SUBDUED PERFORMANCE OF AUTO SECTOR
ISSUE # 38 -----
Sep 22 - Sep 28, 2014

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Pakistan Automotive Manufacturers’ Association (PAMA) has released its monthly sales data for the month of August registering growth of over 76%MoM, in indication of strong recovery from the adverse impact of advance tax. The prime gainer in the month was Corolla with sale of 3,515 units. Despite the strong recovery the numbers remained under pressure on a cumulative basis, posting a decline of 11.3%YoY in 2MFY15.
While auto industry is witnessing the declining in annual volumes, improvement in margins due to depreciation of Japanese yen is likely to support bottom line. However, analysts expect the benefit of Japanese yen depreciation to be realized in 2QFY15 where the confluence of a weaker yen and rebounding volumes are likely to drive the industry growth.........
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PAGE TOP STORIES

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EXCLUSIVE INTERVIEWS
& PAGE SPECIAL REPORTS

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CAR INDUSTRY NEEDS ACCOUNTABILITY, ENFORCEMENT OF DELETION PLAN
INTERVIEW WITH MR H. M. SHAHZAD, CHAIRMAN, ALL PAKISTAN MOTOR DEALERS ASSOCIATION

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The automobile assemblers and vendor industries enjoy the status of the most protected industries in Pakistan where the effective protection ratio (EPR) is comparatively very high. This protection has made the local industry dull and uncompetitive. The high demand for vehicles coupled with a delayed supply response has created a black market with customers paying as much as Rs150,000 to Rs300,000 extra for early delivery. This has been variously named as premium or on-money in the market; but by any name it is black marketing and it will not be unfair to assume that the supply situation is being manipulated for the companies’ benefit.........

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UNDER INVOICING AND MIS-DECLARATION A MAJOR THREAT FOR MOTORCYCLE INDUSTRY
INTERVIEW WITH MR ANWAR IQBAL, CEO, SILVER SEAL INTERNATIONAL

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There is no doubt smuggling is a big problem for an indigenous industry same is the case of Pakistan motorcycle industry. However, I will repeat my earlier statement that under invoicing and mis-declaration is a more big threat for Pakistani motorcycle industry I call it systemize and scientific smuggling. Unfortunately, major motorcycle assemblers and parts vendors are involved in this racket. Indigenization should have played the key role in optimizing cost by following Indian experience. Since Pakistan has failed in developing heavy as well as light engineering industry.......

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OIL PRICES
OIL WEEKLY BASKET PRICE

 (US Million $)
PERIOD PER BARRELS
June 27, 2014 109.62
July 4, 2014 108.03
July 11, 2014 105.73
July 18, 2014 104.65
July 25, 2014 105.33
Aug 1, 2014 104.45
Aug 8, 2014 102.44
Aug 15, 2014 101.61

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PREVIOUS ISSUES

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PAKISTAN WEATHER
3 DAYS FORECAST

  MIN MAX HUM% FORECAST.
KARACHI
TODAY 26 32 61 cloudy
TOMORROW 26 32 61 sunny
DAY AFTER 26 31 62 cloudy
LAHORE
TODAY 24 36 58 sunny
TOMORROW 24 36 55 sunny
DAY AFTER 23 36 53 sunny
ISLAMABAD
TODAY 21 34 55 sunny
TOMORROW 22 34 56 sunny
DAY AFTER 23 34 58 sunny

updated: Sun - Tue, Sep 21 - 23, 2014

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COVER STORY
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MORE TRADE ROUTES FOR PROMOTION OF TRADE BETWEEN INDIA & PAKISTAN
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Indian High Commissioner said that in order to improve interaction between the Commercial Section of Indian High Commission in Islamabad and KCCI, the possibility of providing video conferencing facility can certainly be worked out. Indian High Commission’s visa section can be linked with Karachi Chamber via video conferencing, which will improve interaction between the officers of commercial section and KCCI representatives on fortnightly basis, he said, adding that it will help in instantly resolving many issues being faced by businessmen and industrialists of Karachi........

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COVER STORY
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KEEP TAXES LOW BUT TAX TO EVERY ONE
INTERVIEW WITH M. ABDUL ALEEM, CHIEF EXECUTIVE, OVERSEAS INVESTORS CHAMBER OF COMMERCE & INDUSTRY (OICCI)
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Enormous resources, young population, attractive incentives and policies yet for foreign investment on wane because lack of implementation of the policies in letter and spirit. There seems lack of predictability and sustainability of the policies. Now is the time to focus on implementation and accountability of the poor administrative conduct of the functionaries. Even attractive incentives and economic policies offered to foreign investment fail to attract investors due to lack of trust about effective implementation of the declared policies.

Of course lack of governance, and accountability are some of the major irritants in the way of foreign investment in Pakistan............

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COVER STORY
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OPEN ECONOMIC SYSTEM IS CONSIDERED AS THE STIMULUS FACTOR BEHIND CHINESE ECONOMIC GROWTH
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By 2030, China’s economy could be 30 percent larger than that of US. China’s share of global GDP on Purchasing-Power-Parity (PPP) basis rose from 3.7 percent in 1990 to 14.3 percent in 2011 and rose to 16.06 percent this year. During the past 30 years, China's economy has changed from a centrally planned system that was largely closed to international trade to a more market-oriented that has a rapidly growing private sector. A major component supporting China's rapid economic growth has been exports growth.

 

Chinese officials contend that China is a “Socialist-market economy”. This appears to indicate that the government accepts and allows the use of free market forces in a number of areas to help grow the economy, but where the government still plays a major role in the country’s eco development.........

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COVER STORY
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SUBDUED PERFORMANCE OF AUTO SECTOR
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Pakistan Automotive Manufacturers’ Association (PAMA) has released its monthly sales data for the month of August registering growth of over 76%MoM, in indication of strong recovery from the adverse impact of advance tax. The prime gainer in the month was Corolla with sale of 3,515 units. Despite the strong recovery the numbers remained under pressure on a cumulative basis, posting a decline of 11.3%YoY in 2MFY15.

While auto industry is witnessing the declining in annual volumes, improvement in margins due to depreciation of Japanese yen is likely to support bottom line. However, analysts expect the benefit of Japanese yen depreciation to be realized in 2QFY15 where the confluence of a weaker yen and rebounding volumes are likely to drive the industry growth. The latest news regarding delay in the Punjab Taxi Scheme may lead to some pressure on Pak Suzuki Motor Company (PSMC) in the near term. However, PSMC being the prime beneficiary of depreciating Japanese yen, which continues to look strong on fundamentals. .......

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COVER STORIES
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SHIPPING
NEWS

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CHINA DOMINATES SEABORNE TRADE
It could be called ‘the China decade’. World seaborne trade maintained a four percent average annual rate of growth during the past ten years, slightly better than the previous ten-year average. This achievement was especially notable in the light of the global economy’s evolution, featuring a wrenching severe recession. But trade growth at that rate would have been impossible without China’s super-size contribution.
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COVER STORY
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DISMAL CONDITION OF AUTOMOTIVE PARTS MANUFACTURERS

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Since 2008 financial crisis manufacturers of automotive parts are fighting for their survival. Many units have closed down; others are barely serving and the number of units making even modest profit can be counted on the fingers of two hands. Only the Government of Pakistan (GoP) could be held responsible for the delinquencies because: 1) policies are mostly skewed towards assemblers because of huge foreign investment, 2) lack of interest of assemblers in developing local vendor industry, 3) inability of the authorities to curb smuggling of parts and accessories and above all 4).........

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FINANCE
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PAKISTAN’S GROSS DOMESTIC DEBT INCREASES BY 11.63PC
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Pakistan’s gross domestic debt rose to Rs15.807 trillion by the close of the financial year 2014 as against Rs14.16 trillion the previous year showing an increase of about 11.63 percent or by Rs1.8 trillion in one year.
According to a latest report compiled by the State Bank of Pakistan the gross net domestic debt is at 14.7 percent to Rs10.946 trillion by the end July 2014 from Rs9.538 trillion in July 2013. Foreign debt, mostly to the Western donors and international financial institutions rose by 5.9 percent or by Rs4,861 trillion as against Rs4.622 trillion at the end of July 2013.
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RESEARCH CORNER

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IMPORT OF LNG, COMPLETION OF IMPORTANT GAS PROJECTS REMAIN IN DOUBT

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Numerous states are making tremendous attempts to overcome their oil & gas shortage, either they facing them at the moment, they are about to face or expect in the future to come.
Pakistan is passing through the hard phase of its economic history since the past few years as the severe gas shortage is posing a grave predicament for its weak economy and volatile nationwide security. Pakistan’s gas requirements are outstripping supply.
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CAPITAL MARKETS
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PAGE REPORTS
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PAK-CHINA JV IN AUTOMOBILE
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Leading Chinese group has expressed its interest to make Pakistan an export base country for automobiles under a joint venture with Pakistan in auto manufacturing.
Zotye Holding Group is interested in having a joint venture with Pakistani firm Raja Group of Industries to make Pakistan the manufacturing base for export of Zotye vehicles to South East Asian markets.
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COVER STORY
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THE STATE OF AUTOMOBILE INDUSTRY IN PAKISTAN AND THE ROLE OF IMPORTED AND USED CARS
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The automobile industry and the auto parts manufacturers in the country have been suffering greatly due to the inconsistency in import policies and the widespread import of used cars taking place in the country. Personal baggage schemes are being used by used car importers, which are meant only to help overseas Pakistanis to import their used cars into the country. A number of the cars being imported in this scheme do not seem to be owned by overseas Pakistanis and instead, the scheme is being used to import used vehicles from Japan.........

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INDIA IN THE NEWS

NEW DELHI: Hero MotorCorp Ltd (HROM.NS), India's top maker of motorcycles and scooters, plans to invest 16 billion rupees ($262 million) to set up a new manufacturing plant in south India, a source directly involved in the matter said.
Hero has signed a preliminary agreement with the Andhra Pradesh government to set up the plant, to be spread across 600 acres, which can produce upto 1.8 million vehicles annually, the source said. Hero, which has three operational plants and one under construction across India, did not have an immediate comment.
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IN THE NEWS

The Federal Board of Revenue (FBR) has implemented a budgetary measure of issuing ''taxpayer card'' to compliant taxpayers for imposition of 2 percent withholding tax on purchase of immovable property by non-filers of income tax returns under Finance, Act 2014. Source told to research analyst-PAGE on Friday that the FBR has given the job of printing of the Taxpayer Cards to National Database and Registration Authority (NADRA). The printing of the Taxpayer Cards has been started by NADRA and around 80,000 cards have been printed so far. At the same time, the FBR has also given the duty of distributing the cards to the NADRA, source added to him......

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GULF NEWS

TEHRAN - The Iranian government has announced plans to take up to 400,000 vehicles that don’t meet emission standards off the roads by the end of the current Iranian calendar year, in a bid to reduce the country’s air pollution problems. More than 1.5 million cars have been scrapped over the past decade, according to Iran Fuel Conservation Organization Deputy Director Mojtaba Shafiei.
In Tehran, automobile use has doubled in the past eight years, according to the Ministry of Transport and Urban Development estimates, and around one million of the cars on the road each day are more than 20 years old..
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ANNOUNCEMENT

Recognizing the rapid growth of ultra-affordable mobile phones, Microsoft Devices today unveiled the Nokia 130, a mobile phone designed to introduce millions of people to new digital experiences. At just PKR 2,850/-, the Nokia 130 combines the everyday essentials first-time mobile phone buyers expect with the beautiful design, reliability and mobile entertainment they want. With a built-in video player, music player with up to 46-hours continuous playback on a single charge and everyday essentials such as a flashlight, FM radio and USB charging, the Nokia 130 is the perfect introduction to a “mobile first” world.........

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COVER STORY
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DILAPIDATED AUTO, ALLIED SECTOR IN BALOCHISTAN
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Development of auto and allied sector faces enormous challenges in Balochistan which lacks proper infrastructure and skilled work force. The strategically located province has the immense potential to emerge as a strategic manufacturing and assembling hub for the country’s automobile industry, it however, witnessed a rapid growth and hefty expansion over the past five years under former government, yet Balochistan could not see any development in auto and allied sector. The province was simply neglected and no plan was formulated for development of automobile industry. The present economic managers should take some practical measures to exploit the geo-strategic position of the province for developing a robust automobile market for the region.........

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EXCHANGE RATES
Pakistan Open Market Rates

BUYING SELLING
US $ 102.7 102.95
UK POUNDS 167 167.25
KUWAITI DINAR 357.25 357.5
SAUDI RIYAL 27.25 27.5
UAE DIRHAM 27.85 28.1
CANADIAN DOLLAR 93.35 93.6
EURO 132.25 132.5
JAPANESE YEN 0.97 1

MORE RATES

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COVER STORY
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PAKISTAN MOTORCYCLE MARKET HAS A CLEAR BRIGHT FUTURE
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Despite challenges and in light of the current economic crisis where doing business and the buying habits of the common man are waning, the motorcycle industry is one of the most consistently growing industries of Pakistan. The industry is flourishing day by day as it met 95 percent localization through state-of-the-art technology implementation, billions of investment and hundred thousands of skilled force benefiting from it. This potential industry not only contributing to compensate local demand but exporting various models inviting the interest of the buyers.
In the year 2000-01, the total production of motorcycles in Pakistan was 100,000 which jumped to 2 million motorcycles a year in 2013. With the passage of time the preferences and demands of consumers also go through the process of change.
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5Sep14 12Sep14 19Sep14
NASDAQ

4,562.29

4,591.81

4,103.08
H.SENG

25,207.00

24,606.04

24,377.31
SENSEX

26,978.70

26,999.12

27,153.21
NIKKEI

15,677.96

15,948.29

16,321.17
CAC-40

4,494.94

4,441.04

4,464.70
DAX

9,724.26

9,688.36

9,798.13
FTSE

6,877.97

6,809.17

6,819.29
S&P

1,997.65

1,997.45

2,011.36
DJIA

17,069.58

17,049.00

17,265.99

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As On Sep 19, 2014

TENOR

BID

OFFER

1 Week

9.88

10.38

2 Week

9.88

10.38

1 Month

9.88

10.38

3 Month

9.91

10.16

6 Month

9.93

10.18

9 Month

9.95

10.45

1 Year

9.99

10.49

2 Year

11.78

12.28

3 Year

12.26

12.76

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RESEARCH CORNER
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PAK SUZUKI COMMITTED TO OFFER TOP QUALITY PRODUCTS AT COMPETITIVE PRICE

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Pak Suzuki Motor Company Limited (PSMCL) is a leading company that values users’ demands and offers motoring solutions with great customer care. It is a company distributing and assembling Suzuki Japan cars and is the largest car assembler in the country.
Pak Suzuki is the market leader in Pakistan automobile market by having greater than 60.0 percent (December, 2011) of market share. Having market share of more than 50.0 percent since its establishment, the company always strives to launch latest and innovative products and fulfilling the need of middle class of our society.
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BUSINESS QUOTATIONS
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The first wave of the Internet was really about data transport. And we didn't worry much about how much power we were consuming, how much cooling requirements were needed in the data centers, how big the data center is in terms of real estate. Those were almost afterthoughts.
PADMASREE WARRIOR
I work in a business environment forty hours a week, and writing is what I do to unwind. It allows me to transport myself to a happy place where I can indulge my hopes, beliefs, aspirations and fantasies. It also allows me to live and breathe a topic for eighteen months while I'm researching and writing.
ASHWIN SANGHI
The Ethiopian government's use of the railway from Djibouti to Addis Ababa was, in practice, a hazardous regards transport of arms intended for the Ethiopian forces.
HAILE SELASSIE
'Untitled' is a time machine that can transport you to 1992, an edgy moment when the art world was crumbling, money was scarce, and artists like Tiravanija were in the nascent stages of combining Happenings, performance art, John Cage, Joseph Beuys, and the do-it-yourself ethos of punk. Meanwhile, a new art world was coming into being.
JERRY SALTZ
All the great religions have a place for awe, for ecstatic transport at the wonder and beauty of creation.
RICHARD DAWKINS
Transport of the mails, transport of the human voice, transport of flickering pictures-in this century as in others our highest accomplishments still have the single aim of bringing men together.
ANTOINE DE SAINT-EXUPERY

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COVER STORY
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CAR FINANCING FACING DOWNWARD TREND
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Consumer financing in the past has substantially contributed for economic turnaround of the country by hastening consumption and investments. There has been an extraordinary increase in private consumptions due to easy availability of credit from banks.
Pakistan’s banking sector in the past years has effectively engaged in consumer financing by introducing a variety of products such as credit cards, auto loans, housing finance and personal loans, etc.

The robust growth of consumer financing in the previous years was predominantly ascribed to the liberal economic policies set to the principles of free market economy, and huge liquidity available to the banks. However, with the passage of time, banks are making stringent laws to regulate consumer financing particularly car financing.......

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CURRENCY CONVERTER
(Open Market)

 EURO:

 US DOLLARS:

 UK POUNDS:

 Japanese YEN:

 SAUDI RIYAL:

 UAE DIRHAM:

 KUWAITI DINAR:

 CANADIAN DOLLARS:

 PAKISTANI RUPEES:


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THIS WEEK TOP STORIES
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FOOD COMPANIES, RESTAURANTS ADD PROTEIN TO BEEF UP PROFITS (DAWN NEWS)

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SHARES RISE IN LONDON ON 'NO' VOTE (BBC NEWS)

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K-E TO UTILISE COAL RESOURCES FOR POWER GENERATION (THE NATION)

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BANGLE INDUSTRY SHRINKS AS DEMAND DROPS (BUSINESS RECORDER)

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ZAYED UNIVERSITY STUDENTS DESIGN SPECIAL BANKNOTES (GULF NEWS)

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MASSIVE OVER-BILLING BY POWER COMPANIES (DAWN NEWS)

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LATEST TESTING STANDARDS INITIATED FOR CEMENT SECTOR (THE NATION)

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CAPITAL MARKETS
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STOCK MARKET ROUND UP
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Pakistan market remained directionless during this past week, registering a decline of 0.1%WoW to close at 30,015 points, although average daily turnover improved by 25%WoW to 163.6 million shares. News flow affecting the market during the week included renunciation of militancy by the Punjab Taliban (a splinter group of the TTP), continued delays to IMF tranche release, US assurances that CSF would be released on time and CCoP approval for OGDC stake sale. The latter has led to weakness in OGDC share price. Sector-specific developments included the Supreme Court taking suo motto notice of drug pricing in the country, urging swift approval to the new pricing policy...............

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