61 125.07 -2.23 1,235,262IGI Insurance Ltd 65.71 65.50 63.25 64.27 -1.44 3,384National Refinery 242.45 242.97 240.06 241.09 -1.36 14,793

Volume Leaders

Jah.Sidd. Co. 13.51 14.44 13.55 14.24 0.73 13,497,822D.G.K.Cement 42.72 43.55 42.65 43.46 0.74 12,509,140Engro Foods Ltd. 67.93 71.32 67.31 70.78 2.85 9,827,701Bank Al-Falah 17.88 18.01 17.75 17.95 0.07 3,608,504Azgard Nine 6.55 6.97 6.50 6.83 0.28 3,448,618

Interbank RatesUS Dollar 94.0247UK Pound 146.1050Japanese Yen 1.1765euro 116.3743

Dollar EastBUY SELL

US Dollar 93.50 94.70Euro 114.12 115.85Great Britain Pound 143.99 146.13Japanese Yen 1.1607 1.1779Canadian Dollar 90.67 92.52Hong Kong Dollar 11.89 12.10UAE Dirham 25.32 25.67Saudi Riyal 24.83 25.14Australian Dollar 94.09 96.94

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