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PRE BUDGET 2015-16: PREDICTABLE ASSESSMENT
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ISSUE # 16 ----- Apr 20 - Apr 26, 2015

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The budget for 2015-16 is expected to revert some decisions the government took last year. Through inflation and interest rate is reducing, which has already passed benefit to the middle class and the poor, it is expected that the government will announce a budget which is focused towards the middle class and the cost of living. We have stated before that inflation in Pakistan has more to do with cost associated with supply side. The government is in a position to pass further reduction in oil and gas prices for public relief. The budget for 2014-15 was for Rs3.945 trillion, which raises questions as to how the funds were utilized. The government is in the process of finalizing the budget for 2015-16, which is expected to be announced in by end May 2015........

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PAGE TOP STORIES

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EXCLUSIVE INTERVIEWS
& PAGE SPECIAL REPORTS

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WITH KEEN FOCUS ON GROWTH, THIS YEAR BUDGET SHOULD BE BUSINESS AND INVESTOR-FRIENDLY
INTERVIEW WITH MR IFTIKHAR VOHRA -- PRESIDENT KCCI
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Pakistan’s economy has witnessed some improvement in the current fiscal year 2015, thanks to the declining international petroleum products’ prices. Resultantly a significant drop in inflation was witnessed and subsequently the discount rates were also lowered to 8%. Likewise, IMF also changed its GDP outlook to 4.1% from previous 3.7% for Pakistan amid respite in economic indicators, though it is still lower than the budgeted GDP target of 5.1%.
The persistently rising remittances and narrowing of current account deficits coupled with increased net inflows from foreign donors like IMF improved the external side position where the foreign exchange reserves rose to around $16.7 billion in April’15 from approximately $14.5 billion in July’14...

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MAKING BANKS ROBUST
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State Bank of Pakistan (SBP) recently updated the level of banking sector deposits, investments and advances for month of March'15. During the month deposits increased by 12%YoY resulting into higher investment and advances portfolio which rose by 27% and 8% respectively. It was observed that huge chunk of the deposits turned into investments as banks preferred to invest in risk free government securities in contrast to advances due to lower risk and competitive returns.
Growth in advances of 8% was the highest in last five years. Whereas, it is seen that banking deposits and advances during the month under review changed by insignificant percentages of 0.21% and negative 0.27% respectively on MoM basis.
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OIL PRICES
OIL WEEKLY BASKET PRICE

 (US Million $)
PERIOD PER BARRELS
Apr 17, 2015 56.92
Apr 10, 2015 53.93
Apr 3, 2015 51.98
Mar 27, 2015 51.91
Mar 20, 2015 49.50
Mar 13, 2015 52.93
Mar 6, 2015 55.98
Feb 27, 2015 54.87
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PREVIOUS ISSUES

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PAKISTAN WEATHER
3 DAYS FORECAST

  MIN MAX HUM% FORECAST.
KARACHI
SUNDAY 27 35 47 sunny
MONDAY 24 38 33 sunny
TUESDAY 24 38 39 sunny
LAHORE
SUNDAY 24 37 39 sunny
MONDAY 22 37 34 sunny
TUESDAY 22 37 36 sunny
ISLAMABAD
SUNDAY 19 29 57 showers
MONDAY 17 31 56 cloudy
TUESDAY 17 32 47 sunny

updated: Sun-Tue, Apr 19 - 21, 2015

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COVER STORY

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NEED TO ENHANCE LISTED CAPITAL RATHER THAN COMPANIES
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Though, there has been increase in listed capital at the stock exchanges, it still represents a minuscule percentage of overall number of companies operating in the country. It is believed that Karachi Stock Exchange, being the oldest and the largest bourse of the country come up with some radical changes in its listing regulations that should provide the incentives to sponsors to get their companies listed. The beauty of the listed companies is that those who have the money can immediately acquire ownership in some of the best performing companies.......

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COVER STORY
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NEW BUDGET SHOULD BE BUSINESS-FRIENDLY, PROMOTES INDUSTRIALIZATION
INTERVIEW WITH MR IKRAM RAJPUT -- VP FPCCI
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The future of Pakistan’s economy depends upon the industrialization and knowledge based economy. The current economic indicators and seriousness of the government indicates that more development projects will be announced. As government has taken initiatives to eliminate load shedding by the end of 2017 and presently LNG has been injected. Therefore, we hope that commercial and economic activities and industrialization will be promoted, employment opportunities will be available that will ultimately resolve the issues of law and order.

This indicates that the future of Pakistan will be bright and Pakistan will be prosperous country for everyone.......

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COVER STORY
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LESSONS FROM KOREA’S ECONOMIC DEVELOPMENT: VISIONARY LEADER AND NATIONAL UNITY WITH SACRIFICES

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It has been 1 year and 8 months since I came to Pakistan as the Ambassador of the Republic of Korea. During this time the most frequently asked question of my Pakistani friends has been "How did Korea develop so amazingly in such a short time?"
In 1960 Korea's per capita income was $79 which was lower than the average income of the Least Developed Countries and Korea had only $20 million foreign exchange reserves. By the end of 2013, Korea’s per capita income was $25,977 and its foreign exchange reserves are over $345.6 billion, the 8th largest reserves in the world.

 

There are many reasons for Korea's speedy development. The two most important reasons were Korea's visionary leader, President Park Chung-hee, who created a strong momentum and secondly, the Korean nation's unity and efforts with their sacrifices........

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COVER STORY
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BUSINESS COMMUNITY URGES THE GOVERNMENT TO FOCUS ON OVERCOMING ENERGY CRISES IN BUDGET 2015-16
ECONOMIC GROWTH LIES IN THE HYDRO-POWER GENERATION: LCCI CHIEF
CONSTRUCTION OF KALABAGH DAM IS A MUST AS IT COULD SAVE RS132BN ANNUALLY FOR THE COUNTRY’S GROWTH
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Terming energy crises as biggest impediment in the country’s development, business community has urged the government to focus on overcoming the same in the budget 2015-16 thus paving the way for country’s progress and uplift. The country’s dependence on power generated through thermal sources is costing too much posing insurmountable challenges to remain competitive both in national and international markets.

Electricity generation through thermal sources is estimated to cost almost Rs16 per unit whereas the same can be produced at Rs2.5 to Rs3 through hydel means.
Business leaders said that Kalabagh dam was the most feasible project to ensure cheaper electricity and help overcome impending water scarcity. They said that this is the only dam that could revolutionize the agriculture sector besides enabling the manufacturing sector to cut cost of doing business........

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COVER STORIES
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SHIPPING
NEWS

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TOUGH TIMES FOR OFFSHORE AND MARINE INDUSTRY
The offshore and marine sector has been going through rough times in recent months with oil prices near multi-year lows and slowing production demand. According to the Singapore Maritime Foundation, rig builders have not received any orders for drilling rigs since the start of the year.
Among the companies affected is Ezra Holdings, which reported a 79 percent drop in its quarterly earnings for three months ended in February, attributed to lower contributions from its subsea, as well as offshore support and production divisions......

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COVER STORY
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PRE BUDGET 2015-16: PREDICTABLE ASSESSMENT
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The budget for 2015-16 is expected to revert some decisions the government took last year. Through inflation and interest rate is reducing, which has already passed benefit to the middle class and the poor, it is expected that the government will announce a budget which is focused towards the middle class and the cost of living. We have stated before that inflation in Pakistan has more to do with cost associated with supply side. The government is in a position to pass further reduction in oil and gas prices for public relief. The budget for 2014-15 was for Rs3.945 trillion, which raises questions as to how the funds were utilized. The government is in the process of finalizing the budget for 2015-16, which is expected to be announced in by end May 2015......

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COVER STORY
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BUDGET PROPOSALS FOR FISCAL YEAR 2015-16
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As the preparation for the budget 2015-16 is on the cards there are number of proposals and recommendation in course to make more better development and spending and how overhead costs and fringe benefits may be incorporated with the budget for the relief of common people of Pakistan have been recently presented to the government. The budget-making process can be more efficient and effective if all the stakeholders taken on board before finalization of budget proposals....

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RESEARCH CORNER

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FBR SEEKS OVERSEAS ASSISTANCE IN INFRASTRUCTURE AND CAPACITY BUILDING

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Presently, the Federal Board of Revenue (FBR) has tried to find overseas support for development in two main sections; IT infrastructure development and capacity building of employee and employers. The board is of the view that if developed, both of these sections can merely play major role in bringing FBR at par with revenue and tax authorities. The overseas concerned organizations and institutions have promised FBR to think request for provision of required cooperation. After achieving an optimistic view from the concerned quarters, FBR has recruited Chief IT as focal person for future engagement with foreign agencies and others.
The board put this request at a 3-day conference on regional taxation held in the first week of April in Tokyo. FBR mentioned 4-key sectors; key contours of tax authorities, major strategies and reforms, fresh demanded strategy interventions and to enhance the tax base in the region as well as ways and means to further enlarge tax base net..

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CAPITAL MARKETS
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COVER STORY
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CEMENT INDUSTRY—A MAJOR PART OF THE ECONOMY FEELS PINCH OF HIGH RATES
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Cement Industry has succeeded in developing a strong base, which is helpful in contributing in the development process especially in the infrastructure development, housing and construction industry which activates to over 42 allied industry if the construction business moves on smooth lines in the country.
Besides meeting the domestic need of cement this industry also contributing for export earnings and is destined to play much greater role due to fast track development process which is in the offing in the neighborhood like Afghanistan and Central Asian States as well as in Western China as a part of China Pakistan Economic Corridor package which is bound to open a flood gate for investment in the country...

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INDIA IN THE NEWS

The ministry of shipping has written to the defence ministry to encourage Indian shipbuilding sector by allowing domestic firms to build some of its vessels from a total order book that runs into over $92 billion (about Rs 5.7 lakh crore). The shipping ministry is batting for not just public sector entities like the Cochin Shipyard but also private companies including Bharti Shipyard and ABG Shipyard, among others, to promote the entire industry. The industry has been in the doldrums for the past four years due to a fall in orders from shipping companies. Several companies are undergoing corporate debt restructuring (CDR) or running into severe losses........

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IN THE NEWS

Out of the total $45 billion investment in Pakistan, China will invest up to $37 billion in various energy projects while give $8 billion concessional loan for infrastructure development projects of Pak-China Economic Corridor project, source said to research analyst-PAGE. This was stated by Ahsan Iqbal, Minister for Planning, Development and Reforms while speaking at a press conference along with Information Minister Pervez Rashid and Prime Minister's Special Assistant on Foreign Affairs Tariq Fatemi on Friday......

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GULF NEWS

Saudi Arabia will open its $532 billion stock market to direct foreign investment on June 15, allowing qualified foreign institutions to buy shares from that date, the Capital Market Authority said last week.
Final rules covering the opening of the market will be published on May 4, the regulator said in a brief statement. Saudi Arabia announced last July that it would permit direct foreign purchases of shares in the first half of 2015, as a way to expose companies to market discipline, diversify the economy beyond oil and create jobs........

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ANNOUNCEMENT

In a survey of 5,000 people across five Asian countries – Pakistan, China, India, Singapore and Vietnam – Shell discovered that nine out of ten Asian drivers are aware that a high quality motor oil can help improve their vehicle’s fuel efficiency. China (98%) was the highest, while Singapore (70%) was the lowest.
While findings vary by country, the numbers also showed that 87% of all those surveyed knew the importance of choosing the right type of motor oil suitable for their respective vehicles. Eight in ten chose their brand or type of motor oil according to the recommendations of their mechanic or vehicle manufacturer.....

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COVER STORY
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EDUCATION, HEALTH, SECURITY – THE TOP PRIORITIES IN BALOCHISTAN BUDGET
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Balochistan’s coalition government led by Chief Minister Dr Abdul Malik Baloch will present its third annual budget in June for the next fiscal year 2015-16. Last year, the province’s total income was estimated at Rs200.051 billion, and the deficit was Rs15.662 billion. An amount of Rs50.742 billion had been allocated for the Public Sector Development Program (PSDP) in the outgoing year. In the next fiscal year, the education, health and law and order are likely to remain among the government’s top priorities. After taking office in 2013, the Chief Minister Dr Baloch declared an education emergency in the province and vowed to beat backwardness by focusing on education and health sectors on war footings. Unfortunately, the province with a literacy rate of 39 percent has not witnessed any significant improvement in these areas...

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EXCHANGE RATES
Pakistan Open Market Rates

BUYING SELLING
US $ 102.5 102.75
UK POUNDS 152.6 152.85
KUWAITI DINAR 336.35 336.6
SAUDI RIYAL 27.15 27.4
UAE DIRHAM 27.8 28.05
CANADIAN DOLLAR 83.25 83.5
EURO 110 110.25
JAPANESE YEN 0.85 0.89

MORE RATES

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COVER STORY
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IMPORT OF USED CARS — AN UNFAIR ADVANTAGE AT THE COST OF DOMESTIC INDUSTRY
PAMA SUBMITS PROPOSALS FOR BUDGET 2015-16
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The automobile industry which has developed sufficient capacity to cater to the needs of automobile market is experiencing the pinch of the unfair advantage being given to the importers of the used cars at the cost of the local industry.
It is surprising that instead strengthening the base of the domestic auto industry that generates a huge number of job opportunities besides imparting training and skill to the youth at various training centers in the country has been deprived of the opportunities to play its due role in the fast track development of the engineering industry as well as contributing its share in the exports of auto parts and locally manufactured vehicles.
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3Apr15 10Apr15 17Apr15
NASDAQ

4,886.94

4,974.56

5,007.79

H.SENG

25,275.64

27,047.32

27,653.12

SENSEX

28,260.14

28,863.15

28,438.92

NIKKEI

19,435.08

19,967.37

19,285.63

CAC-40

5,074.14

5,208.95

5,231.32

DAX

11,967.39

12,166.44

11,986.96

FTSE

6,833.46

7,015.36

7,080.32

S&P

2,066.96

2,091.18

2,104.99

DJIA

17,763.24

17,958.73

8,105.77

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As On Apr 17, 2015

TENOR

BID

OFFER

1 Week

7.46

7.96

2 Week

7.45 7.95

1 Month

7.44 7.94

3 Month

7.68 7.93

6 Month

7.61 7.86

9 Month

7.66 8.16

1 Year

7.64 8.14

2 Year

7.76 8.26

3 Year

7.92 8.42
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RESEARCH CORNER
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NBP TEAM UP WITH BANK AL-JAZIRA IN HOME REMITTANCE ARRANGEMENT
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National Bank of Pakistan (NBP) has inked home remittance arrangement with Bank Al Jazira (BAJ) and the services would be introduced shortly. BAJ is in Saudi Arabia and is emerged as one of the leading Shariah-compliant fast boosting financial institution in Saudi Arabia.
Experts predicted that this collaboration would grow remittance commerce and would provide choice to remitters to send money from Saudi Arabia to Pakistan in seconds. The payment remitted from BAJ’s over 48 retail branches, placed in the main town centers all over Saudi Arabia can be collected from any of the NBP countrywide 1,327 branches. In order to get cash/money remittance, it can immediately be collected via NBP foree cash, even with no having a bank account. National Bank foree transfer provides credit to the person accounts in over 1,327 online branches.......

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BUSINESS QUOTATIONS
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A budget tells us what we can't afford, but it doesn't keep us from buying it.
WILLIAM FEATHER
NASA is an engine of innovation and inspiration as well as the world's premier space exploration agency, and we are well served by politicians working to keep it that way, instead of turning it into a mere jobs program, or worse, cutting its budget.
BILL NYE
The budget is not just a collection of numbers, but an expression of our values and aspirations.
JACOB LEW
We can't get to the $4 trillion in savings that we need by just cutting the 12 percent of the budget that pays for things like medical research and education funding and food inspectors and the weather service. And we can't just do it by making seniors pay more for Medicare.
BARACK OBAMA
Look at our society. Everyone wants to be thin, but nobody wants to diet. Everyone wants to live long, but few will exercise. Everybody wants money, yet seldom will anyone budget or control their spending.
JOHN C. MAXWELL
I think what's been lacking from our discussion for a long time is really that other part of what a Budget chair does, which is set the priorities for this country in terms of making sure we invest in the right places, in education, in job training, and to make sure we do a balanced approach moving forward.
PATTY MURRAY
And, we have no such thing as a budget anymore. Our manager freaks when we show him the bill. We're lavish to the bone, but all our money goes back into the product.
FREDDIE MERCURY
Balanced budget requirements seem more likely to produce accounting ingenuity than genuinely balanced budgets.
THOMAS SOWELL
The legions of reporters who cover politics don't want to quit the clash and thunder of electoral combat for the dry duty of analyzing the federal budget. As a consequence, we have created the perpetual presidential campaign.
HUGH SIDEY

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COVER STORY
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NEED TO FOCUS ON TEXTILE EXPORT SECTOR

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Textile industry is the most important manufacturing sector of Pakistan and has the longest production chain with inherent potential for value addition at all stages of processing. It provides employment to about 40 percent of industrial labor force, consumes more than 40 percent banking credit and accounts for more than 8 percent of the GDP and overall textile exports contribute 60 percent to the total foreign exchange.

The exports of textiles and garments from Pakistan remained almost firm and earned $9.179 billion in the first eight months of fiscal year 2014-15 that began on July 1, 2014, compared to exports of $9.136 billion in the corresponding period of previous fiscal. In July-February 2014-15, Pakistan’s knitwear exports grew by 9.48 percent year-on-year to $1.622 billion, while exports of non-knit readymade garments were up by 10.54 percent to $1.384 billion..

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CURRENCY CONVERTER
(Open Market)

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 US DOLLARS:

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THIS WEEK TOP STORIES

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DAR PROJECTS ROBUST ECONOMIC GROWTH (DAWN NEWS)
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ARGENTINA LAUNCHES LAWSUIT AGAINST FALKLAND OIL DRILLERS (BBC NEWS)
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ADB TO PROVIDE $43M FOR WATER RESOURCES PROJECT IN FATA (THE NATION)
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ECONOMIC CORRIDOR FINANCING: CHINA WON''T USE EITHER AIIB OR SILK ROAD FUND (BUSINESS RECORDER)
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FROM FILM TO FASHION, DUBAI BIDS TO BE CREATIVE CAPITAL FOR ARAB WORLD (GULF NEWS)
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USE OF WOOD PACKAGING BANNED FOR EXPORTS (DAWN NEWS)
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PUNJAB APPROVES 7 UPLIFT SCHEMES (THE NATION)
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CAPITAL MARKET
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STOCK MARKET ROUND UP
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Bulls ruled the market during this past week as the benchmark KSE-100 Index gained 2.73%WoW to conclude the week at 33,235 level. It was driven mainly by 11.7%WoW with increase in oil price. Oil & Gas sector remained in the limelight that appreciated by 5.9%WoW. Key highlights of the week included: 1) the ongoing result season where POL result beat market expectations, 2) the CCOP approved bids worth US$1.02 billion received against divestment of 609 million shares in Habib Bank Limited (HBL), and 3) remittances for 9MFY15 posting an increase of 15%YoY to US$13.3 billion. Gainers at the bourse were DAWH, PPL, MLCF and POL. The laggards for the week included: PTC, EPCL and MEBL. Volumes jumped by 23.14%WoW reflecting renewed investors’ confidence taking average daily turnover to 296 million shares during this week from 240.4 million shares a week ago..........

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