Author: Mrs. Anjum Shahnawaz

Weekly Review: lower COVID cases to boost investors confidence

KARACHI: The equity market likely to stay positive in the coming week owing to fall in corona cases during past couple of days.

Analysts at Arif Habib Limited said that the market to remain positive in the upcoming week.

With COVID-19 cases reducing on daily basis along with higher recovery rate we expect investor confidence to improve.

Given further inflow of funds, SBP’s foreign reserves are expected to swell up, which will stabilize Pak Rupee/USD parity.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.4x (2020) compared to Asia Pac regional average of 12.9x and while offering DY of 6.4 percent versus 2.8 percent offered by the region.

The market commenced on a positive note this week amid rally in OMC scrips due to rise in petroleum prices last week, followed by increase in international oil prices (leading to upward movement in E&P scrips).

Furthermore, approval of Federal Budget 2020-21 in National Assembly, monetary funding worth USD 500 million from World Bank and loan from Chinese Banks of USD 1.3 billion led to higher investor sentiment.

Moreover, inflation for June 2020 of 8.59 percent remained in line with expectations. Besides this, urea offtake surging to 76 percent MoM in June 2020 added fuel to the sentiment.

Additionally, foreign reserves of SBP jumped up to USD 11.23 billion given monetary funds from multilateral institutions last week, after which PKR/USD parity settled at PKR 166.21.

The market settled at 35,051 points, gaining 1,112 points (up by 3.3 percent) WoW.

Sector-wise positive contributions came from i) Commercial (176 point), ii) Cements (170 point), iii) Oil & Gas Exploration Companies (140 point), iv) Fertilizer (136 point) and v) Technology & Communication (85 point). However, sector-wise negative contribution came from i) Automobile Parts & Accessories (7 point) and ii) Textile Spinning (4 point). Scrip-wise positive contributions were led by LUCK (107 point), OGDC (81 point), MCB (72 point), TRG (59 point) and PSO (50 point).

Foreign selling continued this week clocking-in at USD 20.5mn compared to a net sell of USD 9.9mn last week. Selling was witnessed in Commercial Banks (USD 8.8 million) and E&P (USD 3.9 8.8 million). On the domestic front, major buying was reported by Insurance Companies (USD 17.5 8.8 million) and Companies (USD 9.6 8.8 million).

Average Volumes settled at 251 8.8 million shares (up by 42 percent WoW) while average value traded clocked-in at USD 51 8.8 million (up by 45 percent WoW).

July 4, 2020
K-Electric seeks stakeholders meeting to explain power generation

KARACHI: K-Electric, the power supply and generation utility, has requested Sindh governor for a meeting of stakeholders to discuss matters pertaining to power generation.
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July 4, 2020
FBR extends date for retail outlet integration up to August 31

ISLAMABAD: Federal Board of Revenue (FBR) on Friday extended date for retailers to integrate their Point of Sale (POS) up to August 31, 2020.

The last date for integrating the POS for Tier-1 retailers was June 30, 2020.

The FBR said that only those retailers can integrate their POS by August 31 who submit their intention to RTOs/LTUs by August 20, 2020.

FBR sources said that the decision had been taken due to lockdown in the many parts of the country in order to prevent spread of coronavirus the business activities had become stand still.

They said that big outlets and shopping plazas are observing closure during the lockdown and many of those big retailers would not able to make compliance.

The deadline was expired on December 15, 2019 which was given by the FBR to tier-1 retailers to integrate their POSs with the FBR online system. However, the date was extended in order to give opportunity to big retailers to make compliance.

All tier-1 retailers are required to integrate all their POSs with FBR’s computerized system.

Tier-1 retailer is defined in section 2(43A) of the Sales Tax Act, 1990, to be a person who falls in any of the following categories:

(a) a retailer operating as a unit of a national or international chain of stores;

(b) a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;

(c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees twelve hundred thousand;

(d) a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers; and

(e) a retailer, whose shop measures one thousand square feet in area or more.

July 4, 2020
Finance Act 2020: Commissioner empowered to cancel exemption certificate

ISLAMABAD: A commissioner of Inland Revenue has been authorized to cancel or modify exemption certificate issued automatically by online system IRIS.

Through Finance Act, 2020 amendment has been made to Section 153 of Income Tax Ordinance, 2001.

As per the amendment the commissioner of Inland Revenue of Federal Board of Revenue (FBR) is required to issue certificate to taxpayer within prescribed time frame. However, if application is filed by taxpayer and commissioner fails to take action than the IRIS will automatically issue certificate to the taxpayer.

However, the commissioner is empowered to modify or cancel the certificate on reasonable ground.

The amendment in this regard is as:

“Provided that the Commissioner shall issue certificate for payment under clause (a) of sub-section (1) without deduction of tax within fifteen days of filing of application to a public company listed on a registered stock exchange in Pakistan if advance tax liability has been discharged.

“Provided further that the Commissioner shall be deemed to have issued the exemption certificate upon the expiry of fifteen days to the aforesaid public listed company and the certificate shall be automatically processed and issued by Iris:

“Provided also that the Commissioner may modify or cancel the certificate issued automatically by IRIS on the basis of reasons to be recorded in writing after providing an opportunity of being heard.”

July 3, 2020
Customs to allow provisional release in ADD case

ISLAMABAD: The customs authorities shall allow provisional release of goods on bank guarantee where levy of anti-dumping duty (ADD) challenged in court of law.

Through Finance Act, 2020 applicable from July 01, 2020 amendment has been made in Anti-Dumping Duties Act, 2015.

As per the amendment: “ … where a competent court of law has stayed preliminary or final determination of anti dumping duly, goods shall be provisionally released against security in shape of bank guarantee or pay order of a scheduled bank along with indemnity bond equal to the amount of anti-dumping duty imposed on subject goods.

“In case preliminary or final determination is upheld by the court, duty shall be paid by the importer and security with the customs department shall be released otherwise the same shall be en-cashed to settle the duty liability.

“If the preliminary or final determination is set aside by the court, security shall be released, if not required for recovery of any outstanding previous liability.”

July 3, 2020
Stock market gains 73 points in narrow range trading

KARACHI: The stock market ended with 73 points on Friday after traded in narrow range trading.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 35,051 points as against 34,978 points showing an increase of 73 points.

Analysts at Arif Habib Limited said that the market traded in a narrow range today between -60 points and +127 points, closing the session +73 points.

Pharma sector stood out with SEARL, FEROZ traded at and near upper circuits. Engineering (Steel) sector also showed price gains, barring MUGHAL, which closed negative.

Banking sector showed mixed trend, but buying activity was observed in HBL, UBL and BAFL. Among Fertilizer sector, EFERT realized high volume with price gains. Cement, E&P and OMCs on the other hand saw profit booking and closed red.

Technology sector topped the volumes with 51.7 million shares, followed by Inv Banks (14.8 million) and Cement (13.8 million).

Among Scrips, TRG realized trading volume of 23.3 million shares, followed by JSCL (12.7 million) and HUMNL (9.1 million).

Sectors contributing to the performance include Pharma (+34 points), Banks (+32 points), Fertilizer (+28 points), Technology (+16 points), Cement (-33 points).

Volumes declined from 383 million shares to 175.8 million shares (-54 percent DoD). Average traded value also declined by 46 percent to reach US$ 40.6 million as against US$ 74.9 million.

Stocks that contributed significantly to the volumes include TRG, JSCL, HUMNL, WTL and PTC, which formed 35 percent of total volumes.

Stocks that contributed positively to the index include FFC (+24 points), SEARL (+23 points), TRG (+21 points), UBL (+21 points) and BAFL (+15 points). Stocks that contributed negatively include LUCK (-16 points), HUBC (-12 points), OGDC (-9 points), MCB (-8 points), and PSO (-7 points).

July 3, 2020
Rupee gains 68 paisas on improved foreign exchange reserves

KARACHI: The Pak Rupee gained 68 paisas against dollar on Friday after improvement in foreign exchange reserves of the country.

The rupee ended Rs166.21 to the dollar from previous day’s closing of Rs166.89 in interbank foreign exchange market.

Currency experts said that the lower demand for imports and inflows from international financial institutions helped the rupee to gain value.

The foreign exchange reserves of the country increased by $1.24 billion to $17.97 billion by week ended June 26, 2020, State Bank of Pakistan (SBP) said on Thursday.

The foreign exchange reserves of the country were at $16.73 billion by week ended June 19, 2020.

The official foreign exchange reserves of the SBP increased by $1.27 billion to $11.231 billion by week ended June 26, 2020. The official reserves of the central bank were at $9.961 billion a week ago.

The SBP said that during the week ended June 26, 2020, the central bank received around $2,046 million official inflows, including $737 million from World Bank, $503 million from Asian Development Bank, $500 million from Asian Infrastructure Investment Bank and $300 million as GOP loan disbursement from China.

After incorporating government external debt payments of $ 809 million, SBP reserves increased by $ 1,270 million to $ 11,231 million.

During the current week, SBP has received additional $1,000 million as GOP loan disbursement from China.

These funds will be part of SBP weekly reserves data as of July 03, 2020 to be released on July 09, 2020.

July 3, 2020
Trade deficit narrows by 27pc in 2019/2020

ISLAMABAD: Pakistan’s trade deficit narrowed by 27 percent to $23.18 billion in fiscal year 2019/2020 as against the deficit of $31.8 billion in the preceding fiscal year, Pakistan Bureau of Statistics (PBS) said on Friday.

The import bill of the country significantly declined by 18.61 percent to $44.57 billion during July – June 2019/2020 as compared with $54.76 billion in the same period of the preceding year.

The exports also fell by 6.84 percent to $21.38 billion in the fiscal year 2019/2020 as compared with $22.95 billion in the preceding fiscal year.

The fall in import bill and export receipts may be attributed to COVID-19 which adversely affected the international trade and lower forecast the global economic growth.

July 3, 2020
Meezan Bank’s Shariah Board approves guidelines for COVID related refinance schemes

KARACHI: Meezan Bank’s Shariah Supervisory Board (SSB) has approved guidelines for COVID-19 related refinance schemes intended to provide relief to businesses and individuals during these challenging times.

In the 47th meeting of Meezan Bank’s Shariah Supervisory Board (SSB) was recently held as an online event, with the goal of preventing contagion and staying consistent with the recommendations of global and local health authorities and the Government.

This was the first Shariah Supervisory Board meeting conducted completely online where members from across different countries participated via video conferencing.

The meeting was chaired by Justice (Retd.) Mufti Muhammad Taqi Usmani and was attended by Dr. Muhammad Imran Ashraf Usmani, Sheikh Esam Mohamed Ishaq (Bahrain) along with other members of the SSB.

Meezan Bank’s Founding President and CEO – Irfan Siddiqui, Deputy CEO – Ariful Islam and senior management of the Bank were also present at the meeting.

In view of the current situation and the outlook for the coming months, the Bank’s SSB has approved guidelines for COVID-19 related re-finance schemes intended to provide relief to businesses and individuals during these challenging times.

The Board reviewed several key issues including policies adopted by the Bank as well as the corresponding contingency plans ensuring that the Bank continues to serve its customers normally despite the challenges faced due to COVID-19.

Products and structures for providing relief to customers were also discussed in detail after which the SSB approved a comprehensive set of guidelines to ensure that SMEs get adequate support to mitigate the impact of the pandemic on their activities.

The SSB also approved Smart Remittance Account that will enable Overseas Pakistanis to apply for bank accounts online either in PKR or USD currency from anywhere outside Pakistan.

This account will permit Overseas Pakistanis to remit money either in PKR or USD and to invest in Shariah-compliant alternative of “Overseas Pakistanis Saving Scheme” announced by Government of Pakistan (GoP).

Furthermore, the structure for the re-opening of GoP Ijarah Sukuk was also approved by the Board, making it the first time that a re-opening mechanism will be introduced in any Sukuk issued in Pakistan. The re-opening of Sukuk is expected to bring depth in the Pakistani Sukuk market.

The SSB appreciated the Bank’s ‘Work from Home’ policy amid the COVID-19 crisis; which has been adopted to protect the wellbeing of its employees, customers and stakeholders and expressed its overall satisfaction on the Shariah compliance environment and operations of the Bank.

July 3, 2020
Competition Commission approves 59 mergers, acquisitions in 2019/2020

ISLAMABAD: The Competition Commission of Pakistan (CCP) has processed and granted approval to 59 merger and acquisition applications during fiscal year 2019-2020, against the annual target of 50, showing the CCP’s promising performance to facilitate the local and foreign investors despite the limitations caused by COVID-19 pandemic.

A statement issued on Thursday out of the total 59 approvals, 51 were acquisitions, 5 mergers and 3 joint ventures applications.

The major sectors where these mergers and acquisitions took place include automotive, household products, food, sugar, oil, power, freight, LNG, insurance, agriculture, coal mining, logistics, pharmaceutical, chemicals, petroleum, healthcare, leasing, plastics, textile, hospitality, financial services, digital payments, mobile phone, investment, IT-Hardware, wind power, and microfinance banking.

Moreover, the CCP also processed and granted Exemptions to 43 undertakings under the Section 5 of Competition Act, 2010.

CCP grants exemptions to notified agreements between companies from the prohibition of Section 4 of the Competition Act, on the basis of an individual assessment.

Restrictive agreements qualify for exemption if their benefits to general welfare (product improvement, technical or economic progress, benefits to consumer) outweigh their restrictive effects on competition.

During the outgoing fiscal year, the CCP complete 14 inquiries, issued 78 Show cause notices, and passed 15 orders. An important enquiry was concluded In the matter of alleged bid rigging in the tenders issued by Power Distributions companies for the procurement of Line Hardware material.

Similarly, the CCP issued to the Pakistan Sugar Mills Association and its member sugar mills in 2009 for cartelization.

These sugar mills had not challenged the CCP’s show cause notices, but legal action had not been started against them in the past.

Even in the challenging time of COVID-19 pandemic, the CCP ensured its smooth functioning by extending facilitation to the stakeholders. An Online Merger and Acquisition Application filing system was launched to facilitate the local and foreign investors in filing merger applications online.

Furthermore, to ensure health and safety of the respondents amid COVID-19, the parties have been allowed to respond the show-cause notices issued to them in the hearings using video conference and other online tools.

An online application for granting exemptions has also been prepared and will be launched soon.

The CCP issued a Policy Note to the Securities & Exchange Commission of Pakistan (SECP) asking for an immediate reinstatement of the cost audit of companies (particularly Cement, Sugar, Vegetable Ghee/Cooking Oil, Fertilizers, and Wheat flour companies), so that credible and verified cost information is available to assist in factual (rather than speculative) policy making.

In order to curb the bid rigging in tenders and public procurements, the CCP has prepared an in-house IT-based Bid Rigging Analysis and Detection (BRAD) system to help detect signs of collusion in the bidding process.

On the legal front, the Islamabad and Lahore High Courts have resumed hearings in the cases wherein the CCP’s constitutionality has been challenged by the undertakings. The government, through the Attorney General of Pakistan, has been extending full support to the CCP in resolving the pending issues.

Certain other recent initiative include initiation of online webinars to help educate the business and consumers around Competition Law; launch of draft study on the Competition Concerns in the LPG Sector; and working on the State of Competition report after a pause of 10 years.

July 3, 2020