Pakistan Mercantile Exchange has acquired memberships of Association of Futures Markets (AFM) and World Federation of Exchanges (WFE). Both are prominent bodies where exchanges, financial market institutions and other industry participants come together to work for the development and growth of Exchange-traded Futures Markets.
Volumes at Pakistan Mercantile Exchange stood at Rs490.5 billion in fiscal 2011 against Rs63.6 billion
The Association of Futures Markets (AFM) is a not-for-profit association formally established in 1998. The prime objective of AFM is to promote and encourage the development of new derivatives exchanges worldwide from established to the emerging markets.
Samir Ahmed, MD Pakistan Mercantile Exchange had the honor of receiving an invite and attending the 15th Annual AFM Conference that was held in Budapest last month. He represented PMEX for formal induction as Associate Member.
He also spoke on “The Derivatives Market Outlook for Emerging Markets in Asia” alongside representatives from TAIFEX, NYSE Euronext and Istanbul Stock Exchange. With the inclusion of PMEX, AFM now has 34 members out of 26 countries.
PMEX also participated at the World Exchange Congress 2012, titled “Maintaining a Competitive Edge” where PMEX COO, Amjad Khan was invited to speak on ‘Preparing your Exchange for remote access nodes and Foreign Markets’.
PMEX is Pakistan’s first and only technology based commodity and futures exchange. It is licensed and regulated by the Securities and Exchange Commission of Pakistan.
Its shareholders are National Bank of Pakistan, Pak Kuwait Investment Co, Zarai Taraqiati Bank and the three stock exchanges of the country. PMEX currently lists various contracts for trading in Gold, Silver, Crude Oil, IRRI6 Rice, Palm Olein, Sugar, Wheat and Kibor.
Asad Umar President and CEO of Engro Corporation has taken early retirement from his job after serving it more than twenty-seven years, it has been confirmed officially.
Asad Umar, President and CEO Engro Corporation
He is leaving Engro for pursuance of his own personal projects. His successor will be announced by the end of April and will assume the position during the month of May.
Umar joined Exxon Chemical Pakistan Limited in February 1985 as a Business Analyst. His career progressed through various assignments in different divisions of the company and he was appointed CEO of Engro Polymer & Chemicals in October 1997. In January 2004 he became the President and CEO of Engro Corporation (then known as Engro Chemical.)
Umar has not only provided leadership in the organization at various levels, but has also been an active contributor on various boards both inside and outside Engro.
In his eight years as President and CEO of Engro Corporation, he has dramatically transformed a chemical company into a major Pakistani conglomerate.
Umar is the Chairman of Pakistan Business Council, Pakistan Chemical & Energy Sector Skill Development Company and Punjab Skill Development Fund. He is a member of the Board of Directors of Engro Corporation Ltd., Karachi Education Initiative, State Bank of Pakistan and Dawood Hercules Corporation Limited, and Trustee of Lahore University of Management Sciences, famously known as LUMS.
He was awarded the Sitara-i-Imtiaz in 2010.
He has previously served as Director of Oil & Gas Development Company Ltd., Karachi Stock Exchange, Pakistan Centre for Philanthropy, Pakistan State Oil and Port Qasim Authority. He also served as Chairman of Young Presidents’ Organisation, Pakistan Chapter.
Zakir Mehmood, President and CEO of Habib Bank Limited (HBL) is likely to quit his job on his own desire after serving the bank for 12 years as a top official, highly reliable sources in the banking industry told EconomyAge.
Habib Bank President Zakir Mehmood
He met board of directors recently and expressed his will to leave the bank as he is seeking relieve now having put in untiring endeavors to develop the organization as strong and successful, a source quoted EconomyAge on condition of anonymity.
HBL’s board of directors has acknowledged his request and looking for alternative President for the bank, however, they have yet to be decided whether Mr Mehmood will continue his job or he will be given green signal to leave bank with warm farewell.
There will be several strong candidates with rich experience and leadership quality to replace the incumbent HBL CEO in the future. Among them, the two favorite names are Nauman K Dar, Head of Corporate, Investment and International Banking and Sima Kamil, Head of Retail and Consumer Banking.
Afterwards, the announcement of board’s decision will be made public in the media and stock market, he added.
Zakir Mehmood was one of the finest bankers who has been leading the banking among the most profitable and expanding banks in the country.
Under his long-year term, he caused to gain several achievements including business expansion, banking services and products, human resource development, initiative of branch-less banking & global and regional records.
He had been retained as president and CEO after Habib Bank was privatized in 2004 as Aga Khan Fund for Economic Development (AKFED) acquired 51% of the shareholding in bank. (42.5% of the shareholding is retained by the Government of Pakistan (GOP), whilst 7.5% is owned by the general public).
It is merit mentioning here that bank’s majority share with management rights were sold out at Rs 22.4 billion ($ 389 million), which majority of the economists, policymakers and bankers argue the thrown away price. However the banks’ last year declared profit was Rs 22.33 billion.
After privatization, HBL has grown its branch network and become the largest private sector bank with over 1,450 branches across the country and a customer base exceeding five million relationships.
Mr Zakir Mehmood also served on boards of Khushhali bank, First Women Bank Limited, National Investment Trust Limited and Karachi Electric Supply Corporation.
With Additional input from Mr Ali Ahmad
Arif Habib Limited, a corporate broker of Karachi Stock Exchange, reports its nine months profit of Rs 38 Crore for the period ending March 2012, a growth of almost 23% from previous year’s Rs 31 Crore.
Arif Habib’s revenues increased by a five fold to Rs 63 Crore from Rs 9 Crore last year. Since last year has been very profitable for banks and Arif Habib Limited followed the growth of these institutions who are its primary customers.
Administrative expenses and finance cost increased to Rs 17 Crore and Rs 12.5 Crore from Rs 7.7 and Rs 4.8 Crore respectively.
Interestingly, Arif Habib generates a revenue of Rs 63 Crore in last nine months out of which Rs 45 Crore was made in first three months of 2012.
Arif Habib Limited has won the “Top 25 companies of Pakistan award” by the Karachi Stock Exchange in 2007 and 2008.
The SECP registered 370 companies in March. This represents a 5% increase over 353 companies that were registered during the previous month.
During the current financial year, Jul 2011- March 2012, a total 2,666 companies have been registered in comparison of 2,360 during corresponding period of previous financial year (FY), reflecting an increase of 13%.
This increase in incorporation of companies is a sign for the healthy growth and development of the corporate sector.
Private companies have the highest share in new incorporation totaling to 340 followed by 20 single-member companies, 5 public unlisted companies, 3 non-profit associations and 2 foreign companies.
Of the 2 foreign companies, one belonging to China was registered in Karachi while the other belonging to the US was registered in Lahore.
Foreign investment by nationals from Canada, the UAE, Japan, the UK, China, Panama and AJK has been witnessed in 8 new local companies. Of these, 6 companies are registered at Islamabad and 1 company each at Lahore and Karachi. Two companies are from the services sector while one each are registered in health, I.T., mining, oil and gas exploration, glass and ceramics, and hajj and umrah services each.
The sector-wise breakdown shows that with 46 companies the services sector has the highest share in new incorporation, followed by trading with 40 companies, I.T., with 36 companies, hajj and Umrah services with 33 companies, construction with 19 companies, food and beverages with 17 companies, communications with 15 companies, tourism with 13 companies, engineering with 12 companies, textile, pharmaceuticals, and broadcasting and telecasting with 11 companies each, transport, and fuel and energy with 9 companies each, corporate agricultural farming, healthcare, and auto and allied with 7 companies each, mining and quarrying with 6 companies and power generation, paper and board, and finance and banking with 5 companies each .
The Company Registration Offices (CROs) in Lahore, Karachi and Islamabad registered 115, 109 and 100 companies respectively. The remaining CROs of Peshawar, Multan, Quetta and Faisalabad registered 21, 10, 8 and 7 companies respectively.
The authorized capital and paid-up capital of 370 companies, is Rs4.02 billion and Rs774.72 million respectively.
During the month, 189 companies increased their authorized capital with the aggregate authorized capital increment of Rs8.12 billion and 131 companies raised their paid-up capital with the total paid-up capital increment amounting to Rs5.87billion.
Pakistan will co-sponsor Annual Investment Meeting 2012 (AIM 2012) in Dubai to be held from May 1-3, 2012, under the auspices of the UAE Ministry of Foreign Trade and with the support of the Consulate General of UAE.
The country sponsored the global mega event to attract foreign direct investment (FDI) and multinational companies in different sector. Pakistan sought to become one of its main sponsors to attract FDI and showcase its trade and investment opportunities available in Pakistan for foreign investors.
AIM is one the world ‘First Emerging Market’ -focused events with a theme, ‘Financing Possibilities in Frontier and Emerging Markets’. It is the brainchild of the UAE Minister of Foreign Trade, Sheikha Lubna bint Khalid Al Qasimi, who visited Karachi, last year` to open Magnificent 7 – UAE EXPO 2011, the largest single country exhibition.
AIM 2012 will attract investors from all over the world, providing a valuable platform -For cross-industry project developers, arranging meetings with institutions, corporations and private companies.
To attract FDI, it would provide an excellent forum to focus on showcasing projects and opportunities available in Pakistan at an institutional level, as well as for private projects for all participating organizations and delegates.
The event would have a gathering of major investors, leading individuals from global businesses and governments to discuss investment opportunities in the emerging markets.
It is an FDI-focused event, a unique platform to discuss prospects of investment in various businesses, from public-private partnerships to ‘Forming government-to-government interactions and realise more avenues for investment.
Pakistan International Airlines, which is already on a verge of financial destruction. With Rs. 83 Billion in revenues (Rs 8300 Crore) and with Rs 19 Billion (Rs 1900 Crore) in losses for last nine months of fiscal year 2011 – PIA is becoming what we know today a curse on taxpayers’ money.
While already troubled financially and in no position to pay its dues, Pakistan International Airlines (PIA) $100 million Islamic, IATA receivables-backed syndicated transaction has won the Euro-Money Air Finance Journal’s Asia Deal of the Year. But the question is How will you pay back?
The syndicated loan facility was arranged by Abu Dhabi Islamic Bank, Al Hilal Bank, Citibank NA, and United Bank Limited as Mandated Lead Arrangers and Joint Bookrunners.
Warba Bank in Kuwait has joined the transaction as Lead Arranger. Citibank N.A. also performed the role of the Account Bank and Security Trustee.
This facility represents the first foreign currency commercially syndicated financing for a Pakistani corporate since 2007 in a difficult credit environment. The voucher-based Islamic structure has allowed MLAs to bring in new Islamic investors to aviation and we hope to see it replicated.
Munawar Noorani, Citi’s Managing Director & Aviation Head for Europe, Middle East & Africa said, ‘We extend our heartiest congratulations to PIA for winning this prestigious award, especially given the tough competition there was from other transactions in Asia.
Again, and this time Seriously, How on Earth will you pay Back?
While there are many reasons to celebrate this award but with the recent financial results and with inflating losses – one might wonder as how PIA will be able to pay back this $100 Million, or to put it more clearly, Rs 900 Crore plus interest to these banks.
With the current situation of aviation industry worldwide and with the corruption and poor administration stories of PIA, this deal and award should only be celebrated by the banks, who are at least certain that they will get their money back. As for investors, wait for next century.
Developed economies are using Public Private Partnerships (PPP) in a fashion more appropriate for developing economies, according to a major new research project from ACCA (the Association of Chartered Certified Accountants).
The research commissioned by ACCA and conducted by Manchester Business School, Taking Stock of PPP and PFI around the world, is the first global comparison of different countries’ PPP programmes.
The report uncovers developed economies with sound institutional frameworks for PPP but struggling to deliver value for money. Meanwhile developing economies have poor PPP monitoring and review frameworks but are forging ahead with PPP projects that deliver otherwise unaffordable key infrastructure.
‘PPP in the developed world should be very different to PPP elsewhere,’ says Professor Graham Winch of Manchester Business School. ‘However, many developed economies are still approaching PPP as if they were developed economies: hoping to use PPP to procure infrastructure they can’t afford thanks to public spending constraints. It delivers infrastructure, but at a far higher cost than otherwise might be expected. Is this cost too high? Taxpayers and public spending watchdogs seem inclined to think it is.
‘This approach has resulted in a pretty bad reputation for PPP amongst the public in some developed economies, but developing economies shouldn’t let this put them off PPP. For developing economies, PPP isn’t a luxury but a necessity.
However, the speed with which developing economies are adopting PPP in their public procurement is leaving institutional monitoring and oversight behind. The use of PPP might be necessary, but if they’re not careful, developing economies could be in for a nasty PPP surprise in the coming decades as poor planning and oversight of projects comes back to bite them.’
The report found that:
- There’s no common PPP definition around the world. Broadly, it is the use of private finance to provide public infrastructure but agreement generally ends there.
- Only in rare cases can private finance offer greater value for money than traditional public sector procurement. Private finance is generally more expensive than public finance, there is a high premium payable for risk transfer, and there are important accountability issues around the commitments made by the public sector to private finance providers.
- Developed economies behave like developing economies. The additionality of PPP – providing otherwise unavailable funds for public procurement – is more likely to be of benefit in developing countries, where capital typically comes from outside the country (due to low national wealth) and the economic stimulus is relatively larger. In reality, almost allcountries use PPP for additionality reasons, no matter the official justification. The UK, for example, has for three decades pursued a form of pseudo-additionality with regards to PPP. This has provided infrastructure sooner than otherwise available, but it has created a huge debt overhang on the public sector and few projects have achieved value for money. Singapore, on the other hand, with large national reserves, is committed to PPP on a value for money basis and consequently uses PPP very rarely.
- Accounting treatments matter more in developed economies.Accounting treatment of PPP is likely to have a greater impact on the attractiveness of PPP in countries with public spending constraints (i.e. developed countries) because it determines the border between ‘on’ and ‘off’ the public balance sheet. The evidence is that accounting treatment is not a subject of national debate in countries without strict public spending constraints.
- Value for money monitoring is lax in developing economies.Value for money is the only official justification for PPP in developed economies. Countries like Japan and the UK must assure stakeholders that PPP is the procurement option with the best value for money, which can lead to strong institutional frameworks for PPP evaluation and monitoring. In countries where meeting the growing demand for infrastructure is more important than meeting that need efficiently, guidelines for value for money assessment remain under-developed or absent.
The report contains a breakdown of the history PPP and other variants of private finance around the world, as well as case studies from developing and developed countries (including, the UK, China, Singapore, France, Japan, Malaysia, India, Thailand, South Korea, and Indonesia).
‘PPP has been a bold experiment in public sector procurement over the past couple of decades, in terms of its scope and innovation,’ says Arif Masud Mirza, head of ACCA Pakistan.
‘Like all experiments, there have been mistakes, errors, and misunderstandings, but also some successes. Despite the problems, private finance has firmly established itself as a fixture in public sector procurement around the world and looks set to remain prominent. It will be interesting to see how PPP develops in the future, with improvements required in both developed and developing economies.
Developing economies have several institutional improvements to make, while developed economies are still searching for the elusive value for money.
Nadeem Lodhi has been appointed as new Managing Director and Chief Commercial Officer of Citi Bank Pakistan. He will be taking up his charge officially in the upcoming weeks, sources in the banking industry said.
Lodhi will be replacing Arif Usmani, who resigned from his position in February to work with Abu Dhabi government. Mr Usmani was working for Samba Bank in Saudi Arabia before joining Citi Bank Pakistan
Nadeem Lodhi has previously worked for Citi Bank as a Chief Country Officer Uganda. He is presently a Principal at Abraaj Capital and Head of the group’s business in Sub Saharan Africa.
He has 20 years experience in the financial sector in Africa, Middle East, Asia and Europe. Prior to joining Abraaj, Mr. Lodhi was a Managing Director at DIB Capital heading the Debt Capital Market and Syndications business where he closed several landmark Sukuk transactions.
In 2008, DIB was globally ranked as the number one Sukuk bookrunner by Bloomberg.
Lodhi began his career with ANZ Grindlays Bank plc in Asia and the United Kingdom. He holds a Bachelors degree in Economics and Finance from Muhlenberg College, USA.
The National Investment (Unit) Trust, the countrys leading fund, posted a healthy year-on-year bottom-line growth of around 30 percent during the first nine months of the current fiscal year.
The NIT has registered a net profit of Rs4,340 Crore (Rs 4.34 billion year 2011, thereby yielding an earning per unit of Rs3.23, as opposed to Rs2.85 during the same period last year.
The bottom-line growth is symptomatic of growth in dividend income and realised capital gains. This can be gauged from the fact that the Fund saw a hefty 37 percent year-on-year growth in its dividend income to Rs2,150 Crore.
At the same time, realized capital gains grew by around 63 percent to Rs 89 Crore.
The Funds Net Asset Value (NAV) amounted to Rs30.01 per unit as on March 31, glided higher by around seven percent since the start of the current fiscal year.
With exposure in equities, NIT-State Enterprise Fund (NIT-SEF) and NIT-Equity Market Opportunity Fund (NIT EMOF) flourished at the heels of growth in capital gains and dividend income.
The fund managed to yield an annualized return of around 12.69 percent to its investors, thereby outperforming its benchmark by 19 bps.
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