Friday, 16 December, 2011Pages: 7 profit.com.pk

Bears grip KSE as Euro crisis hitsregional stocks Page 4

kArAcHI

sTaFF REPORT

GiveN recent gas supplysituation in the country,the fertiliser sector hasproven to be the most

volatile sector at KSe. Despite gascurtailment, 2011 has been a fruitfulyear for the fertiliser sector in termsof profitability, particularly FFCwhich has outperformed the marketby 59 per cent YTD. However, withpersistent gas load shedding and theapproval of Gas infrastructureDevelopment Cess (GiDC) by theNational Assembly indicates toughtimes ahead for the fertiliser sector.This is also highlighted from the priceperformances of eNGrO, FFBL andFFC off late down 51 per cent, 25 percent and 22 per cent from theirrespective peak levels during 2011.The question that arises is whether therecent price meltdown has fully pricedin the negatives or not? We believe theimplementation of GiDC and theequalisation tax to pose downsiderisks for FFC, said Naveed Tehsin at

JS, adding that currently our fair valuefor FFC is rs208, however, werecommend cautious stance on it dueto the uncertainties that may hurt FFCearnings moving forward.GIDC: The InCremenTalCosT pass-ThrouGh:According to some sources, onaccount of GiDC the government hasdecided to increase fertiliserfeedstock gas prices by 193 per centto rs299 per mmbtu from rs102 permmbtu. The incremental cost impactof GiDC and the extent that ureamanufacturers are able to pass itthrough to end consumers hasemerged as a key question. GiDC islikely to impact old urea plants only,while eNGrO’s enven and Fatimaare expected to get feedstock gassupplies at their previous subsidisedrate because of their agreement withthe government. Therefore,incremental cost impact on eNGrOdue to GiDC will be 50 per centcompared to FFC. FFC so far hasbeen a major gainer of urea pricehikes by eNGrO. However, in thissituation we believe eNGrO will

only raise urea prices to cover itsincremental cost impact, he added.Whereas, FFC can see taking a brunton its earnings as the company willonly be able to pass 50per cent of theincremental cost impact, because itwon’t be in a position to justify priceraise by itself. ‘Consequently, weforesee FFC’s 2012-14 earningsestimate will be revised downwardsby 15-17 per cent and its target pricewill drop down to rs192,’ he added.proposals To TaCkle ureaprICes: The uncertainty pertainingto the fertiliser sector doesn’t endhere. Due to uproar by the farmersamid higher urea prices, thegovernment is considering differentproposals to tackle with the urea priceissue. Amongst them, includes theshifting of engro’s enven plant fromSNGP network to SSGC andequalisation tax which plans to taxthose fertiliser producers facing lessergas curtailment. This measure is beingundertaken to compensate thosemanufacturers facing excessive gasshortages. Consequently, it may resultin urea prices to get under control.

These issues have caused uneasinessamongst investors and prompt themto rethink their investment case forFFC which managed to report recordlevel of 3Q2011 gross margin of 58 percent i.e. abnormal compared to itsaverage historical gross margin of 38per cent from CY05-09. resumptionof gas supply to eNGrO eitherthrough SSGC or any other mean onstable basis may further hurt FFC’searnings. Though at this point in timeit seems a distant probability keepingin mind gas has again beingsuspended by SNGP to enven plantdespite commitments from thegovernment, however, we can’t rule itout completely, he added.if that happens, eNGrO may have toreduce its urea prices due toregulatory pressures, followed byothers. To recall, urea manufacturershave increased urea prices worthrs460/bag (including GST) duringCY11. moreover, the equalisation taxif implemented will further dampenFFC’s earnings and won’t impacteNGrO’s earnings and it will bemaintained.

Apprehensions persist over fertiliser sector

The T-bill rejection SAkInA HuSAIn

iT just seems too hard to believethat the government isstraightening up! An analysis ofbid rejection in the latest auction

may be appear redundant to theobserver considering the miniscule(rs700 million) additional requirement,it nevertheless sends a strong signal; thegovernment chose to retire its debtrather than rolling it over! moreover, italso represents a one-off for thefinancial system which during theprevious and ongoing financial year hasbeen participating with up to threetimes the auction target. However, inthis particular instance (Dec-15), theamount offered stood at rs42.6 billionwhereas the target stood at rs100billion. Strain in the liquidity availablewithin the financial system is evidentthrough the rising KiBOr, currently at11.98 per cent up from 11.90 per centbeginning of Nov-11. However, SBPchose to mop up liquidity (rs22.5billion) in the latest OmO conducted onDec-14, running counter to the liquiditystress argument as a mop-up makessense only if there is excess. And most probably there is! Thegovernment has been exceeding itsborrowing limit, rs1,150 billion from theSBP since Oct-11. As of 2nd Dec, thegovernment borrowing stock stood atrs1,257 billion which implies that rs107billion have been printed in excess tillthe said date. Thus, one explanation ofthe strained liquidity can be that theexcess money printed for catering to thegovernment has not found its way backinto the financial system. A second and much spicier argument canbe collusive behaviour amongsttreasuries at banks. The much lower thantarget offer may have been placed toobtain absolute acceptance at higherrates in comparison to the last auctionheld a fortnight ago. The cut-off rates inthe last auction (30th Nov) stood at 11.78per cent, 11.81 per cent and 11.88 percent of 3-month, 6-month and 12-monthBills respectively. However, the latest bidpattern shows that the range of yields forstood between 11.78-11.90 per cent,11.85-11.92 per cent and 11.95-11.99 percent for 3m, 6m and 12m T-Billsrespectively, with higher denominationsoffered towards the higher end of theseranges across the board. And thus thewrath of the sovereign was ignitedresulting in the rejection of all. This maymark a watershed in the relationshipbetween the government and primarydealers which were previously veryhappily engaged through the alignmentof their interests because there was oh somuch risk in the economy. And mostlikely, the government has acquired astronger bargaining hand because of theturn of its tax collection fate which haskept the deficit at about 1.1 per cent ofthe GDP during the previous quarter.Historically, if one were to scrutinise thelast three years, the government has onlypartially rejected bids ie (i) of 3m and6m Bills in July and August 2009, whichoccurred on the eve of a discount ratecut, and, (ii) of 12m bills in Sep and Oct-10, and in Jan-11 along the same lines.This instance may also be indicative of asimilar direction, although hinderingfactors such as over borrowing from theSBP may play strong. But regardless ofwhether all goes well or unwell, thegovernment can be sure to have its wayby hook or by crook.if there was any trust in the governmentor its good intentions, then hopefulconjectures could have been made aboutthe government wanting to change itsdebt profile in favour of permanent debtor long-term bonds/PiBs developingdeeper precedents for the corporate bondmarket considering a PiB auction isexpected soon. But only if there was!

ISLAMABAD

sTaFF REPORT

Prime minister Syed Yusufraza Gilani expressed his an-noyance over the slow pace ofutilisation of Asian Develop-

ment Bank’s (ADB) financing facility of$ 2.9 billion for 22 projects mainly inenergy and highway sectors. Pm saidunder-utilisation of foreign fundingwould be treated as criminal negligenceof ministries. He further directed thatmonitoring of the projects should be theintegral part of it in order to determinenegligence and also to know the pace ofthe completion of the projects.

Prime minister said this during abriefing by the economic Affairs Divi-sion on the pace of progress of ADB fi-

nanced projects in the country. Themeeting was attended by Finance minis-ter Abdul Hafiz Sheikh, minister forCommunications Dr Arbab AlimgirKhan, Secretary Finance Dr Waqar ma-sood Khan, Secretary eAD Abdul Wajidrana, Secretary Water and Power, im-tiaz Kazi, Secretary CommunicationsAmjad Nazir, Chairman NHA muham-mad Ali Gerdazi, and senior officials ofthe relevant ministries.

Pm directed economic Affairs Di-vision to hold meeting every month in-stead of three months to remove snags,if any, in undertaking the developmentprojects financed by ADB. it would beappropriate to address issues pertain-ing to projects prior to negotiatingfunding with international agencies in-stead of other way round, he said. He

said it was inexcusable that projects inenergy and infrastructure were de-layed for which credit facility was al-ready there. He said energy and goodhighways are the basic requirementsfor generating economic activities toput the country on trajectory ofprogress and prosperity. The projectsin these vital sectors should be pur-sued with requisite dedication andcommitment.

Finance minister Dr Abdul HafizSheikh said rationalisation and priori-tisation of projects should be the fun-damental principle in developmentstrategy and taking up of too manyprojects at the same time must beavoided for the same reason. He saidprioritisation is the essence of develop-ment strategy and should be followed

as such. Secretary Finance pointed outthat commitment charges by govern-ment due to delay in utilisation offunds had led to net export of capitalfrom the country causing big losses tonational exchequer. Secretary Waterand Power informed the meeting thatreasons for slow pace of utilisation offunds in energy sector had been ad-dressed and therefore it would pick upsubstantially in the near future.

Secretary Communications andChairman National Highway Authoritysaid land acquisition was the major hur-dle in undertaking projects for buildingroads and highways. However, the landacquisitions and other related problemswould be addressed first as directed byPrime minister before undertaking thesame with foreign funding.

PM questions slow progress onutilisation of $2.9b ADB funds

Islamabad: Prime Minister Syed Yousaf

Raza Gilani chairs meeting over utilisation

of ADB financing facility. ONlINE

PRO 16-12-2011_Layout 1 12/16/2011 12:32 AM Page 1

SHAHID kHurSHeeD

A CCOrDiNG to theHuman Developmentreport 2011 of theUnited NationsDevelopment Programme

(UNDP), Pakistan ranks at the 145thspot among low human developmentcountries; whereas, Bhutan, SriLanka, india and China are amongmedium developed countries.Norway is at the top along with USA.New Zealand, Canada, ireland,Liechtenstein, Germany and Swedenare among the top 10 countries.

Multidimensional Poverty IndexThe multidimensional Poverty index(mPi) examines factors at the familylevel such as access to clean water,cooking fuel and health services, aswell as basic household goods andhome construction standards thattogether depict a more completeportrait of poverty than incomemeasurement alone does. Some 1.7billion people in 109 countries lived inmultidimensional poverty in thedecade ending in 2010, by mPicalculus. 1.3 billion people areestimated to be living on $1.25 a day orless. Niger has the highest share ofmulti-dimensionally poor, at 92 percent of the population, followed byethiopia and mali, with 89 per centand 87 per cent respectively. in SouthAsian Countries 27.4 per cent ofPakistan’s population is living in severepoverty when juxtaposed with Bhutan– that has a meager 8.5 per cent.

Comparing different policies

if we examine the countries falling inthe High Human Development listcompare them and we can easilyconclude that all countries that evolvedeconomic policies based upon humandevelopment, who gave their massesthe central place in their planning, withtheir core philosophy orbiting the upliftof the common man reached the mountof advancement. Such countries fall inthe earlier group and none of these 47countries belong to the black world thatis historically claimed to be the birthplace of the earliest homo erectus andhomo sapiens. many of the countriesincluded in the top end of the HDiindex belong to europe and some fromAsia and America. Japan, South Korea,israel, UAe, Bahrain, Cyprus,

Singapore, and Hong Kong representAsia while Argentina and Chilerepresent South America. On the otherhand, in the latter group, from 142 –187, the sway is with African countries,except Solomon island, Papua NewGuinea and Timor from Oceania andPakistan. Yemen, myanmar, Nepal,Bangladesh and Afghanistan are therest of the countries from Asia. Whatstands out is that no county fromeurope and theAmericas is included inthese 46 Low HumanDevelopment Countries.in Asia Pakistan isranked with Nepal andmyanmar. A nuclearpower, so weak in thefield of humandevelopment cannotsurvive withoutchanging thefundamentals of itspolicy making. einsteinsaid, “We cannot solveproblems by using thesame kind of thinkingwe used when wecreated them”.

What the UNDPReport tells usThe UNDP reportconfirms that man haslearnt through hisexperience and not bymetaphysical guidance. According tothe report the nations at the top arethose who paved their waythemselves and never played assecond fiddles whether rightly orwrongly. They shaped their destinywith their own hands.

Prehistoric problems and howhumans respondedFirst problems, in prehistory, that ourancestors had to face, were the fear ofthe unforeseen, apprehension oversurvival, hunger, lack of knowledgeand lack of communications amongthemselves. But they neversurrendered, and tried their utmost tomake their environment comfortableand safer for themselves. Their fearscompelled them to create groups andtribes, and before 1,000,000 BC menhad started living together. Theydistributed various assignmentsamong themselves. Division of labour,

this was termed. Their own need, andpower of others, compelled them toact even against their own wishes.They were not fighters; they were notfawns of the powerful; they were onlythinkers who resultantly invented anddiscovered many things. Theyintroduced such ideas whichtransformed the style of living fortheir future generations. in 15000 BCthey made the ‘bow and arrow’ for

easy hunting and in11000 BC they madevessels of fired clay; inor around 10,000 BCthey startedagriculture. it wasconstant journey ofprogress, evolving withthe needs of the hour.in 8500 BC they learntto make houses made ofmud bricks simply tosave themselves againstmother nature.

Evolution of man:traversing timedilations

All this was being doneon a small canvas andin different patches andplaces of this world. Afew people used theirneurons; their tendencyto observe minutely;

their capacity to analyse, the facts andsituations – they were called thehomo sapiens (wise man). The restonly stifled their brain like animals orused it at the lowest level; they werestill homo erectus or ‘Chopayas’(quadruped) as is ascribed in Surah‘Al- Furqan’ or homo sapiens in theoffing. it means that homo sapiensand homo erectus are similarapparently, but the tendency to usethe brain or talent places them indifferent categories. And if a personstill lacks the quality of analysingthings and issues and does not havecapabilities to arrange facts accordingto their appropriate position, he isstill a homo erectus.if we look back into history or even inprehistory, we reach the conclusionthat the rulers and the powerful neverused the brain for the welfare of public.There are exceptions but during the last5000 years we can hardly pick five orsix rulers who did something whichgenuinely benefited the common man,and their period of rule was not more

than a 100 years in total. The situationcan only be altered if we adopt the habitof reasoning and no other way out.europe did not reach the stage it is todaywith a sudden jump. rome was certainlynot built in a day. From 753 B.C. to date,this continent traversed many upheavals.From miletus, Socrates, Plato andAristotle to einstein; this regionremained the laboratory of world levelexperiences. From religious rivalries andcrusades to the civilised revolutions,Pyrenees and Alps remained constant.europe was the cradle of industrialrevolution, enlightenment, agriculturalrevolution, glorious revolution and in theend two horrible World Wars. All theseups and downs taught the europeansthat they should function along with theproletariat and not by dragging them.They finally learnt that the core purposeof this life is the uplift of human beingsand making them ultimate useful citizensfor the whole country.

What the UNDP Report divulgesThe UNDP report confirms somebasic facts:-1. The western countries are in a

dominant position as far as humandevelopment is concerned.

2. Scandinavian countries are at thetop of the table. An efficient andequitable distribution of resourcesmade all the difference whichfinally shaped the countries intobeing prosperous.

3. The presence of USA, Canada andNew Zealand, in the top 10countries means that thosenations that managed to evolveeconomic and political policymaking have progressed beyondthose that failed to do so.

4. Niger, mali and ethiopia have asubterranean historicalbackground but it couldn’t helpthem out as they failed to make aneffective allocation and utilisationof their resources.

5. Those that collected knowledge,refined it, and made effective useof it for their own prosperity wereable to sit at the helm of authority.

6. Progress means an effective use ofdecision making by employing thefaculties of the human mind

7. “Followers” can never rule the world.

The writer is a Grade-20 governmentofficer and a freelance writer. He can

be reached atshahidkhursheed2009@gmail.com

Some 1.7 billion peoplein 109 countries lived in

multidimensional povertyin the decade ending in

2010, by MPI calculus. 1.3billion people are estimated

to be living on $1.25 aday or less. In South AsianCountries 27.4 per cent of

Pakistan’s population isliving in severe poverty

debate02Friday, 16 December, 2011

PhotoGRAPhY BY: NIda EzdI

The worst and thebest of austerity

JeAn PISAnI-Ferry

bRUssEls

iN June, it was Greece. inAugust, it was France, italy,Spain, and Portugal. inSeptember, it was Greece

again – and Spain. in November,France took another turn, before italyagain in December, this time in amajor way. every month, despite anever-darker outlook for economicgrowth, countries announce newspending cuts and tax hikes in thehope of restoring confidence in thebond markets. Only Germany standsout, having recently announced a taxcut, albeit a modest one. it looks likea no-brainer: accelerated budget cutsare preferable to a lethal interest-ratesurge on public debt, even if the cutsincrease the risk of recession. Butthere are caveats. First, whileindiscriminate austerity may be theonly option for those eurozonecountries that no longer have accessto capital markets, others have morechoice of policy options.Consolidation is required, butgovernments are responsible for itsspeed and its design. Second, a soundfiscal strategy requires establishing,on the basis of prudent economicassumptions, an ambitious budgetarytarget for the medium term,determining what mix of taxation andexpenditure cuts are required inorder to achieve it, and then stickingto the plan throughout economicfluctuations. This allows the so-called“automatic stabilizers” – lowerreceipts in a slowdown, higher in aboom – to come into play, preventingthe economy from overheating at thetop of the business cycle andproviding stimulus at the bottom.Third, headlong consolidation is notalways the best way to reassuremarkets, which may worry moreabout growth. italy is a case in point.The country’s budget deficit this year,at 4% of GDP, is far below that ofSpain or France. indeed, it was notthe country’s deficit that finally ledinvestors to shun italian bonds, butrather a forbidding cocktail of highdebt, desperately slow growth, andpolitical paralysis. in a situation likethis, nibbling at the edges of a deficitis at best a sideshow. The markets aredemanding reforms that lift growthrates durably and an approach tofiscal consolidation that is consistentwith higher potential growth. Fourth,the cost of rushed austerity is that itgenerally relies on immediate fixes,such as indiscriminate spending cutsand tax hikes that are expected toyield revenue in the short term, butthat have an economically damagingimpact. At the end of 2010, mosteurozone countries were pencilingspending cuts into their consolidationprograms while preserving the mostproductive areas, such as educationand infrastructure.But, since thissummer, governments have done theopposite. rather than focus onspending, they have zeroed in on taxmeasures, for the most partincreasing existing rates. This is a badsign for growth. What should theybe doing instead? Fiscalconsolidation is unavoidable, butthat is a medium-term process.instead of undertaking knee-jerkcuts, eurozone governments mustfirst reestablish their credibilitythrough policy rules enshrined innational legislations, as recentlydecided by the european heads ofstate and government. Second, theyshould design and implementsmart consolidations, even if theytake a little more time to designand a little more time toimplement. This entails finding theoptimal balance between spendingcuts and tax increases, andidentifying the least harmfulmeasures over the medium term.Doing so will take time, thought,and an iron will.

A version of this article was firstpublished in Project Syndicate

PRO 16-12-2011_Layout 1 12/16/2011 12:32 AM Page 2

THe fact is well-known that capital accumu-lation gives rise to unequal development.Unequal development is a condition inwhich certain regions, given specific natu-ral, economic, social, cultural and techno-

logical endowments, on one hand, and political utilisationof these endowments on the other, tend to become moredeveloped and powerful than the others. A classic case isthe division of the world between more developed partsand less developed ones appearing geo-politically as sov-ereign nation-states which attempt to maximise their

power and influence againsteach other. But the ambit ofthis law is not limited tointer-state relations alone.Several layers of this phe-nomenon can be identifiedsuch as: continental unequaldevelopment, between con-tinents; regional unequaldevelopment, between vari-ous regions in a national

economy; local unequal development, between neigh-bourhoods; and household-based unequal development.Since this structural asymmetry functions at so many lev-els, it comes to be accepted as the natural state of affairs,as how things have always been since time immemorial.

This eternalisation of a specific historical outcome, andits factitious maintenance in the form of the contemporaryfree market-based international order, tends to elude thecritical cognitive grasp of most people. Negation by affirma-tion, defined in my last article for these pages as a pre-emp-tive strategy to manage dissent, neutralising resistance, andcontaining social change, plays a special role in promotingthe misrepresentation of reality that sustains the law of un-equal development. This is how they work together:

Objectively, unequal development assumes the formof a peculiar historical Darwinism and is represented asa case of neutral historical evolution favouring those whoadapt well to epochal transformations by means of effi-cient resource allocation. This historical Darwinism hasthe effect of flattening all historical diversity on the planeof the theory of the survival of the fittest and blocks fromvision the historical manufacturing of the fittest.

inter-subjectively, the fact of unequal developmentlurks behind and is reinforced by the formal declaration

of the fundamental equality of human beings and theconstitutional enshrinement of universal human rightsmeant to show that this formal principle also exists sub-stantively. Once this formal principle comes to be seen asthe basis of human civilisation, unequal development isredeemed through a disingenuous emphasis on the nat-ural difference of ability and talent amongst human be-ings. in other words, the idea of equality props up thebrute fact of inequality. This means a constant strugglegoes on between entities populating the various levels ofunequal development. This struggle gives birth to net-works of domination and collaboration across and withinthese levels but not without ideological disguise.

Whole cities are planned on the basis of the multiplecircuits of capital which, through the division of labour,are inscribed in our bodies and psyches. To bring homethis flow of capital through our lives, i invite the goodreaders to think quickly about the wonderful city of La-hore. A marvel of the beautiful blend of the traditionaland the modern, it is also a place criss-crossed with myr-iad practices of inequality and domination. Urban capitalaccumulation in the city works by creating differentialzones of capital concentration. These zones are articu-lated through discrete channels of capital circulation. Thesites of the creation of capital are spatially distanced fromthe foci of consumption. These zones of capital concen-tration are legitimised through urban planning policiesand manifested in the practices of urban housing.

As one goes from the north to the south of the city,there is a marked spatial shift from the older less priv-ileged spaces like Shahdara, Sant Nagar, Sanda etc., torelatively new affluent neighbourhoods like Gulberg,DHA, Bahria Town etc. middle to lower-middle classcolonies like Samanabad, iqbal Town, Gulshan-e-ravireflect their desperate desire for social climbing in theirmock-palatial residential facades. Progressive coloni-sation of the semi-rural belt surrounding the city con-tinues apace. The stark difference between the triad ofconsumption like the Liberty market, main market,and mini market-cum- m. m. Alam road, and thoselike ichhra and scores of makeshift Sunday bazaarsscattered across the metropolis, is a direct outcome ofa sharp income apartheid enabled by the so-called nat-ural phenomenon of the varying purchasing powers ofdifferent urban social groups inhabiting the city. Theaccess to public utilities and civic institutions followsthe same social lines of force as do the differential cir-culation of capital in the city. However, the remarkablefact is that we live with this quotidian creation and con-solidation of inequality, exploitation, marginalisation,and exclusion in our midst mollycoddled by a sincerebelief that all human beings are fundamentally equaland that there is no difference between the rich and thepoor except that ordained by nature or the prudent util-isation of something called the freedom of opportunity.

The writer is a professor of economics at LUMS

DeSPiTe fundamental growthproblems in the global econ-omy, geopolitical tensions inthe Persian Gulf seem set totrigger yet another round of

nervous hikes in international oil prices. Sofar, oil above 100 is definitely overbid, espe-cially since markets have not yet priced in anyunintended, or intended, consequences ofwar clouds gathering over iran. Yet withTehran throwing an unexpected ace as itsfirst visible move – blockading the Straits ofHormus for ‘regular military exercises’ – oilis likely to break its uncertain, range-boundtrading pattern to the upside. That is badnews for emerging markets, and bad news forPakistan considering its present low-growthdilemma.

in case of further escalation, it is difficultto foresee a not-so-sobering outcome. One,expensive oil seriously threatens to derailfragile recoveries in America and the euro-zone, both beset by debilitating hangoversfrom the ’08 recession. Two, it will make re-taining struggling emerging economies’growth trajectories that much more difficult,

slowing down Asia. Three, it will burn Amer-ica-friendly oil barons in riyadh, long thestabilising force in international oil. Theyhave always been wary of the consequencesof too-expensive-oil, and how demand slow-down in the west can compromise its ownvaults. But with a $130 billion social spend-ing package to stall a building spring in theoil-rich eastern provinces, it’s support pricehas risen to the $90-100 range, forcing it tostand with “intolerable” iran and venezuelaat the opec conclave. Four, the worst blowwill be dealt to economies mired in stagfla-tion, already suffering low-growth and high-inflation, like we are.

Granted, no economy is immune to interna-tional shocks, especially oil price gyrations. Butconsidering how oil movement causes input pricecorrection across the board, commodity pricealone can seriously derail our economy. Theprime reason is that our economy is continuouslynear break-down point, unable to withstand ex-ogenous shocks, which is simply poor planning.These developments should prompt some man-ner of proactive posturing in islamabad.

Economics of oil

I invite the goodreaders to think quicklyabout the wonderfulcity of Lahore

Unequal development andnegative affirmation

Ali Shah

E D I T O R I A L

Islamic banking windows

AN islamic window is a sepa-rate department within aconventional bank, whichoperates under strict guid-ance by an independent

Shari’a Advisory Board to develop and offerislamic financial products to the clients thatdemand such products. An islamic Windowmay offer its products and services throughconventional branches or dedicated islamicbranches of the conventional bank. There arethree notable examples of countries wherebanking regulators do not allow setting up is-

lamic Windows. malaysia is perhaps the best example,

though the prohibition is limited to the offer-ing of islamic retail banking services throughislamic Windows. Conventional investmentbanks, however, are allowed to offer islamicinvestment banking services in the country.Consequently, major conventional bankshave now set up fully-fledged islamic banksto tap the islamic retail banking market. Thelikes of CimB, rHB, Hong Leong, maybankhave set up separately licensed islamic banks.Similarly, Lebanon does not allow conven-tional banks to offer islamic financial serv-ices. Qatar has also introduced a ban onconventional banks to set up islamic Win-dows. ethiopia, on the other hand, providesan interesting example of a country that al-lows islamic banking only in the form of is-lamic Windows. in other words, the existinglegislation in the country does not allow thesetting up of dedicated islamic banks.

in Pakistan, there are five full-fledgedislamic banks, and another 12 conventionalbanks offering islamic banking services

using an islamic Window model. The totalnumber of islamic branches owned by con-ventional banks is 268, which is more thanhalf of the number of branches of islamicbanks in the country (524). This shows thatislamic Windows are significant in terms oftheir market share of islamic banking inPakistan. While the role that conventionalbanks are playing in islamic banking in Pak-istan is laudable, it must be emphasised thatconventional banks take islamic banking asa purely business proposition.

The following are some of the major con-cerns that people have with islamic Windows:

1. islamic windows are seen to havein general contributed to the development ofwhat is known as Shari’a-light products,

2. Shari’a governance regimes inconventional banks tend to be weak. Whilethe likes of Dubai islamic Bank, Abu Dhabiislamic Bank, Kuwait Finance House and Alrajhi Bank have very strong Shari’a compli-ance departments, conventional banks withislamic Windows tend to be light in terms ofShari’a governance.

3. As mentionedabove, conventionalbanks lack real commit-ment to the developmentof islamic banking. Themanagers of islamic Win-dows always face a daunt-ing challenge, as the mainmanagement tends to fearcannibalisation of theirconventional business.

4. many conser-vative muslims believethat segregation of islamic funds withinconventional business is merely an ac-counting trick. A simple requirement forsegregation of islamic funds within conven-tional banks is that at any point the value ofislamic liabilities of the bank should beequal to its islamic assets.

Given this, it is important for bankingand financial regulators in the OiC countriesto discourage islamic windows. For Pakistan,it is recommended that no new conventionalbanks be allowed to start their islamic oper-

ations through an islamicWindow model. Thiskind of protectionist ap-proach to islamic bank-ing will allow the existingislamic banks to expandtheir businesses. On theback of their growth, theincumbent islamic banksmust be asked to increasetheir capital base, whichin many cases will be pos-sible only through at-

tracting more capital from the Gulf countries.in this way, islamic banking can be used toattract more investment into the bankingsector in Pakistan, which is indeed a very lu-crative business.

The writer is a Shari’a advisor to anumber of banks and financial

institutions and can be contacted athumayon@humayondar.com

Humayon Dar

For comments, queries and contributions, write to:

Email: profit@pakistantoday.com.pk Ph: 042-36298305-10 fax: 042-36298302 Website: www.pakistantoday.com.pk

BaBUR saGhIRCreative Head

haMMaD RaZaLayout Designer

shahaB JafRyBusiness Editor

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F r i d a y, 1 6 D e c e m b e r, 2 0 1 1

For Pakistan, it isrecommended that nonew conventional banksbe allowed to start theirIslamic operationsthrough an IslamicWindow model

KUNWaR KhUlDUNE shahIDSub-Editor

MahEEN syEDSub-Editor

Unwise decision ofeconomic managers

This is with regards to the news report,‘Cabinet committee shelves privatisationplan for PSe’s’, published yesterday.Another unwise decision by the economicmanagers of the country for not privatisingeight public sector enterprises, which areon the verge of collapse, is justsafeguarding their vested interest.releasing more money for the revival ofthese dying institutions is of no use.Government will never be able torehabilitate these entities on sound footingdue to the fact that firstly it is too late andsecondly, it cannot manage the industryand trade. it is the job of private sectorenterprises, who know how to runorganisations, efficiently and profitably.

M ASLAM cHAuDHry

lahORE

Loyal customer

This is with regards to the article, ‘Ufone,Teri mehrbani’, published on 10/11/12. i ama Ufone user for the last 10 years and i havebeen a loyal Ufone customer, ever sincethen. Ufone has always been making awe-some advertisements and to be very honest,these ads are the best ads that the Pakistanimarket has ever seen. But let’s face it, i don’tthink so that the effectiveness of Ufone ad-vertisements is actually driving the cus-tomers to buy their SimS, for things don’twork here, the way they work in the West.However, this holds true for all other tele-com companies as well. Ufone or any othertelecom company, in Pakistan should realisethat at the end of the day, it’s about whatyou give to the user.

rAMeez

CaRdIFF

shaRI’a MaTTERs

PRO 16-12-2011_Layout 1 12/16/2011 12:32 AM Page 3

Friday,16 December,2011

04news

CEO Mehran sugar Mills ltd, Ebrahim hasham

The governments of developingcountries cannot be expected to take careof all development aspects of its citizens;the private sector has to lend a hand

Mv Multan soldby shipping CorporationkaraChI: Pakistan National Shipping Corporation(PNSC) has sold its bulk carrier namely m.v multan, andthe vessel has anchored at the Gidani Shipbreaking yard.Profit has learnt that in line with its earlier decision ofscrapping two bulk carriers of its fleet, the management ofPNSC sold m.v multan to Compass Shipping and Trading,Sharjah, United Arab emirates for $25,3271. The saleagreement was made on the 18th of last month, and it hasbeen sold in $466 per LDP, sources added. The saidcarrier has anchored at the Gaddani Shipbreaking yard,and the fleet of the corporation is now left with 8 vessels.But interestingly the buyers of this vessel were in realitylocals, the sources disclosed. The sale agreement wassigned by imran Aziz mideast Shipping and Trading.Sources informed that this was solely the decision of themanagement of the corporation, and the board of directorsinsisted to maintain the transparency. WaqaR hamza

Centre, provinces to sortout differences on GsT todayIslamaBaD: Federal and provincial governmentswill again attempt to resolve the issue of agricultureincome tax and settlement of dispute on GST onservices, at the meeting of National FinanceCommission (NFC) today. An official source said themeeting of NFC will be held after one and a half yeardelay and the centre and provinces will attempt to sortout their differences on the uniform implementationof the GST on services. Three provinces have alreadygranted powers to Federal Board of revenue to collectGST on services on their behalf while Sindh provinceis still adamant to take a solo flight. Federalgovernment is expected to force Sindh to hand overcollection to FBr. However, the source said provincialgovernment was likely to offer resistance on the move.Centre and Sindh are at odds over collection ofrevenue from port related services on which otherprovinces have expressed concerns. Other thanservices in the formal sector, governments have noplan of action on other services like land developersand catering businesses, which still remain outsidethe tax net. sTaFF REPORT

Broadening industrialbase vital for country: seminarIslamaBaD: ministry of industries and its WTOCell is committed to broaden industrial base ofPakistan, upgrade production methods and createawareness among existing industry about rapidlychanging international trading and business rules.WTO Cell of the ministry of industries incollaboration with rawalpindi Chamber of Commerceand industry (rCCi) held a seminar titled on “Generalawareness about WTO and major issues confrontingPakistan’s industry today and footwear industry ofPakistan with respect to Non-Agriculture marketAccess (NAmA)”. WTO Cell team was led by ChiefWTO Officer ms Seema raza Bokhari. mr JavedAkhter Bhatti, President (rCCi), mr irfan mananKhan, Secretary General, other members ofmanagement, industrial representatives andstakeholders from the footwear industry were alsopresent on the occasion. sTaFF REPORT

Punjab govt attentivetowards livestock needslahore: Provincial minister for Agriculture andLivestock malik Ahmed Ali Aulakh has said Punjabgovernment, in spite of financial constraints, is payingspecial attention to livestock development. He wasaddressing University of veterinary and Animal SciencesLahore in a cheque distribution ceremony arranged byLivestock and Dairy Development Department and PunjabAgriculture and meat Company. malik Ahmad Ali Aulakhsaid cheques worth rs7 crore 25 lakh were distributedamong 117 beneficiaries of ‘Save the Calf’ project belongingto Lahore, Sheikhupura and Kasur districts. The ministersaid Livestock is the asset of Pakistan and we have worldrenowned Neeli ravi Buffalo and Sahiwal Cattle with equalpotential for milk and meat. Pakistan being an islamic statehas great potential to access three trillion dollars halal meatmarket in the world but for that we have to upgrade ourproducts and animals upto the international standard byvalue addition so that we may be able to export surplus meatto the muslim and adjoining countries. minister saidLivestock and Dairy Development Department is working onthe right track as during the previous flood, the livestockdepartment team worked very hard in vaccination andtreated affected animals owing to which there have not beenany disease outbreaks in the province. sTaFF REPORT

Bears grip KSE as Eurocrisis hits regional stocks

kArAcHI

sTaFF REPORT

BeArS prevailed on Karachistock market Thursday, aftermarket observers said after re-

gional stock markets and commoditiesplunged on rising concerns over euro-pean debt crisis. “Pakistan stocksclosed sharply lower after Asian stocksand commodities plunged on risingconcerns for europe debt crisis,” saidAhsan mehanti, director at Arif Habibinvestments.

The analyst said United States’clarification on a $700 million con-ditional aid to islamabad also af-fected the sentiments at the bourse.The day witnessed the benchmark100-sahre index nose-diving by161.47 points or 1.43 per cent toclose at 11, 139.52 points as against11,300.99 points of Wednesday. The

intraday high and low was, respec-tively, recorded at 11,301.80 and11,058.07 points. “The index man-aged to close above session lows onstate-run institutional support inoversold blue chip stocks,” said theanalysts. Trading volumes closedhigher at 52.0038 million sharescompared to Wednesday’s 34.960million shares. Trading value alsoset in the green zone and increased

to rs2.01 billion against the previousday’s rs1.96 billion.

Of the total 316 traded scrips, 39advanced, 188 declined and 89 re-mained unchanged. market capitali-sation closed as low as rs2.88trillion against rs2.930 trillion of aday earlier. KSe-30 index also lost217.25 points or 2.08 per cent toclose at 10, 251.92 points comparedto 10,469.17 points of the previous

session. “Foreign outflow from localbourse, uncertain Pak-US relationsand prevailing government judiciaryconflicts played a catalyst role innegative sentiment at KSe,” analystAhsan mehanti observed. FatimaFertiliser Company was the volumeleader of the day by counting itstraded shares at 5.9 million with itsper share price closing lower atrs21.50 after opening at rs22.10.

PIA, Pilots’ Associationsign working agreement

LAHOre

sTaFF REPORT

PAKiSTAN interna-tional Airlines (PiA)and Pakistan AirlinePilots’ Association(PALPA) have mutu-

ally agreed to finalise the workingagreement for the year 2011-2013without any revision in pay and al-lowances. A spokesman for PALPAsaid in a statement that consideringthe financial condition of the na-tional flag carrier the pilots associa-tion has already voluntarily droppedchapter two from the working agree-ment after completing negotiationson procedural issues. Thespokesman mentioned that theworking agreement was needed toaddress safety and operational is-sues. The financial aspect is also apart of the same negotiation, henceafter every two years it is renegoti-ated; but this time round it wasdropped from final implementation.

He further said that the since the

Working Agreement was of proce-dural nature it cannot be called an ex-traordinary favour, thus projecting itas if the association has taken finan-cial benefits is not only wrong but mis-leading as well. Not only that theassociation has dropped the pay andallowances from this Working Agree-ment but has further offered to reduceguaranteed flying hours from 70 to 50,flying allowance on Long range flightsfrom $350 to $275 and all additionalflying allowances given to manage-ment pilots over and above normal al-lowances paid to all regularnon-management pilots have alsobeen withdrawn forthwith.

He said PALPA has contributedsignificantly to improve airline’s fi-nancial conditions by suggestingcost cutting measures in cabin andcockpit crew flight and stay patternsabroad besides many in-flight andon-ground measures through whichthe airline is saving huge amountsspecially in foreign exchange. Presi-dent PALPA, Captain Suhail Baluch,stated in a press release that PALPA

members have agreed unanimouslynot to ask for financial benefits fromthe PiA management in protest overits wrong decisions which havebrought the national air carrier onthe verge of collapse.

He said that the credibility ofPiA has been shaken badly in theeyes of its customers and interna-tional aviation industry too all due toa series of decisions, marred withcorruption and nepotism, which leftthe airline in a quagmire. He re-ferred to the consistent delays in PiAflights, especially in Pre and PostHajj operations, as well as recurringtechnical faults in PiA aircraft oneafter another posing serious threatsto the safety of passengers and air-craft, and the dubious leasing ofmore aircrafts resulting in the loss ofbillions of dollars of airline’s finance.

Suhail Baluch said PiA manage-ment has completely failed to handlethe affairs of the airline and is notcarrying out due and proper care ofthe PiA fleet so as to create artificialjustification to lease more aircraft to

serve vested interests. He said PiAmanagement should overhaul itsgrounded aircraft first instead of tak-ing leased planes and should do awaywith the spare-parts supply contractto inefficient companies likeTransworld Aviation, FZe, whichhave no proven experience of work-ing with commercial airlines. He saidPALPA is aware of the financial con-straints of the national air carrierand admits that PiA is facing acuteshortage of funds. Nevertheless, headded, PALPA members and otheremployees of the airline can never beblamed for the dire financial crisis asthe management is solely responsiblefor PiA funds and decisions in thisregard. He thanked mD PiAC forsigning the negotiated and agreedPALPA-PiAC Working Agreement2011-2013 minus Article ii, as per in-ternational aviation rules and regu-lations it is mandatory to have anagreement between pilots and airlinemanagement to ensure smooth func-tioning and adherence to all interna-tional safety rules.

India to hold ‘Madein India’ exhibition inPakistan in february

kArAcHI

GhUlam abbas

FOr the fist time indianbusinessmen are going tohold ‘made in india’

exhibition in Pakistan inFebruary next year. The eventis scheduled to be held fromFebruary 11 to 13, 2012 inLahore and will also befollowed by a CeO conferenceon the last day of the tradeevent, sources told Profit.According to the sources,indian Commerce ministerAnand Sharma would alsoattend the business event andwould meet Pakistani officialsand authorities both in Lahoreand Karachi.

Australia to provide Rs1.2 billionfor agricultural research in Pakistan

ISLAMABAD

sTaFF REPORT

AUSTrALiA will provide rs1.2billion to enhance agricultureresearch, development and ex-

tension system to deliver practical re-search outputs to agribusiness andfarmers. This information was providedby Australian High Commission at a re-ception on the launch of next phase ofthe Agriculture Sector Linkages Pro-gram (ASLP) in Pakistan. Chief execu-tive Officer of the Australian Centre forinternational Agriculture research(ACiAr) Dr Nick Austin was also pres-ent on the occasion.

Addressing the reception, Aus-tralian High Commissioner, TimGeorge said, “ACiAr’s work, including

ASLP, is a key component of Australia’sgrowing engagement with Pakistan. Asa leading agriculture exporter, withworld-class expertise in agricultural re-search, we see great scope to cooperateto build Pakistan’s agricultural capac-ity.” The partnership in the agriculturesector between both the countries hasgrown during the last few years. ASLPPhase i, operated from 2005-10, andwas successful in increasing the trans-fer of technical knowledge betweenAustralian and Pakistani scientists tounderpin the ongoing transformationof Pakistan’s mango, citrus and dairyindustries.

ACiAr CeO, Dr Nick Austin, said itwas his first visit to the country and wasimpressed by the huge potential in agri-culture. “Pakistan’s farmers face many

challenges and it is critical that we con-tinue our collaboration. ASLP Phase iihas the potential to change the lives offarmers across Pakistan, and i look for-ward to working with government, aca-demic institutions, and farmers, tomake a real difference to Pakistan’s agri-culture sector”, he added.

ASLP Phase ii will build linkagesbetween agricultural sectors of Aus-tralia and Pakistan in order to improvethe livelihood of rural poor in Pakistan.The programme will contribute a total$AU 12.95 million or rs1.2 billion, overfour years to agricultural research inPakistan. its goal is to enhance abilityof Pakistan’s research, developmentand extension system to deliver tar-geted and practical research outputs toagribusiness and farmers.

PRO 16-12-2011_Layout 1 12/16/2011 12:33 AM Page 4

05

Friday,16 December,2011

news

CORPORATE CORNERBoK Raast Islamic Banking branchstarts operations in DIK

Dera IsmaIl khan: The formal inaugurationof Bank of Khyber (BoK) raast islamic Bankingbranch was held at Tank Adda area of DiK in agraceful ceremony. The inaugural ceremony wasattended by managing Director BoK mr Bilalmustafa, executive Director mir Javed Hashmat,islamic Banking Group Head mr Kamran masudKhan, Head islamic Business Development mrSohail Khan, Head Banking Operations mrKhurshid Alam, and Head marketing Syed AliNawaz Gilani, along with business community andthe notables of the area. PREss RElEasE

Wateen rewardson-time bill payment

lahore: Wateen Telecom has announced thewinners of its ‘recharge and reconnect’ campaignthrough which it is incentivising subscribers torecharge their accounts within time. The ‘rechargeand reconnect’ lucky draw campaign was aimed at

building a connection with Wateen customers,while encouraging them to recharge their accountsbefore the recharge date for each month. ShaukatAli from Sahiwal won a Hewlett Packard laptop,Faisal Altaf from Lahore was the winner of a DellStreak tablet and Amber Nasir from Karachi wonan Apple iPad2 tablet. PREss RElEasE

Cathay Pacific releasescombined traffic figureslahore: Cathay Pacific Airways has releasedcombined Cathay Pacific and Dragonair trafficfigures for November 2011. The figures showed thegrowth in passenger numbers again failing tomatch capacity growth, while cargo and mailtonnage showed another significant year-on-yeardecline. Capacity for the month, measured inavailable seat kilometres (ASKs), was up by 8.6 percent. For the year to date, the number ofpassengers carried has increased by 2.5 per centcompared to a capacity increase of 9.2 per cent.Cathay Pacific General manager revenuemanagement James Tong said, “Once again thegrowth in passenger traffic could not keep pacewith the increase in capacity, which accounts forthe dip in load factor.” PREss RElEasE

Jaffer Brothers winsOPN specialised asia Pacific award karaChI: Jaffer Brothers (JBL) was awardedthe Oracle Partner Network (OPN) Specialised AsiaPacific Award for Oracle Accelerate. The awardswere given to partners at the Oracle Asia PacificApplications Partner Summit in Phuket, Thailandin August, 2011. The award reflects Jaffer Brother’ssuccess leveraging its Oracle Accelerate offering tobring industry-specific capabilities to midsizecompanies in Pakistan. The partners nominated forthis award were the top performing OracleAccelerate Asia Pacific partners in 2011. The OPNSpecialised Asia Pacific Awards were presented topartners who demonstrated outstanding use ofOracle products to create value and innovativesolutions for customers. PREss RElEasE

Ufone restoresBlackBerry Internet servicesIslamaBaD: Ufone has managed to delightits valued customers by restoring the muchdesired BlackBerry internet Services (BiS).BiS is a service that provides BlackBerrysmartphone users with access to internetbrowsing, allows email messaging, instantmessaging using the BlackBerry messengerservice, and more. The service also allowsusers to access POP3, imAP, and OutlookWeb Access email accounts withoutconnecting through a BlackBerry enterpriseServer (BeS). PREss RElEasE

Dubai Islamic Bank launchesIslamic priority banking solutionkaraChI: Dubai islamic Bank Pakistan Ltd(DiBPL) has launched Pakistan's first islamicpriority banking solution to offer its exclusivecustomers with a gateway to an exquisitebanking experience. Dubai Lounge PriorityBanking caters to the affluent segment byoffering an unmatched luxurious bankingexperience. moreover, the exclusive customerscan enjoy a host of privileges including feebased waivers, viSA Gold Card, access to viPairport lounges in Pakistan and a higher cashwithdrawal limit. PREss RElEasE

TRG holds TRG learnfest IslamaBaD: TrG LearnFest, Pakistan'spioneer learning festival of trainingproviders and seekers; was held for thesecond time this year in islamabad witharound 30 diverse training sessions.Organised by Trainer’s resource Group, withthe core objective of strengthening the trainingand development industry in Pakistan, theevent attracted more than 300 people. Officialpartners included, TCS, CityFm89, OrientAdvertising, wCube Dimensions, expressTribune and Torque. PREss RElEasE

Business schools should stop handing outMBA degrees to anyone who comes to them.Work experience of a few years should bemandatory to get into an MBA programme

GM hR shell Pakistan, leon Menezes

lahORE: Yaseen anwar, Governor state bank ofPakistan, along with Rajiv Vastupal President allIndia management association (aIma); dshivakumar senior Vice President aIma and NokiaIndia, middle East and africa; Kamal ChinoyPresident management association of Pakistan(maP), saadia Naveed VP maP and others at 12thConvention of maP. PRESS RELEASE

lahORE: On the occasion of an internationalconference, Chaudhry abdul Rehman is presentingshield to Prof stephen. PRESS RELEASE

Islamabad: Group photo of young electedrepresentatives of primary class after oath takingceremony at beaconhouse primary branch,Peshawar road, Rawalpindi. PRESS RELEASE

Spain looks safer thanItaly as borrowing costs fall

MADrID

REUTERs

SPAiN saw solid demand forits bonds on Thursday, pay-ing more than 2 percentagepoints less to borrow over 5-years than italy a day earlier

as budget cuts helped ease concerns itcould be among the next to fall in theeuro zone's debt crisis.

But while the Treasury also paidmuch less to sell two 10-year bonds thana similar issue just a month ago, yieldswere still near euro-era highs amiddoubts over leaders' ability to find a last-ing solution to the bloc's debt crisis.

"A good auction ... they managed tosell quite a chunk. it won't help to calmthese fears everyone in the market is hav-ing about funding in 2012, but Spain isconsidered a far more attractive creditthan italy," strategist at West LB, michaelLeister said. Spain has been in the line offire in the euro crisis since Greece wasbailed out more than a year ago. Butmeasures which have almost halved thebudget deficit along with a massive bank-ing restructuring program have takensome of the heat off.

Attention has turned instead to theeuro zone's third largest economy, italy,which has seen refinancing costs soar tounsustainable levels and its Prime minis-ter Silvio Berlusconi replaced by techno-crat caretaker mario monti.

"The contrast with italy is striking.Spain, despite its severe economic prob-lems, is judged to be a safer credit," saidNicholas Spiro, economist at Spiro Sov-ereign Strategy. "italy is walking on verythin ice at the moment given the scale ofits funding needs next year. Spain is bet-ter placed on this front and has more pol-icy-making credibility in the eyes ofinvestors." The premium investors de-mand to hold italian over Spanish debtrose to a new record of around 162 basispoints on Thursday while Spain's spreadsagainst German debt dropped more than24 basis points following the auction.

SOCIALISTS TROUNCED

The centre-right People's Party (PP)trounced the Socialists in November 20election as voters punished Prime minis-ter Jose Luis rodriguez Zapatero for hishandling of the economic crisis thoughhis measures have kept Spain needing aGreek-style bailout.

incoming Prime minister marianorajoy has said he will continue with theprevious government's austerity meas-ures and cut the budget shortfall from anexpected 6.5 percent of GDP this year to4.4 percent of GDP next year. Pollsterssay Spaniards are largely resigned to theidea of more cuts, but that sentimentcould fade within a year if the economydoes not bounce back from a prolonged

slump. Spain's economy stagnated in thethird quarter and is widely expected tosink into its second recession in threeyears at the start of 2012 as domestic de-mand shows no sign of returning and ex-ports are hit by the global slowdown.

meanwhile, the burst property bubblehas left the country's banks sitting on 176billion euros ($227.94 billion) of poten-tially troubled real estate assets at end-June and struggling to raise capital toshore up balance sheets in a paralyzedmarket. rajoy has said his priorities whenhe takes office next week are to balancethe public accounts, reform the labor mar-ket -- Spanish unemployment is morethan double the european Union average-- and intensify bank restructuring efforts.

RISING COSTS

As market nerves rise over the futureof the euro zone, Spain's government hasfound it increasingly expensive to issuebonds but with a debt-to-GDP ratio ofaround 68 percent, around 20 percentagepoints below the euro zone average, it hassome margin.

Spain also faces a less pressing re-demption calendar than italy, withmedium and long-term debt redemptionsof nearly 50 billion euros in 2012 withnone due until April.

rome meanwhile faces redemptionand coupon payments of around 100 bil-

lion euros between January and April,reuters data shows.

The Spanish Treasury raised 6 billioneuros from the auction on Thursday ofthree bonds in the primary market, farsurpassing a target of 3.5 billion eurosand meaning the Treasury has completedits end-of-year bond issuance goal.

The auction came as markets bracedfor a possible ratings downgrade after adisappointing summit of europeanUnion leaders on Friday.

Spain sold 2.5 billion euros of a bondmaturing January 31, 2016 at a yield of4.023 percent, compared to 5.276 percentwhen it was last auctioned December 1.The bond was 2 times subscribed after2.8 two weeks ago.

The bond maturing April 30, 2020,sold 2.2 billion euros at an average yieldof 5.201 percent while a bond maturingApril 30, 2021 sold 1.4 billion euros for5.545 percent.

The last time Spain ran a primaryauction a 10-year bill November 17, itpaid an average yield of 6.975 percent,considered by most economists as unsus-tainable over the long term.

However, while the benchmark 10-year yield was down from recent highsduring volatile trade, it was still far aboveprices paid from the average yields seenbefore June. "These are still high levels ofrates but they are a lot better than italy'sones," strategist at monument Securitiesmarc Ostwald said.

PRO 16-12-2011_Layout 1 12/16/2011 12:33 AM Page 5

top 5 perForMers sector wisesyMBOl OPEN hIGh lOW CURRENT ChaNGE vOlUME syMBOl OPEN hIGh lOW CURRENT ChaNGE vOlUME

Food ProducersAdam Sugar 17.00 16.02 16.00 16.00 -1.00 7,138AL-Noor Suger Mills 52.34 54.95 52.80 52.80 0.46 1,902Chashma Sugar Mills 7.99 8.30 7.97 8.30 0.31 49,195Colony Sugar Mills 1.76 1.80 1.80 1.80 0.04 1Dewan Sugar 2.11 2.15 2.10 2.10 -0.01 296

Household GoodsDiamond Ind. 8.20 9.18 9.18 9.18 0.98 1Hala Enterprise 6.01 6.90 6.90 6.90 0.89 50Pak Elektron Ltd. 4.06 4.38 3.94 3.94 -0.12 389,302Singer Pakistan 14.07 15.06 13.07 15.06 0.99 501Tariq Glass Ind. 8.30 8.50 8.31 8.39 0.09 11,224

Personal Goods(Colony) Thal 1.40 1.40 1.11 1.40 0.00 8,000Ali Asghar Textile 0.55 0.46 0.41 0.41 -0.14 2,000Amtex Limited 1.30 1.33 1.20 1.23 -0.07 30,238Artistic Denim Mills 21.00 21.00 21.00 21.00 0.00 400Ashfaq Textile 8.96 9.00 8.11 9.00 0.04 550

Future ContractsAHCL-DEC 28.55 28.95 28.40 28.76 0.21 53,500ANL-DEC 3.34 3.60 3.35 3.35 0.01 82,500ATRL-DEC 115.75 117.30 113.00 113.50 -2.25 240,000BAFL-DEC 11.85 11.90 11.75 11.75 -0.10 26,500BAHL-DEC 29.02 29.00 29.00 29.00 -0.02 500

Pharma and Bio TechAbbott Laboratories 101.11 102.00 101.00 101.00 -0.11 227Ferozsons (Lab) Ltd. 74.10 76.80 75.50 75.50 1.40 21GlaxoSmithKline Pak. 66.12 66.25 65.11 65.12 -1.00 1,593Highnoon (Lab) 29.60 29.75 29.30 29.30 -0.30 1,151IBL HealthCare 12.60 12.99 12.60 12.99 0.39 1,014

Fixed Line TelecommunicationP.T.C.L.A 10.24 10.48 10.08 10.15 -0.09 1,783,870Pak Datacom Ltd 36.49 36.25 35.95 36.25 -0.24 2,075Telecard Limited 0.81 0.88 0.78 0.82 0.01 13,572Wateen Telecom Ltd 1.80 1.99 1.77 1.80 0.00 156,283WorldCall Telecom 1.00 1.04 0.91 0.93 -0.07 1,076,370

ElectricityAltern Energy 6.25 6.00 6.00 6.00 -0.25 1,186Genertech 0.37 0.42 0.31 0.31 -0.06 16,006Hub Power Co. 36.45 36.70 36.45 36.50 0.05 901,477Japan Power 0.60 0.70 0.57 0.60 0.00 36,483K.E.S.C. 1.56 1.68 1.50 1.57 0.01 488,458

BanksAllied Bank Ltd 58.53 59.49 58.50 59.00 0.47 16,287Askari Bank 10.01 10.39 10.15 10.27 0.26 122,208B.O.Punjab 5.33 5.47 5.25 5.31 -0.02 281,491Bank Al-Falah 11.75 11.99 11.56 11.80 0.05 1,265,356Bank AL-Habib 28.75 29.40 28.95 29.00 0.25 157,733

Non Life InsuranceAdamjee Ins 42.99 43.45 42.25 42.64 -0.35 8,309Ask.Gen.Insurance 8.50 8.79 7.87 7.87 -0.63 2,990Atlas Insurance 36.00 36.40 35.40 36.40 0.40 215Century Insurance 6.94 6.94 6.50 6.94 0.00 400Cres.Star Insurance 2.97 2.97 2.00 2.97 0.00 501

Life InsuranceAmerican Life 14.50 14.50 13.50 14.50 0.00 2East West Life Assur 1.40 2.34 1.40 1.40 0.00 1EFU Life Assur 65.53 68.80 65.53 65.53 0.00 157

Financial ServicesAMZ Ventures A 0.33 0.36 0.27 0.30 -0.03 35,272Arif Habib Investmen 16.31 16.43 15.50 16.43 0.12 402Arif Habib Ltd. 14.71 15.10 14.70 15.00 0.29 4,491Dawood Equities 0.82 1.00 0.80 0.80 -0.02 5,998F. Nat.Equities 2.54 2.87 2.35 2.70 0.16 31,436

Equity Investment Instruments1st.Fid.Leasing Mod 1.56 1.60 1.54 1.60 0.04 1,041AL-Noor Modar 3.99 4.10 4.10 4.10 0.11 5,000Elite Cap.Mod 2.20 2.20 2.20 2.20 0.00 22,335Equity Modaraba 0.85 1.33 0.87 1.25 0.40 25,109F. Dawood Mut.Fund 1.85 1.85 1.85 1.85 0.00 35,000

MiscellaneousCentury Paper 13.50 13.40 12.70 13.17 -0.33 13,107Security Paper 35.05 35.75 35.00 35.00 -0.05 29,833Pakistan Cables 33.30 33.30 31.76 33.30 0.00 34P.N.S.C. 12.75 13.48 12.98 13.43 0.68 5,716Pak.Int.Con. SD 65.47 68.00 65.00 65.47 0.00 1,277TRG Pakistan Ltd. 1.23 1.39 1.16 1.23 0.00 506,131Murree Brewery 66.37 66.00 64.00 65.49 -0.88 1,921Shakarganj Food 4.50 5.50 5.39 5.50 1.00 16,000Shezan Inter. 115.00 111.00 109.25 110.07 -4.93 1,751Diamond Ind. 8.20 8.20 7.20 8.20 0.00 150Pak Elektron Ltd. 3.88 3.90 3.20 3.42 -0.46 363,050Singer Pakistan 13.07 14.07 13.07 14.06 0.99 502Tariq Glass Ind. 8.34 8.35 8.35 8.35 0.01 1,500Grays of Cambridge 23.75 23.75 23.60 23.75 0.00 10Pak Tobacco Co. 57.92 59.00 57.92 57.92 0.00 1Shifa Int.Hospitals 29.48 30.49 28.99 30.24 0.76 600Hum Network Ltd. 16.00 16.00 15.75 16.00 0.00 502Media Times Ltd 7.96 8.00 6.96 7.99 0.03 3,236P.I.A.C.(A) 1.85 1.99 1.76 1.81 -0.04 24,136P.T.C.L.A 10.16 10.20 9.82 9.99 -0.17 2,331,360Telecard Limited 0.81 0.80 0.71 0.75 -0.06 43,023Wateen Telecom Ltd 1.80 1.94 1.75 1.75 -0.05 191,954WorldCall Telecom 0.89 0.94 0.83 0.86 -0.03 445,463Sui North Gas 16.82 16.96 16.00 16.25 -0.57 381

syMBOl OPEN hIGh lOW CURRENT ChaNGE vOlUME

Oil and GasAttock Petroleum 411.29 419.00 410.55 412.00 0.71 36,564Attock Refinery 115.05 116.90 112.50 113.10 -1.95 463,796Burshane LPG 20.96 21.51 20.01 21.00 0.04 41Byco Petroleum 6.90 6.95 6.85 6.87 -0.03 113,350Mari Gas Co. 90.37 91.25 88.25 90.02 -0.35 16,930

ChemicalsAgritech Limited 16.99 17.50 17.50 17.50 0.51 500Arif Habib Co SD 28.54 28.85 28.25 28.40 -0.14 386,065Bawany Air Products 5.81 5.00 5.00 5.00 -0.81 3,000Clariant Pakistan 155.00 158.35 153.00 157.80 2.80 4,858Dawood Hercules 34.19 34.70 33.90 33.90 -0.29 37,823

Industrial metals and MiningCrescent Steel 19.31 20.00 19.00 19.79 0.48 615Dost Steels Ltd. 1.20 1.33 1.15 1.25 0.05 7,365Huffaz Seamless Pipe 8.40 8.50 8.35 8.35 -0.05 2,122Int. Ind.Ltd. 29.07 29.53 29.00 29.25 0.18 6,422Inter.Steel Ltd. 10.01 10.49 9.80 9.80 -0.21 2

Construction and MaterialsAl-Abbas Cement 2.11 2.30 2.00 2.30 0.19 370,668Attock Cement 51.93 52.79 50.06 51.65 -0.28 3,527Berger Paints 14.30 14.00 14.00 14.00 -0.30 95Cherat Cement 7.52 7.68 7.35 7.64 0.12 1,173D.G.K.Cement 20.22 20.53 20.11 20.30 0.08 1,564,009

General IndustrialsCherat Packaging 28.56 29.00 28.60 28.85 0.29 6,065ECOPACK Ltd 3.42 3.50 3.35 3.35 -0.07 8,506Ghani Glass Ltd 40.17 40.75 40.00 40.75 0.58 1,095MACPAC Films 7.70 7.70 7.60 7.70 0.00 890Packages Limited 85.83 89.51 86.10 86.10 0.27 2,553

Industrial EngineeringAdos Pakistan 5.25 5.99 5.30 5.30 0.05 105AL-Ghazi Tractors 174.55 183.27 177.99 183.06 8.51 5,018AL-Khair Gadoon 4.51 5.51 5.50 5.51 1.00 4,492Bolan Casting 28.50 28.01 28.00 28.01 -0.49 639Dewan Auto Engg 0.75 0.78 0.78 0.78 0.03 173

Automobile and PartsAtlas Battery Ltd. 167.13 169.00 166.60 167.00 -0.13 923Atlas Honda Ltd. 117.00 122.00 121.90 122.00 5.00 100Dewan Motors 2.13 2.20 2.10 2.20 0.07 602General Tyre 17.00 18.00 17.00 17.25 0.25 6,734Ghandhara Nissan 2.33 2.97 2.60 2.60 0.27 3,003

BeveragesMurree Brewery Co. 110.49 111.43 109.00 111.18 0.69 1,170Shezan Int’l 150.02 150.00 145.05 145.58 -4.44 203

Mutual Funds

fund Offer Repurchase Nav

Alfalah GHP Cash Fund 501.2900 501.2900 501.2900 Askari Islamic Asset Allocation Fund 114.7196 111.8516 111.8516Askari Islamic Income Fund 103.6501 102.6136 102.6136 Askari Sovereign Cash Fund 100.6900 100.6900 100.6900 Atlas Income Fund 519.3500 514.2100 514.2100 Atlas Islamic Income Fund 519.0900 513.9500 513.9500Atlas Money Market Fund 516.9700 516.9700 516.9700 Atlas Stock Market Fund 453.1500 444.2600 444.2600 Crosby Dragon Fund 82.9800 81.3500 81.3500

fund Offer Repurchase Nav

HBL Money Market Fund 100.2768 100.2768 100.2768 HBL Multi Asset Fund 87.0103 85.3042 85.3042 HBL Stock Fund 97.6745 95.2922 95.2922 IGI Income Fund 101.8987 100.8898 100.8898IGI Stock Fund 112.3545 109.6141 109.6141 JS Principal Secure Fund I 121.5000 111.5200 117.3900 JS Principal Secure Fund II 104.1200 96.5000 101.5800 KASB Cash Fund 0.0000 0.0000 100.1087

Markets

Friday, 16 December, 2011

06

top 10 sectors

24% 01%Construction & Materials

Chemicals General Industrials

07%Electricity

02%03%

Fixed Line Telecommunication

01%Equity Investment Instruments

Financial Services

09%Banks35%Oil & Gas10%Personal Goods08%

International Oil PriceWTICrude Oil

$95.52

BrentCrude Oil

$105.02

STOCK MARKET HIGHLIGHTS

Index Change Volume Market ValueKSE-100 11139.52 -161.47 43,855,890 1,969,263,156LSE-25 2749.64 -61.74 1,719,144 37,917,007ISE-10 2553.44 -18.87 13,082 496,805

Major Gainers

Company Open High Low Close Change TurnoverColgate Palmolive 634.87 649.00 621.00 639.11 4.24 66Dadex EternitXD 35.49 37.26 37.26 37.26 1.77 1Leiner Pak Gelatine 16.40 17.40 16.40 17.40 1.00 500Shakarganj Food 4.50 5.50 5.39 5.50 1.00 16,000Singer Pakistan 13.07 14.07 13.07 14.06 0.99 502

Major Losers

UniLever Pak Ltd. 5406.67 5443.99 5200.00 5329.80 -76.87 208Nestle PakistanXD 2314.00 2350.00 2228.00 2290.60 -23.40 54National Refinery 240.99 240.00 230.00 230.88 -10.11 172,374P.S.O. 239.61 239.00 229.00 230.39 -9.22 360,383Pak Oilfields Ltd. 361.88 360.49 353.25 354.89 -6.99 458,899

Volume Leaders

Fatima Fert.Co. 22.10 22.00 21.00 21.50 -0.60 5,991,996Hub Power Co. 36.04 36.03 34.95 35.15 -0.89 4,136,319Fauji Fert BinXD 48.31 47.94 45.91 46.18 -2.13 3,423,950Lotte PakPTA 9.03 9.00 8.69 8.77 -0.26 3,283,821Engro Corp 104.03 103.50 98.83 99.08 -4.95 2,570,956

Bullion MarketPer Tola (PKR) Per 10 Gm (PKR) Per Ounce US$

Gold 24K 53,227.00 45,682.00 1,585.00Gold 22K 51,608.00 44,245.00 –Silver (Tezabi) 967.00 830.00 35.05Silver (Thobi) 1025.00 880.00 –

Interbank RatesUS Dollar 89.6165UK Pound 138.6009Japanese Yen 1.1491Euro 116.2416

Buy SellUS Dollar 89.40 90.20Euro 115.54 116.98Great Britain Pound 137.89 139.49Japanese Yen 1.1385 1.1489Canadian Dollar 85.35 87.68

Hong Kong Dollar 11.34 11.58UAE Dirham 24.26 24.47Saudi Riyal 23.77 23.95Australian Dollar 87.69 90.31

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Friday,16 December,2011

news

07

ISLAMABAD

sTaFF REPORT

DePUTY Chairman, PlanningCommission, Dr Nadeem ulHaque emphasised the impor-tance of understanding impli-

cations of global financial crisis forsustained economic growth. Chairing thelecture on the third day of the annualconference of the Pakistan Society of De-velopment economists he said in Pak-istan’s context the underdevelopedfinancial system has made it immune tothe international financial crises but atthe same time it is not conducive for itslong term economic growth.

The conference also honoured emi-nent economist Dr Parvez Hasan. He saidPakistan could not grow until saving cul-ture was introduced instead of foreign aidand loans. He said development of infra-structure was necessary for rapid eco-nomic growth along with increasing the

local investment in the export orientedsectors. However, he stressed that im-provement in governance was required toachieve these aims, as without good gov-ernance economic progress was not pos-sible. He said the world is passingthrough turmoil due to financial crisisbut international trade will not collapse,it will grow. The government shouldfocus on enhancing export oriented sec-tors as the share of other major develop-ing countries in international trade havegrown four times during the last fewdecades. He said upto 80 per cent of newlabour force will come from South Asianand Sub-Sahara African countries. Fac-tors of productivity have remained lowand new areas of trade should be focusedto provide employment to the entry ofnew labour force. He said Pakistan waswitnessing fifth year of double digit infla-tion and it was due to the high borrowingof government. He warned that if faith incurrency vanishes then it was difficult to

revive. He said there was no need to beemotional about exchange rate and letthe market make correction.

earlier, delivering the distinguishedlecture, Professor Atif mian of Universityof California said great recession in US,has to offer important lessons. This reces-sion was triggered by massive accumula-tion of debt on US household balancesheet. US households borrowed more andmore for every dollar of income, which in-creased dramatically from 2000-2001. Hepointed out that this was not accompa-nied with high growth. Professor mian ar-gued that when credit comes into aneconomy it results in two different affects.On the one hand, when it comes into geo-graphical regions where more houses arebuilt housing prices do not increase a lotwhile on the other hand, in areas wheremore houses cannot be built, it shows upin increasing housing prices. When hous-ing prices increase, the households bor-row more against value of their houses,

which creates bubble. And one importantconsequence of which is that the first peo-ple to default are the ones who were lastto borrow because they had little income.Consequently, the net worth of US house-holds started to decline. macro impact ofthis situation is that aggregate demanddecreases and employment to populationratio declines, which has social and polit-ical consequences. Professor mian, chalk-ing out lessons that can be learnt fromthe financial crisis, said the first lessonthat we can learn from this is that debtmatters should be given priority in theoryformulation. When you have debt ittranslates into huge distributional shockas well, but nothing happens to that lend-ing class. The way around this problem isto reverse the distributional shock, whichis difficult due to political reasons. There-fore, financial contracts should be re-formed ex ante, he concluded. A paneldiscussion on a very important theme ofentrepreneurship was also held on the

third day of the conference. The discus-sion was chaired by Dr rashid Amjad,vice Chancellor, PiDe. The panelists in-cluded Azam Chaudhary, Dean, LahoreSchool of economics, Lahore; Zafarmueen Nasir, Dean, Business Studies andChief of research, PiDe, islamabad;Thomas morris, Chief economist,USAiD, islamabad; Shoaib Z. malik, Di-rector, Kausar Group of Companies, andOmer Saeed, Chief executive, Service in-dustries Limited, Lahore. The paneliststipped entrepreneurship as key to privatesector development and economic growthin Pakistan. They addressed issues suchas factors hindering entrepreneurship inPakistan and how it can be promoted.They said entrepreneurial skills do notfully transfer to the next generations.Further, they said entrepreneurship cur-riculum taught at educational institutionsin Pakistan is not up to par and it shouldbe revised according to the needs of thedomestic economy.

Implications of financial crisis need to be understood: Dr Nadeem ul haque

Newly appointed CEO Engrofoods, afnan ahsan

Engro foods isalready doing great;my focus will be totake it a step further

ISLAMABAD

amER sIal

eCONOmiC Coordina-tion Committee of thecabinet (eCC) onThursday ordered re-

tendering for purchase of200,000 tonnes of sugar,banned import of CNG cylindersand conversion kits and their in-stallation in new vehicles, andalso banned export of POL prod-ucts to Afghanistan and CentralAsian republics. The meeting ofeCC was held under chairman-ship of minister for finance DrAbdul Hafeez Shaikh. An officialsource said to the surprise ofcommittee members. ChairmanPakistan Sugar mills Association(PSmA) Javed Kayani was againpresent in the meeting to lobbyfor the association for the pur-chase of sugar from local sugarmills. ministers were concernedover Kayani’s presence again asunder the rules no outsider couldparticipate in eCC meeting.

Kayani stressed upon thecommittee to approve the al-ready negotiated price with

PSmA so that the process couldbe started to make payment tofarmers. However, the commit-tee rejected his intervention anddirected re-tendering for theprocurement. it was decided thatthe bench mark price on theopening day of the tender wouldbe the wholesale price of sugar incommodity market. it was de-cided that all sugar mills will beinvited for the tenders instead ofPSmA and up to 10,000 tonneswill be procured from each millat the finalised rate. it was alsodecided that the mills failing tosupply sugar will be imposedwith a hundred per cent penalty.

The sub committee formedafter last eCC meeting submittedits recommendations which low-ered sugar purchase price fromrs63 to rs53.73 per kg. it pro-posed elimination of 3.5 per centwithholding tax on sugar to beprocured from local sugar mills.Both recommendations were ac-cepted by the committee, thesource said. According to the of-ficial statement, eCC decidedthat purchase of sugar will be re-tendered with certain modifica-tions in tender terms andconditions. The committee di-rected TCP to issue a gall-up ten-der and finalise the processwithin next two weeks. eCC wasof the opinion that the black-listed sugar mills will be also al-lowed to bid in the tenderprovided they deposited thepenalty to TCP. This decisionwas made in good spirit so that alevel playing field was providedto all mills. eCC also approved

ban on import of CNG cylinderand conversion kits in the wakeof current gas shortage in thecountry. installation of new CNGkits in vehicles will also bebanned. manufacturers were al-lowed to use their existing stockof kits and cylinders. However,CNG fitted public transport ve-hicles buses and vans are ex-empted from this moratorium.An official source explainedthat ministry of petroleum wasattempting to convert CNGusers to LPG; as CNG kits andcylinders were not manufac-tured locally, their ban will shiftpeople to LPG.

eCC reviewed its previousproposal of monthly natural gasload management programmeon SNGPL system, and decidedto withdraw the previous ap-proval of supply of 76 mmcfd gasto iPPs because of severe short-age of gas in coming months andto enhance gas supply to fer-tiliser plants. it also approvedenergy efficiency audit of fer-tiliser plants and ban of POLproduct export to Afghanistanand Central Asian republic, pro-posed by ministry of petroleum.The committee was informedthat the actual conditions werequite different as the export wasonly on papers and all POL prod-ucts were being sold in the coun-try. The committee discussedproposal of ministry of indus-tries for import of urea for rabiSeason 2011-12. it was informedthat import requirements of ureawere 700,000 tonnes against de-mand of 3.4 million tonnes dur-

ing rabi season, out of which200,000 tonnes have alreadybeen imported. minister for pe-troleum said import require-ments would further increasedue to short supply of gas incoming two months. eCC dis-cussed the proposal at lengthand decided to meet the remain-ing shortage of urea for rabi2011-12. Finance minister in-quired about formula on thebasis of which gas was providedto fertiliser plants and took ex-ception that certain plants didnot lower prices of their prod-ucts. He expressed concern overpricing regime and subsidy pro-vision and directed that a properdistribution mechanism be iden-tified. A committee was formedheaded by minister for petro-leum including Secretaries ofWater of Power, Production, Fi-nance, Food Secretary, indus-tries and Deputy ChairmanPlanning Commission, to dealwith fertiliser companies for fix-ation of urea price. The commit-tee will report to eCC in three tofour days. Committee also delib-erated upon distribution of avail-able and imported urea, anddirected concerned ministry toensure the pricing regime for theurea. And in this regard the lineministry was asked to have ameeting with dealers of urea inthe provinces to have a unifiedprice in the market so that thefarmers should get the sub-sidised price. it was decided thathoarding of fertiliser be curtailedby the dealer to avoid fluctuationin urea price.

of sugarg PsMa Chairman Javed

Kiyani demandspurchase of sugarfrom local industry

g Export of petroleumproducts toafghanistan disallowed

g Energy Efficiencyaudit of fertiliserplants ordered

kArAcHI

sTaFF REPORT

WiTH no uptick in cementdispatches and slowdownin infrastructure spend-

ing, investors remained distant fromPakistan cement sector which postednegative return of 33 per cent in 2011YTD, said analysts. moreover, theysaid global debt crisis also kept localinvestors at bay due to uncertainty incommodity markets. Out of 19 listedcement companies, only two compa-nies, Kohat Cement (KOHC) andLucky posted positive returns of 22per cent and nine per cent respec-tively. “For a better comparison wehave excluded Javedan Corporation(JvDC) as it has relinquished its ce-ment operations,” said Furqan Pun-jani of Topline Securities.

The analyst said the worst per-forming stocks in the sector were Al-Abbas Cement (AACiL) followed byBestway (BWCL). Turnaround inprofitability amid higher sales in localarena, Kohat Cement stood as the bestperformer in the cement sector uni-verse. Scrip posted a double digit pos-itive return of 22 per cent in 2011 YTDoutperforming the benchmark KSe100 by 28 per cent. Similarly, Lucky,with 9 per cent return stood as the sec-

ond best performing stock in cement,thus outperforming KSe-100 index by15 per cent. The cost efficient plant notonly benefited from rising local ce-ment prices (highest share in localmarket) but also remained stable inexport markets despite weak globaldemand. Javedan Corporation alsoposted a positive return of eight percent during the said period but sincethe company has abandoned its ce-ment operations we have not includedit in our sector return calculation.

Apart from heavy weight Luckycement and turnaround story inKohat cement, entire cement sectorposted negative returns. Al-AbbasCement with negative 73 per centreturn stood as the worst performer.Besides technical difficulties inplant, non materialisation of acqui-sition deal by Attock Cement re-mained the other major reasonbehind its huge underperformance.

Bestway cement posted negativereturn of 68 per cent over its persist-ent under utilisation while FCCLposted negative return of 63 per centamid delay in commercial productionof its new 2mn ton plant. “moreover,with depressed market sentiments,DG Khan with huge investment port-folio posted negative return of 38 percent,” said the analyst.

LAHOre

sTaFF REPORT

PAKiSTANi securities marketregulator has shown keen in-terest to promote and allow

listing of products based on india’sSensex index at domestic stock ex-changes of the country. This develop-ment took place during Pakistanicapital market focus group’s visit toBombay Stock exchange, where theleader of the Pakistani delegation mrimtiaz Haider, Commissioner of Se-curities market Division of SeCP in-formed BSe officials that Pakistanmay allow listing of such products tosensitise Pakistani investors about in-dian market and economy on thewhole. He said on reciprocal basis, in-dian markets should also considerlisting products based on Karachistock exchange’s premier index – KSe100. Pakistani delegation comprising

of securities market regulators, stockand commodity exchanges leaders,heads of the depository and clearinginstitutions, brokerage houses CeOsand institutional investors is currentlyvisiting india under Aman Ki Asha(Hope for Peace) initiative promotedjointly by Times of india andJang/Geo group of Pakistan.

The delegation used the oppor-tunity to get detailed briefing aboutnew ventures of BSe-the UnitedStock exchange of india and indianClearing Corporation Limited,where they were briefed by mrAshishkumar Chauhan, the deputyCeO of BSe and mr. Balasubrama-niam, the Chief Business Officer ofthe Asia’s oldest exchange. The del-egation also discussed various areasof potential cooperation such as co-operation in the field of capacitybuilding, Sme listing proceduresand market management.

Cement sector underperformsKsE by 27pc, analysts

India,Pakistan to evaluate listing of sensex, KsE indices

ECC orders re-tendering for 200,000t

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