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Weekly Review: market likely to stay range bound due to Ramazan

KARACHI: The trading activities in the stock market likely to stay range bound during next week due to commencement of the holy month of Ramazan.

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

With commencement of the month of Ramazan, volumes may dry down. While extension in lockdown by the Federal government to contain the spread of Corona may also build pressure on businesses and keep sentiment at the index lackluster.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.9x (2020) compared to Asia Pac regional average of 10.2x and while offering DY of around 8.5 percent versus around 3.1 percent offered by the region.

The market commenced on a positive note, continuing the unpreceded rally witnessed on last Friday over SBP’s surprise rate cut of 200bps.

Albeit, the euphoria was short lived with investors parring earlier gains as banks felt the heat of compression in NIMs while oil scrips tanked with international oil prices.

The local bourse displayed a mixed trend for the remainder of the week. Initially leveraged stocks gained traction (cements and steel; amid rate cut and news of potential price hikes) but market participants resorted to profit-taking by week-end as results disappointed.

Whereas sentiment of the banking sector was eroded with the State Bank barring banks from declaring dividends in the March and June quarter of the ongoing year so as to conserve capital.

Albeit, large banks posted gains the following day on clarity regarding disbursement provision in case of board approved dividends for the outgoing quarter. With that said, the KSE-100 closed at 32,806 points (down by 0.08 percent / 25 points WoW).

Sector-wise negative contributions came from i) Oil & gas exploration companies (-48.6 points), ii) Power generation and distribution (-43.8 points), and iii) Commercial banks (-43.5 points).

While positive contributions were led by i) Cement (128.2 points), ii) Fertilizer (63.9 points), and iii) Automobile assemblers (34.0 points).

Foreign offloading during the week arrived at USD 2.5 million compared to a net sell of USD 14.2 million last week. Selling was witnessed in Fertilizer (USD 4.8 million) and Banks (USD 4.1 million).

On the domestic front, major selling was reported by Individuals (USD 11.7 million) and Broker Proprietary (USD 4.7 million). Average Volumes settled at 261 million shares (up by 46.3 percent WoW) while average value traded clocked-in at USD 71 million (up by 88.5 percent WoW).

April 25, 2020
FBR issues procedure for safe transportation of ISAF cargo

ISLAMABAD: Federal Board of Revenue (FBR) has issued procedure for movement of International Security Assistant Force (ISAF) cargo under Pakistan Customs Container Security System (PCCSS).

The FBR through a notification dated April 17, 2020 said that the procedure as followed for the transshipment cargo shall be applicable for sealing and de-sealing of ISAF cargo with the following modification:

(i) The containers will be sealed with customs machine readable seal at Karachi by PCCSS after representative of ISAF has inspected, verified and confirmed that the Bill of Lading (B/L) seal/ other seal are intact. Sealing will be done in presence of authorized agent.

(ii) The routes shall be specified by the PCCSS, and any different route or time taken en route will be informed to incharge PCCSS by the ISAF representative.

(iii) The private companies authorized by the FBR to carry ISAF cargo in addition to National Logistic Cell (NLC) will have their transport units registered with PCCSS and the Directorate of Transit Trade, Karachi, or as specifically allowed by Incharge PCCSS on, a case to case basis.

(iv) The unloading from Pakistani Transport Unit and loading on Afghan Transport Unit/authorized units will be done at Peshawar/Quetta dry port. In case unloading is done at the respective terminals of the private carriers, the Incharge PCCSS FP Peshawar/Quetta will coordinate with the FP, carriers and ISAF officials and depute PCCSS staff of these terminals for checking of seals. Officials of ISAF/American Consulate will check their own seals and may affix another seal of their own for their checking at Beghrem Base.

(v) The PCCSS FP Peshawar/Quetta will check the Customs seal as well as other seals and unless a discrepancy is noted, allow the change of transport after noting the number of Second Transport of the Form A. The staff on return to PCCSS Focal Point will enter the verification of the seal in the computer.

(vi) The PCCSS seals will be removed at Focal Point Exit Torkham/Chaman, scanned by the bar code reader and stored in the disposal receptacle.

(vii) Returning containers from Afghanistan will be sealed at Torkham/Chaman only if not empty, as per procedure adopted for ISAF at Karachi for container bound for Afghanistan. Empty containers will not be sealed.

Goods not to be sealed: All containerized cargo which is transshipped, in transit or for export is to be sealed. However, in case of large machinery and awkward loads wherein the seals cannot be applied, the decision will be taken by Incharge Focal Point based on the level of risk in transshipment of such cargo. The Incharge Focal Points will also decided if photographs are to be taken and sent to Incharge PCCSS. In such case the Form A will not carry a seal number, but will mention reasons for not sealing the cargo and whether a photograph of the load/cargo has been sent by e-mail.

April 25, 2020
SBP advises banks to register security interest under STA

KARACHI: State Bank of Pakistan (SBP) on Friday advised banks, microfinance banks and development financial institutions (DFIs) to register their security interest under secured transaction laws.

The SBP in a circular said that with a view to provide for registration of charge on security/collateral offered by un-incorporated entities including sole proprietorships and partnerships and thereby enhancing their access to finance, The Financial Institutions (Secured Transactions) Act, 2016 (STA) was promulgated on July 1, 2016.

The government has authorized the Securities and Exchange Commission of Pakistan (SECP) to operate Secured Transactions Registry (STR) to record statements in relation to security interests created by entities under STA. SECP is going to launch the Secured Transactions Registry (STR) under the STA on April 27, 2020 for registration of security interests on movable assets of entities, other than companies.

In view of the above, all the banks, microfinance banks and DFIs are advised to register their security interests against movable assets of entities for future as well as prior security interests (i.e. security interests created before the operationalization of the STR as provided under section 73 of the STA) in the STR.

The security interest has been defined as: “a right, title, encumbrance or interest of any kind upon movable property created or provided for by a security agreement in relation to a transaction that in substance secures the payment or performance of a customer’s obligation under a finance without regard to the form of the transaction or the terminology used by the parties or the identity of the person who title to the movable property, and includes any charge, mortgage, hypothecation, fixed charge, floating charge, assignment, lien, pledge, assignment of receivable by way of security and transactions under which a secured creditor retains title such as a finance lease, hire purchase agreement, sale and lease back arrangement, conditional sale agreement and retention of title arrangement, having similar effect.”

April 25, 2020
IMF, WTO call for lifting restriction on medical supplies

KARACHI: Kristalina Georgieva, Manaing Director, International Monetary Fund (IMF) and Roberto Azevêdo, Director General, World Trade Organization on Friday jointly called for governments to refrain from imposing export and other trade restrictions on key medical supplies and food and to quickly lift those put in place since the start of the year.

Statements issued by IMF and WTO and received here said that as our members grapple with their response to the global health and economic crisis, we call for more attention to the role of open trade policies in defeating the virus, restoring jobs, and reinvigorating economic growth.

In particular, we are concerned by supply disruptions from the growing use of export restrictions and other actions that limit trade of key medical supplies and food.

Trade has made cutting-edge medical products available throughout the world at competitive prices. Last year global imports of crucial goods needed in the fight against COVID-19, such as face masks and gloves, hand soap and sanitizer, protective gear, oxygen masks, ventilators, and pulse oximeters, totalled nearly $300 billion.

Recognizing the importance of this trade, governments have taken dozens of measures to facilitate imports of COVID-related medical products—cutting import duties, curbing customs-clearance processes, and streamlining licensing and approval requirements.

The world bodies said they welcomed these actions.

Accelerating imports of critical medical supplies translates into saving lives and livelihoods. Similar attention should be paid to facilitating exports of key items like drugs, protective gear, and ventilators.

Anticipating governments’ need to address domestic crises, WTO rules allow for temporary export restrictions “applied to prevent or relieve critical shortages” in the exporting country.

We urge governments to exercise caution when implementing such measures in the present circumstances.

Taken collectively, export restrictions can be dangerously counterproductive. What makes sense in an isolated emergency can be severely damaging in a global crisis. Such measures disrupt supply chains, depress production, and misdirect scarce, critical products and workers away from where they are most needed. Other governments counter with their own restrictions.

The result is to prolong and exacerbate the health and economic crisis—with the most serious effects likely on the poorer and more vulnerable countries.

To ramp up the production of medical supplies, it is essential to build on existing cross-border production and distribution networks.

Both the bodies are concerned by the decline in the supply of trade finance. Adequate trade finance is important to ensure that imports of food and essential medical equipment reach the economies where they are most needed.

Our institutions are tracking developments and engaging with key suppliers of trade finance.

In addition to restrictions on medical goods, curbs on some food items are starting to appear, despite strong supply. The experience in the global financial crisis showed that food export restrictions multiply rapidly across countries and lead to ever greater uncertainties and price increases. We are also concerned that if critical agricultural workers are not able to move to where the harvest is, crops could rot in the fields. Where new cropping seasons are starting, planting could be hampered, lowering both domestic and international supplies and increasing food insecurity. We urge governments to address these challenges in a safe and proportionate manner.

Amid the unfolding global financial crisis, global economic leaders in 2008 jointly committed to refrain for a year from new import, export, and investment restrictions.

This pledge helped to avoid widespread trade restrictions that would have worsened the crisis and delayed recovery—just as trade restrictions deepened and prolonged the Great Depression of the 1930’s.

A similarly bold step is needed today. We call on governments to refrain from imposing or intensifying export and other trade restrictions and to work to promptly remove those put in place since the start of the year. The WTO and the G20 offer two forums for global policy coordination on these important matters.

History has taught us that keeping markets open helps everyone – especially the world’s poorest people. Let’s act on the lessons we have learned.

April 24, 2020
Engro signs pact with Bill & Melinda Gates Foundation to support poverty alleviation in Pakistan

KARACHI: Engro Foundation has signed a three-year agreement with the Bill & Melinda Gates Foundation to promote the well-being of vulnerable and marginalized segments of the society in Pakistan.
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April 24, 2020
Telenor, Ufone awarded next generation broadband SDP contracts

ISLAMABAD: Mobile phone operators Telenor and PMTL (Ufone) have been awarded contracts for Next Generation Broadband for Sustainable Development Projects (SDP) worth Rs729 million in total.

The 70th Board of Directors meeting of Universal Service Fund (USF) granted the approval on Friday. The meeting was chaired by Federal Secretary Ministry of IT and Telecommunication Shoaib Ahmad Siddiqui. Chairman Pakistan Telecom Authority (PTA) Maj. Gen (R) Amir Azeem Bajwa was also present in the meeting.

Telenor is being awarded the contract of Muzaffargarh Lot and Small Lot I-1 (district: Islamabad) while PTML (Ufone) is being awarded the contract of Small Lot P-4 (Bhakkar, Khushab, Jhang and Mianwali).

During the meeting, Secretary IT was apprised about the advances in USF projects. The Hi-speed Broadband services in Mazaffargarh lot will benefit an unserved population of around 2 million thereby covering 666 unserved muazas and an approximate unserved area of 14,195 sq. km.

Muzaffargarh Lot encompasses Muzaffargarh and Ranjanpur districts.

Similarly, an unserved population of 9,083 will gain advantage from Hi-speed Broadband services in Small Lot I-1 that covers Islamabad district with 12 unserved mauzas.

Likewise, the Hi-speed Broadband services in Small Lot P-4 will benefit an unserved population of 86,968 thereby covering 11 unserved muazas and an approximate unserved area of 277 sq. km. Small Lot P-4 encompasses Bhakkar, Khushab, Jhang and Mianwali districts.

The Secretary IT, Shoaib Ahmad Siddiqui emphasized on the growing need for connectivity amid the spread of coronavirus to support the people of Pakistan. He said that the use of ICT in rural areas during the pandemic will help the remote public to access government facilities that are available.

He also laid stress on the significant role of ICT in far-flung areas in each step of fighting the COVID-19 as some people are unable to get the information or services required. In addition, he also asserted that these projects will help the communities to start or run a modern business, access telemedicine or take an online class in these difficult times.

Furthermore, The Federal Secretary stated that the Ministry of IT and Telecom is making every effort to bridge the digital divide under the vision of Digital Pakistan as the economy heavily relies on the internet to minimize the disruption caused by the lockdown.

Moreover, the members of the Board reiterated their full support to tackle the COVID-19 battle by ensuring to make progress in implementation of current and future projects of USF.

The Board sincerely thanked the Secretary IT for providing direction and knowledge to achieve USF goals. Other board members including Shabahat Ali Shah, Executive Director, NITB; Irfan Wahab, CEO-Telenor Cluster Head for Emerging Asia and Nominee of Mobile Cellular Operators; Imran Akhtar Shah, VP for Government Sales, Super Net Pvt Ltd and Nominee of Data Licensees; Rashid Khan, CEO PTCL and Nominee of Fixed Line Operators; Kaukab Iqbal, Chairman, Consumer Association of Pakistan and Nominee of Consumer Group and management of USF Co. also attended the meeting.

April 24, 2020
PIA slashes UAE fares up to 30 percent for providing relief to stranded Pakistanis

ISLAMABAD: Pakistan International Airline (PIA) has slashed fares of its special flights up to 30 percent in order to provide relief to stranded Pakistanis in United Arab Emirates (UAE) due to coronavirus pandemic.
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April 24, 2020
Stock market ends down 44 points in narrow range trading

KARACHI: The stock market ended down by 44 points on Friday as market traded in a narrow range on the last day of the week.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 32,806 points as against 32,850 points showing a decline of 44 points.

Analysts at Arif Habib Limited said that the market traded in a narrow range on the last day of rollover week.

The benchmark index oscillated between -111 points and +218 points and closed the session -44 points.

Pre-open session saw announcement of financial results of OGDC, LUCK and MLCF as key triggers for the Cement and E&P sectors.

OGDC skipped the dividend payment, which disappointed some investors, but high oil prices still kept the interest alive.

Similarly, MLCF and LUCK posted poorer than expected results, which reflected on the prices of both the stocks earlier in the session, however, stock prices recovered to some extent.

By the close of session, Cement sector stocks closed red, as did Engineering, O&GMCs, Refineries and Fertilizer.

HBL and UBL (among Banks) managed to post some price gains, whereas E&P sector also closed green.

Cement sector realized trading volumes of 30 million shares, followed by O&GMCs (16.9 million) and Power (15.7 million). Among scrips, HASCOL led the table with 14.3 million shares, followed by MLCF (14.2 million) and KAPCO (11.9 million).

Sectors contributing to the performance include E&P (+29 points), Power (+20 points), Technology (+12 points), Tobacco (-27 points), O&GMCs (-26 points), Cement (-22 points) and Inv Banks (-13 points).

Volumes declined from 204.3 million shares to 120.2 million. Average traded value also declined by 48 percent to reach US$ 30.5 million as against US$ 58.8 million.

Stocks that contributed significantly to the volumes include HASCOL, MLCF, KAPCO, UNITY and PPL, which formed 44 percent of total volumes.

Stocks that contributed positively to the index include FFC (+26 points), HUBC (+19 points), SYS (+16 points), UBL (+11 points) and MARI (+11 points).

Stocks that contributed negatively include EFERT (-16 points), PAKT (-16 points), PSO (-15 points), DAWH (-14 points), and PMPK (-11 points).

April 24, 2020
Profit rate on saving schemes reduced up to 300 basis points

ISLAMABAD: The government on Friday reduced profit rate up to 300 basis points on saving schemes following major cut in policy rate by State Bank of Pakistan (SBP).

The revised rate of profit on various saving scheme will be applicable on April 24, 2020.

The SBP has reduced the policy rate to 9 percent after revising downward the rate by 4.25 in three announcements in one month period.

Profit rate on Defence Certificate cut by 1.86 percent to 8.54 percent.

Profit rates on Behbood and Pension certificates cut by 1.92 percent to 10.32 percent.

Profit rate on Savings account cut by 1.60 percent to 7 percent.

Profit rate on Special Savings cut by 3 percent to 8 percent.

And, profit rate on Regular Income certificate cut by 2.28 percent to 8.28 percent.

April 24, 2020
Rupee falls by 50 paisas after four straight-day gain

KARACHI: The Pak Rupee recorded 50 paisas decline against dollar on Friday after maintaining appreciation for four straight days.

The rupee ended Rs160.48 to the dollar from previous day’s closing of Rs159.98 in interbank foreign exchange market.

The rupee eased against dollar this week for the first time. The rupee started the week with gain to Rs163.49 on April 20, 2020 from Rs163.58 on Friday April 17, 2020.

Currency experts said that the rupee fell due to advance buying on the back of weekly holidays and closure of banks’ public dealing on April 27 due to deduction of Zakat.

They said that local currency would gain in coming trading days due to fall in international oil prices and improved external accounts.

They said that that improved foreign direct investment and shrinking current account deficit helped the local currency to make gain.

The inflow of Foreign Direct Investment (FDI) into Pakistan has witnessed sharp growth of 137 percent during first nine months (July – March) 2019-2020.

The FDI increased to $2.15 billion during first nine months of current fiscal year as compared with $905 million in the corresponding period of the last fiscal year.

Current account deficit (CAD) has contracted by 73 percent during first nine months (July – March) 2019/2020 due to significant decline in import bill.

The current account deficit fell to $2.77 billion during first nine months of current fiscal year as compared with $10.28 billion in the corresponding period of the last fiscal year.

April 24, 2020