Business News
Wednesday, June 08, 2011 21:05
- Petrol shortage irks Karachiites
Replying to the question, he said that petrol pump owners across the country would go on strike if their profit would not be increased.
- KSE-100 index gains 52.30 points
In the money market, overnight rates ended at 12.75 percent, lower than Tuesday''s close of 13.0-13.5 percent, dealers said.
- OMCs directed to ensure supply of petrol to market
- Attock Refinery Limited (ARL) will repair the damaged plat former sooner than planned in mid July.
- Asian markets down after gloomy Bernanke speech
- Dollar falls against yen after Bernanke''s remarks
- Oil mixed in Asia ahead of OPEC meeting
Consumer nations have called on OPEC to pump more crude amid concerns that current high oil prices -- with Brent oil holding stubbornly above $100 per barrel -- could derail the fragile global economic recovery. (AFP)
- Share prices at KSE gain on fresh buying
government did not remove a capital gains tax on individual investments. (Reuters)
- SED abolished, but wait until July for relief
- Dollar firms against yen
- Asian markets mostly lower as US fears persist
Stock market awaits MSCI review on 21st
KARACHI, June 8: Never mind the 50-odd points gain/loss in a day’s trading at the Karachi Stock Exchange. Just a single heavyweight stock could make the end deceptive for one who relies solely on the KSE-100 index.
On Wednesday, for instance, the index showed a gain of 52.30 points, but with the OGDC stock up by Rs2.29, almost 40 points were contributed alone by the oil and gas sector giant.
With volumes generally thin, there is scarcely an excitement in trading. But analyst pin their hopes on the upcoming Morgan Stanley Capital International World Index (MSCI) Annual Classification Review on June 21, which they believe could prove a catalyst of sorts.
With the budget for financial year 2011-12 a non-event (mainly due to silence on the GST issue); the proposals regarding relaxation of margins on the leverage product-Margin Trading System (MTS) still awaited and the summer results season almost a month away, analysts also see foreign portfolio flows to step yet again in the limelight in terms of influencing the
market. Overseas fund managers rely heavily on the MSCI index in deciding allocation of funds to different country markets.
In a report released on Wednesday, analyst at KASB Securities, Imtiaz Gadar, expected MSCI Annual Review to be a potential trigger in slow times.
He noted that there were slim chances of the Pakistan review for upgrade to MSCI Emerging Market (EM) but potential upgrade of UAE and/or Qatar should be positive for KSE.
The analyst stated that while yielding one per cent weightage gains for Pakistan in MSCI Frontier Market (FM), dilution of Middle East North Africa (MENA) weight in MSCI FM should yield benefits for all non-MENA markets, including Pakistan.
Four MSCI Country Indices were currently included on the review list: MSCI Korea and MSCI Taiwan Indices for potential reclassification to Developed Markets and MSCI Qatar and
Stock market awaits MSCI review on 21st the MSCI United Arab Emirates Indices for a reclassification to Emerging Markets.
”From KSE’s vantage point, two developments will be worth tracking: one, whether KSE is put up for review for upgrade to EM for 2012 and two, to watch if Qatar and/or UAE are upgraded to Emerging Markets,” says Gadar.
Upgrade of either would lead to weight gains for Pak in MSCI FM and dilute MENA.
If UAE and Qatar migrate to Emerging Markets, it could lead to weightage gains for Pakistan in MSCI Frontier Market.
These markets carry 9.0pc and 12.7pc weight respectively in MSCI FM.
In addition, dilution of MENA weight in MSCI FM is also a positive for non-MENA markets, like Pakistan, as it increases visibility, says the analyst, adding that the timeline for implementation, however, could be somewhat drawn out, where an upgrade for UAE and Qatar would likely be implemented in May 2012.
Sentiments, however, could receive a short term boost.
The chances for Pakistan being put on consideration list for an upgrade to Emerging Market (EM) were thought to be low for now, though the market meets the market capitalisation criteria for MSCI EM with three stocks i.e. OGDC, MCB & FFC having required free float market capitalisation (i.e. US$438mn).
However, decline in KSE volumes over last couple of years was likely to be a dampener for Pak prospects.
While KSE traded $364million per day in 12 months preceding the ‘floor’ of Aug–Dec 08, it has traded $66 million per day since the removal of the floor. Just to recall, Pakistan was excluded from MSCI indices after the floor and reinstated among the Frontier Markets in May 2009.
Minimum capital requirement: 50pc banks in trouble: SBP
KARACHI, June 8: Many banks are failing to meet the Minimum Capital Requirement (MCR) set by the State Bank as number of failing banks has reached nearly half of the total banks.
The State Bank in its recently issued performance review of the banking system revealed that 19 banks were facing failure to meet the MCR, reflecting the poor status of small and medium banks.
For the last couple of years, at least 10 banks kept struggling to meet the MCR, but failed and were solely dependent on State Bank`s favour as it has been extending deadline to meet the MCR.
“Data for paid-up capital of the banks (free of losses) reveals that 15 banks were falling short of MCR of Rs6 billion during the last quarter 2010,” said the SBP report.
“With MCR of Rs7 billion from Dec 31, 2010, 19 banks fell short of the enhanced MCR,” the report added.
Small and medium size bankers say the prevailing banking scenario is bleak for them as few banks have absolute monopoly and not leaving enough space for them to survive.
Due to global financial crisis local banks did not find investors or buyers from abroad which further weakened their financial health.
The State Bank has been asking them to improve MCR or go for merger of complete sell-out, but it did not take any action against them despite their failure regarding MCR, probably considering the global financial crisis and poor financial health of the country.
The Central Bank also mentioned that many banks were struggling to meet growing MCR because of deterioration in asset quality since 2008, coupled with the lack of interest by foreign shareholders.
Much of the improvement in tier-1 capital of the banking system was due to increase in the build-up of un-appropriated profits and accumulation in the stock of the general and statutory reserves in the wake of enhanced MCR requirements set by the SBP.While public sector banks and foreign banks witnessed deterioration in tier-1 capital, only large private banks (mainly big-5, NBP, HBL, UBL, MCB Bank and ABL) could improve their position.
The SBP report said the public sector banks witnessed deterioration in their tier-1 capital level on account of higher provisioning and accumulated losses. In case of foreign banks, their capital position deteriorated (by Rs2.3 billion) due to merger of Albaraka Bank with EGIBL (Emirates Global Islamic Bank Limited).
“On the other hand, large private banks witnessed improvement in their tier-1 capital by 5.4 per cent on account of higher un-appropriated profit,” said the SBP.
The Top 5 banks, with 51 per cent share in total asset of the banking system, contributed towards 95 per cent of the total pre-tax profits of the industry
Of the remaining 35 banks, 17 booked net losses and the remaining 18 contributed only 5 per cent in the total earnings.
In terms of the key profitability indicators, the top 5 banks exhibited the highest ROA (return on assets) and ROE (return on equity) ratios followed by the next tier of banks i.e. top 6-10 banks.
French firms asked to buy OGDC bonds
ISLAMABAD, June 8: The Privatisation Commission has offered French business groups to participate in the upcoming monetising of up to 10 per cent of government shareholding in Oil & Gas Development Company (OGDC) through exchangeable bonds.
The offer was communicated by Federal Minister for Privatisation Ghous Bux Mahar to the French Ambassador in Islamabad Daniel Jouanneau on Wednesday, while assuring that the transaction is backed by the sovereign guarantee of the government.
There exists huge potential for French companies to participate in the privatisation process of power generation, distribution companies and other entities, the minister said.
He underlined the need for exchange of business delegations of both the countries to create a better understanding of
investment opportunities in different sectors.
The real potential for doing business in Pakistan could only be projected through interaction with the French groups, he added.
SECP acts against violators
ISLAMABAD, June 8: In order to foster a transparent and efficient securities market and to safeguard the investors’ interest, the Securities and Exchange Commission of Pakistan (SECP) took enforcement actions and penalised the market participants for grave violations of fair market practices in May, 2011.
An order was issued against the CEO of an insurance company and penalty was imposed on him for insider trading in the shares of a listed company.
Moreover, orders were issued against two members of the Karachi Stock Exchange, Intermarket Securities Ltd and Pearl Capital Management Ltd for non-compliance of securities laws.
The SECP also issued 21 warning letters to the directors and beneficial owners of 13 listed companies for late filing of returns under section 222 of the 1984 Companies Ordinance.
In addition, 19 show-cause notices were served on the directors and beneficial owners of seven listed companies for non-compliance with 224 (2) of the Companies Ordinance.
The SECP granted approval to various futures contracts to be traded at the Pakistan Mercantile Exchange Limited (PMEX).
The SECP has said that launch of these futures contracts is expected to contribute positively towards broadening the investor base.
In order to promote activities in the debt market, approval was granted to issue, circulate and publish prospectus for issue of term finance certificates of Rs2,000 million (with a green shoe option of an additional Rs1,000 million) to the public by Engro Corporation Limited.
A total of 21 complaints pertaining to investors and companies were resolved by the SECP during the month of May, 2011.
US jurors mull verdict in Mumbai attacks case
CHICAGO: US jurors began deliberations Wednesday in the case of a Pakistan-born Chicago businessman accused of helping to plot the deadly 2008 Mumbai attacks.
Tahawwur Hussain Rana's trial is being closely watched..
Rana, a 50-year-old Canadian citizen, is charged with providing material support to terrorists by acting as a messenger and providing a cover for a key figure in the 60-hour siege of India's largest city in which 166 people died.
Prosecutors presented coded emails and a lengthy conversation, taped by the FBI, between Rana and confessed Mumbai conspirator, David Coleman Headley, as evidence of his involvement and support for the attacks and a second plot on a Danish newspaper.
Headley, Rana's old friend from military school in Pakistan, has been cooperating with prosecutors since his 2009 arrest at a Chicago airport and was the star witness during the trial.
When it emerged that bin Laden had hidden for years in a Pakistani garrison town before being shot on May 2 in a raid by US Navy Seals, serious questions were raised about the possible collusion of Pakistan's military.
Rana lawyers insisted he is a pacifist who was "duped" into letting his old friend use his immigration services company as a cover for his scouting missions to India and Denmark.
He faces a maximum of life in prison if convicted of one count of providing material support to terrorism in the Mumbai attack or the charge of providing material support to the banned militant group Lashkar-e-Taiba (LeT).
Mohammed Saleem Mansoori
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