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Weekly Market Roundup

November 17, 2019 (MLN): The KSE-100 Index gained another 1,605 points over the week and concluded at 37,583-mark, i.e. up by 4.46%, as compared to previous week’s closing of 35,978 points.

Commercial Banks, Power Generation & Distribution, Cement and E&P companies emerged as the top gainers during the week, as they collectively contributed 994 points to the index. Company wise, the scrips of HUBC, HBL, BAHL, ENGRO and TRG earned the maximum gains.

Meanwhile, the KSE All Share Market Cap increased by Rs. 253.4 billion or 3.64% over the week, being recorded at Rs. 7.22 trillion as compared to a Market Cap of Rs. 6.66 trillion recorded last week.

This week, the local investors bought securities worth Rs. 66.7 billion, amongst which, Individual investors emerged as the largest net buyers as they bought securities worth Rs. 41.9 billion. On the other hand, local investors sold securities worth Rs. 67.3 billion. This resulted in an overall net selling of Rs. 651.7 million over the week.

Forex Update:

The Rupee continued it run against the dollar for the sixth successive week, gaining 8 more paisa with the dollar closing at 155.39 compared to 155.47 from the previous Friday.

During the last six weeks the PKR has appreciated by 1.13 Rupees against the dollar.

Data released by the State Bank of Pakistan of showed PKR’s Real Effective Exchange rate increased by 1.91 percent in September.

PKR has become increasing stable as the 30 Day volatility dropped to 0.49 percent compared to 60 day volatility of 1.37 percent on the back of increasing remittances and foreign investment and decreasing trade deficit.

Fixed Income:

Bond and T-Bill yields in the secondary market were mixed as shorted term yields increased and longer term yields decreased. Yield for Bond and MTB’s up to 3 years increased, with 2 year PIB’s increasing by 36 basis points compared to last week.

On the other hand, following the cut-off yields from the PIB auction the 5 year yield decreased by 15 basis points.

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Weekly News Roundup

November 17, 2019 (MLN): The departed week witnessed series of several important developments that have a direct impact on the economic operations of Pakistan. These developments include:

On Friday, The State Bank of Pakistan (SBP) released the auction calendar for the next three months, Nov-Jan, in which it aims to raise Rs.3.75 trillion from the auction of Market Treasury Bills (MTB) and Pakistan Investment Bonds (PIB).

Mr. Muhammad Usman Dar, Special Assistant to the Prime Minister on Youth Affairs; along with Mr. Asad Umer, Chairman National Assembly Standing Committee on Finance, chaired a high-level meeting with the representatives from State Bank of Pakistan, Presidents and senior officials of National Bank of Pakistan, Bank of Punjab, and Bank of Khyber to review the processing of loan applications received under Youth Entrepreneurship Scheme (YES) of Kamyab jawan Programme.

The same day, IFC, a member of the World Bank Group, has led the financing of a first-of-its-kind program to build six wind power projects in Pakistan, named the Super Six, with a total investment of US$450 million, to help deliver cleaner, cheaper power to meet the country’s critical demand for energy and reduce reliance on expensive imported fossil fuels.

Moreover, Prime Minister Imran Khan said the country's economy has stabilized with all economic indicators moving on the positive trajectory. He was speaking at the signing ceremony of Super-6 310-MW Wind Power Projects in Islamabad.

On Thursday, The Parliamentary Secretary for Maritime Affairs Jamil Ahmed Khan in the National Assembly said that draft of deep fishing policy was ready and soon it would be tabled in the Cabinet for approval. The government was determined to take the export of fish up to three billion dollars, from 400 million dollars, said Parliamentary Secretary.

Furthermore, Finance Advisor, Dr Abdul Hafeez Shaikh addressed at Peace and Development Conference in Islamabad. He said a country’s progress and growth is highly dependent with the other countries’ progress in the region.He mentioned to attract foreign investment, the country should adopt attractive policies. The conditions offered should be conducive for investment. Alone one country could not offer thousands of jobs.

On Wednesday, The State Bank of Pakistan (SBP) conducted an auction on Wednesday in which sold PIBs worth Rs.188.43 Billion in fixed and floating rate bonds.

PM Imran Khan had addressed the MoU signing ceremony between Pakistan and China. Pakistani company, Daewoo Pakistan Express Bus Service Limited and Chinese Company, Doublestar MSD Tyres signed a joint venture to manufacture tyres.

In addition, Economic Coordination Committee (ECC) at its meeting in Islamabad fixed the wheat support price at 1350 rupees per forty kilogram.The meeting was chaired by Adviser on Finance Hafeez Sheikh.

The electric vehicles manufacturers and assemblers have come together to establish Pakistan Electric Vehicles Manufacturers Association (PEVMA) with Mr Sheikh Ehtesham ul Haq of SZS Group and Mr Muhammad Ayaz of Green Wheels Private Limited nominated as Chairman and Senior Vice Chairman of the association.

Besides, the recent measures by the Securities and Exchange Commission of Pakistan (SECP) to make the process of companies’ incorporation easy and hassle-free, led to 19 % increase in the registration of new companies in October 2019. In October, the SECP has registered 1,659 new companies, raising the number of total registered companies to 107,062.

On Tuesday, The State Bank of Pakistan (SBP) has, once again, strongly denied that any proposal to discontinue Rs. 5,000 currency note has been forwarded by SBP.

Besides, The Governor State Bank of Pakistan, Dr Reza Baqir briefed on the economy which covered a range of issues in a press conference, held in State Bank’s head office. He said that he will announce some measures to boost trade and ease of doing business. Two decisions have been taken to smooth the business activity- advance payment eased, and other contract services from abroad problems to be eased.

The Securities and Exchange Commission of Pakistan (SECP) has approved the Growth Enterprise Market Listing Regulations to enable Small and Medium Enterprises (SMEs), Greenfield projects, Not for Profit and other companies to raise capital through capital markets conveniently.

The same day, Alternative Energy Development Board (AEDB) signed implementation agreements with various companies for setting up 11 wind power projects in Jhimpir Sindh.

Moreover, The Central Directorate of National Savings (CDNS) has collected a net target of Rs 20 billion by November 8, of the fiscal year 2019-20.

The Oil and Gas Regulatory Authority (OGRA) has notified revised prices of Regasified Liquefied Natural Gas (RLNG) for the current month. According to the notification, there is $0.228 per mmbtu (Million British Thermal Unit) increase in sale price of imported RLNG on the system of Sui Southern Gas Pipelines Company (SSGC) for the month of November as compared to the last month. The new price of the RLNG for SSGC system has been fixed at $ 10.9385 per mmbtu.

On Monday, the Prime Minister Imran Khan was chairing a high-level meeting on restoration and promotion of the construction sector in Islamabad on Monday. He said the development of the construction sector is essential to accelerate the economic growth of the country.

The government has decided to announce a package of Rs 200 billion for exporters to promote exports besides increasing production and job opportunities in the country, Advisor to Prime Minster on Finance and Revenue Dr Abdul Hafeez Shaikh said.

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Weekly Economic Roundup

November 17, 2019 (MLN): The financial picture of the country in full details was highlighted with the economic and financial data releases over the course of the week.

  • The total external debt and liabilities of Pakistan during the first quarter of Fiscal Year 2020 stood at USD 106,891 million, i.e. 11% higher as compared to the figures of same period last year and merely 0.5% higher as compared to the previous quarter.
  • Pakistan's trade deficit for 4 months (July-October) FY20 was USD 7.78* billion compared to a deficit of USD 11.70 billion from the corresponding period from FY19.
  • Pakistan's Forex Reserves decreased by USD 15.50 Million or 0.1% and the total liquid foreign reserves held by the country stood at USD 15,502.40 Million on Nov 08, 2019.
  • According to a weekly report on SCRA released by the State Bank of Pakistan, the gross sale of securities during the week was recorded at Rs. 36.3 billion, which is around 864 percent higher than the figures recorded last week.
  • Pak Rupee's Real Effective Exchange Rate Index (REER) increased by 1.91 percent in September 2019 to a provisional value of 94.45 from the revised value of 92.68 in August 2019.
  • Overseas Pakistanis remitted USD 2 billion in the month of October 2019 compared to USD 1.75 billion in September 2019 showing an increase of USD 252.85 million over the previous month.
  • Foreign investments in treasury bills have reached a new high, a report released by State Bank of Pakistan (SBP) revealed on Thursday. Reportedly, the investments in treasury bills from November 1, 2019 to November 12, 2019 amounted to $267 million.
  • Exports of raw cotton from the country during the first quarter of the current financial year increased by 53.65% as compared to the exports of the corresponding period of last year.
  • The sale of passenger cars during the month of October 2019 stood at 9,569 units against the production of 9,547 units, a monthly report by Pakistan Automotive Manufacturer's Association (PAMA) revealed on Tuesday. This translated into a decline of 12.4 percent on a monthly basis and 55.16 percent on a yearly basis.
  • The non-government sector has borrowed a net sum of Rs.45.05 billion during the week ended November 01, 2019, which brings the cumulative net borrowing for ongoing fiscal year FY2020 to Rs.20.82 billion. The net retirement as of prior week was recorded at Rs.24.23 billion.
  • The government of Pakistan has acquired an additional debt of Rs.49.07 billion during the week ended November 01, 2019, which brings its total net borrowing for ongoing fiscal year 2020 to Rs.297.39 billion. As of prior week, the government had borrowed a net sum of Rs.248.32 billion.

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Gold price decrease Rs50 per tola

Nov 16, 2019: The price of 24 karat gold decreased by Rs50 and was traded at Rs 86,150 per tola, against the last closing of Rs 86,200 per tola the previous day, Karachi Sarafa Association reported Saturday.

Likewise, the price of 10 gram gold also declined by Rs43 to Rs73960 against Rs 74,3903 during the previous day.

The price of silver remained stable and was traded at Rs 1000 per tola and that of 10 gram silver was traded at Rs 857.34.

In international market, the price of per ounce gold increased by $3 and was traded at $ 1469 against closing of $ 1466 on last trading day.

APP

SEC Policy Board advises SECP to review onerous laws

November 15, 2019: The Securities and Exchange Policy Board met in Islamabad at the SECP Headquarters under the Chairmanship of Professor Khalid Mirza.

The Policy Board approved the General Takaful Accounting Regulations, 2019, the Provisional Manager and Official Liquidator Regulations 2019, Corporate Rehabilitation Regulations 2019, Directive on adoption of IFRS-14 Regulatory Deferral Accounts under section 225 of Companies Act 17, the Directive on Financial reporting of family window takaful operations  by life insurers, and Compliance Of Compulsory Group Insurance Under the Industrial and Commercial Employment (Standing Order) Ordinance, 1968,

The Policy Board took up the matter to initiate review process of the Securities Act 2015 keeping in view to remove harsh regulatory impediments that hamper the overall growth of securities market with the aim to facilitate the ease of doing business in the country. The Board also took the decision to review and rationalize the Futures Act, 2016 and the Limited Liability Partnership Act, 2017 which are onerous and cumbersome, so as to constitute a facilitating regulatory environment.  The Board also advised the Commission to revisit the Regulatory Sandbox Guidelines 2019 (Insurance) and gave directions for appropriate amendments be made to the Companies (further Issue of Capital) Regulations 2018 so as to facilitate and promote the mobilization of capital.

Firm directions were given by the Board to the Commission to recall all staff members seconded to the LEAs and also transfer back cases wrongfully referred to NAB.  Directions were also given for the LEAs to be appropriately for the cost of SECP staff seconded.

The Board directed that the Growth Enterprise Market (GEM) Listing Regulations of PSX proposed by the Commission be looked at again for easing the entire market and making provision for a premium board for a premium tier in the stock exchange for the growth of the capital market and encouraging IPOs in the primary market and

The Board took serious note of the statement of the CEO of Pakistan International Airlines Corporation regarding profitability of PIA which prima facie can be taken as manipulating the  market.  The Commission has been directed to look into and take appropriate enforcement action. The Board directed the Commission to develop a system by which public sector organizations are duly monitored for any possible violations of the laws administered by the SECP.

The Board expressed concern regarding the negative mindset of the the Commission’s staff and gave direction for appropriate steps to ensure that service orientation is inculcated in the staff rather than the current obstructive and “ruler-like” mindset.

The governance structure of the stock exchange was reviewed and substantial recommendations were made by the Board.  It was noted with concern that several months have passed and no appropriate professional has been appointed CEO of the exchange.

Regarding the SECP Annual Report 2019, the Board decided that the Commission to go back to the ‘drawing board’ and ensure it is professional, it portrays facts that are both positive and negative, states clearly the problems faced by the Commission during the past year particularly in reference to unwarranted intrusion by LEAs and also states realistically future goals and strategic plans of the Commission.

The Policy Board considered the draft Insurance Bill 2019.  The Board directed that draft Law should be reviewed to remove harsh regulatory impediments that hamper the overall growth of Insurance sector with the aim to facilitate the ease of doing business in the country. Further, the draft amendments/law be simplified and should be principles based.

It was noted by the Members of the Board that the ex-officio Secretaries who are members of the Board do not attend meetings and invariably send nominees to the meetings. This has effectively short-changed the working of the Board.

The Securities and Exchange Policy Board, in pursuance of Section 12 of the Act 1997, comprises ex-officio members of the Ministries of Finance, Commerce, and Law, SBP, SECP and persons of eminence from the private sector. 

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