SMEs GENERALLY CONSIDERED MORE PRODUCTIVE THAN LARGE ENTERPRISES
ISSUE # 39 -----
Sep 29 - Oct 5, 2014

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Developing and developed countries have recognized the importance of Small Medium Enterprises (SMEs) which play an important role in the development of national economy. In Indonesia, United Kingdom, South Korea, Thailand, China, USA, Bangladesh etc, SMEs have historically been the main players in the domestic economic activities especially as providers of employment opportunities.  SMEs are the starting point of development in the economies towards industrialization as well as significant effect on the income distribution, tax revenue and employment..........
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PAGE TOP STORIES

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EXCLUSIVE INTERVIEWS
& PAGE SPECIAL REPORTS

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COMMERCIAL BANKS PARKING BULK OF THEIR MONEY IN GOVT PAPERS LEAVING A LITTLE FOR SMEs
INTERVIEW: ZULFIKAR THAVER, PRESIDENT UNION OF SMALL & MEDIUM ENTERPRISES (UNISAME)

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The government needs to ensure uninterrupted energy supply to the SME units either through electricity or alternate energy like solar, wind or biomass in the rural areas so that the SMEs could contribute their due role in developing of the economy. The cost of electricity is also too high as compared to per capita income in Pakistan, it is the need of the hour that the government should reduce the taxes on consumption of electricity to give a breathing space to the industrial, commercial and domestic consumers. Making utilities as tax collecting agency is not fair as the consumers are forced to pay indirect high taxes irrespective to their income level.....

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DORMANT SME SECTOR STILL REMAINS THE RAY OF HOPE FOR ECONOMIC GROWTH
INTERVIEW WITH MR KHALID TAWAB, CHAIRMAN TAWAB GROUP

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The manufacturing industry in Pakistan is mostly labor intensive with a low level of automation having high defect rates and low efficiency levels. As a result, it is facing serious problems in increasing, or even sustaining its share in the global market, causing unemployment in different major industrial sectors. The situation is worsening due to current energy shortfall. The increasing input costs and decreasing profit margins are causing threats to manufacturing; among others, the survival of Small and Medium Enterprises (SMEs) is becoming difficult day by day. However, the government statistics show that Pakistan’s SMEs sector recorded an impressive growth of 14.7 percent during 1987-88 and 1996-97 when the estimated value of its output increased from Rs19,683 million to Rs67,541 million........

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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 sunny
TOMORROW 26 32 63 sunny
DAY AFTER 26 32 62 sunny
LAHORE
TODAY 24 36 49 sunny
TOMORROW 24 36 52 sunny
DAY AFTER 24 35 55 sunny
ISLAMABAD
TODAY 21 32 62 sunny
TOMORROW 21 32 63 storms
DAY AFTER 22 32 63 sunny

updated: Sun - Tue, Sep 28 - 30, 2014

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PAGE REPORTS
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MEEZAN BANK TO SUPPORT SHARIAH-COMPLIANT BRANCHLESS BANKING 
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Meezan Bank Limited entered an agreement to provide Shariah technical services and support and Branchless Banking services to Edbiz Consulting (Pvt) Ltd in collaboration with State Bank of Pakistan. Mr. Irfan Siddiqui, President & CEO, Meezan Bank Limited, Mr. Humayon Dar, CEO, Edbiz Consulting and Mr. Saeed Ahmed, Director Agricultural Credit & Microfinance Department of State Bank of Pakistan signed the agreement.
State Bank of Pakistan (SBP) is implementing the Financial Inclusion Program – Financial Innovation Challenge Fund (FICF), sponsored by the UK Aid, with the aim to improve access to financial services in Pakistan.......

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COVER STORY
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FOCUS ON VIBRANT EDUCATION IN PAKISTAN
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The democratic champions and stalwarts, political heavy weights and religious scholars never tired to dilate upon the significance of education for decades and decades in Pakistan but the ground reality exposes the sincerity to the purpose, policies and programs as even after 68 years of creation of this country the budgetary allocation for education is only 2 percent while a huge population is forced to live below poverty line in our country.

Officially speaking, some 15 million children never go to school but the actual figure is much higher.
It is unfortunate that the sanctity of education has been damaged by excessive commercialization of education as this has become the most lucrative business in Pakistan.
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COVER STORY
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MICROFINANCE PLAYING A VITAL ROLE IN WIPING OUT POVERTY
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Islamic banking industry has been showing a spectacular annual growth rate of over 30 percent over the past five years with sustained growth momentum despite substantial increased base. Islamic Banking has been expanded across 80 districts of the country with a network of 304 branches offering Shariah-compliant products and services.

 

The future outlook of the industry is also very positive with bright prospects of doubling its market share by 2020. The market share of Islamic banking assets and deposits in overall banking industry increased to 11.2 percent and 12.1 percent respectively by end of December 2013.
The Consultative Group Against Poverty (CGAP), a World Bank initiative, estimates that roughly 72 percent of individuals in Muslim-majority countries are not using formal financial services.......

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COVER STORY
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SMEDA FACILITATES SMEs TO OVERCOME WEAKNESSES
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Today SMEs are widely regarded by experts as the panacea for many economic problems confronting different countries particularly less developed ones. In particular, vibrant small-scale sector — incorporating the informal firms — is expected to resolve a variety of problems, including unemployment, low growth and poverty. SMEs constitute nearly 90 percent of all the enterprises in Pakistan; employing 80 percent of the non-agricultural labor force and their share in the annual GDP is 40 percent, approximately.

SMEs working in industrial sectors such as agriculture, fisheries, textiles, handloom weaving, transport, leather, marble & granite, carpets and light engineering.
However, unlike large enterprises in the formal sector, a small and medium enterprises (SMEs) are constrained by financial and other resources........

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COVER STORIES
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SHIPPING
NEWS

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FORTUNES IN TANKER MARKETS ON THE RISE
Fortunes are quickly shifting in the tanker markets, both the clean product tanker trades, as well as the crude tanker markets.
As such, owners are easily drawn into trades that while make sense at the time, can quickly backfire. According to the weekly report from shipbroker Intermodal, “when it comes to “wet” trends, during the last twenty months, we have gone from the highly publicized “product story” to the “crude revival”.
Less than two years ago MR tankers were being ordered in a frantic pace, with hopes that the beginning of the wet sector revival was to be found somewhere in the medium range........

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COVER STORY
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INFLUX OF IMPORTED CEMENT HITS DOMESTIC INDUSTRY

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The cement manufacturers of the country have drawn the attention of Chairman, Federal Board of Revenue (FBR) towards the illegal import of cement from Iran that is affecting the local industry and revenues to the government.
Senior Vice Chairman, All Pakistan Cement Manufacturers Association (APCMA), Sayeed Tariq Saigol has written a letter to Chairman FBR, Mr. Tariq Bajwa drawing his attention towards the illegal import of cement from Iran which is being sold in the local market at much lower rates.......

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COVER STORY
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COMMON MAN RESPITE – NO RAISE IN POWER TARIFF
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For the relief of the common man, the government is not going to raise power tariff this month as per demanded by the International Monetary Fund while other adjustments would be made to ensure release of delayed fifth tranche worth about $550 million by the Fund, this was said by the Finance Minister Ishaq Dar while addressing a joint press conference with Minister for Information and Broadcasting, in Islamabad last week. Earlier, there were reports that IMF has asked Pakistan to increase the power tariff by six to seven percent before getting next tranche worth of $550 million...........

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RESEARCH CORNER

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MORE SIGNIFICANT STEPS CALL FOR POVERTY ERADICATION

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Most of the nations of the world explain poverty in a unidimensional way, using consumption or income level. In developing states, consumption is more suitable than income as welfare indicator.
In Pakistan household consumption is utilized as a welfare indicator. Poverty lines are the thresholds, which divide the poor from non-poor. Microfinance is also recognized as an effectual indicator to combat poverty through offering financial services to those who don’t have access to or are neglected through the financial institutions and commercial banks...........

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CAPITAL MARKETS
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COVER STORY
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POLICY PLANNERS HAVE NO COMPREHENSION OF SME POTENTIAL
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Whatever the policy makers say or do, it could be said without any doubt that they don’t have any comprehension of the SME potential. Around the world SMEs have the largest contribution in the GDP of any country as the blue chip companies, large corporate, multinational companies and conglomerates are dependent on the raw material and intermediate products supplied by the SMEs. This could be best understood if one looks at automobile industry of Pakistan. There are less than half a dozen assemblers operating in the country but these are dependent on nearly 100,000 vendor units.......

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COVER STORY
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GAINING AGRICULTURAL YIELDS THROUGH ECO-FARMING STRESSED
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Ecological Farming ensures healthy farming and healthy food for today and tomorrow, by protecting soil, water and climate, promotes biodiversity and does not contaminate the environment with chemical inputs or genetic engineering.
Ecological farming provides the ability of communities to feed them selves and ensures a future of healthy farming and healthy food to all. It also protects soils from erosion and degradation, increases soil fertility, conserves water and natural habitats and reduces emission of greenhouse gases.....
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INDIA IN THE NEWS

KOLKATA: I-Mark, an acronym for Indian Design Mark, could be a powerful motif for micro, small and medium enterprises (MSME) in Bengal to impress and get a bigger slice of the world market, said experts.
"Traditionally, West Bengal is home to many MSMEs which make a wide variety of products. What they need is a greater focus on and more investments in design to move up the value chain," said Pradyumna Vyas, director of the National Institute of Design (NID), at the Design Conference-Cum-Seminar organized by CII in Kolkata. MSMEs across the country apply for I-Mark, he added..........

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IN THE NEWS

The Economic Co-ordination Committee (ECC) of the Cabinet has not considered a proposal on the import of fertilizer through open tenders to meet the indicated shortfall of 600,000 tons of urea for the Rabi crops. The meeting chaired by Finance Minister Ishaq Dar approved the import of 185,000 tons of urea from Saudi Basic Industries Corporation (SABIC) and directed Ministry of Industries and production to put up a detailed proposal before the next ECC meeting for the remaining requirement of 415,000 tons......

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GULF NEWS

Dubai: Dubai is becoming more affordable to live and work in, according to a report released on Tuesday by UK-based property group, Savills. The emirate is ranked the world’s 9th most expensive city for companies to locate employees, overtaking the likes of Shanghai and Rio De Janeiro, according to the Savills report. The ranking has dropped a notch since 2008 when Dubai was placed 8th in the index.
London, meanwhile, was ranked the world’s most expensive city for companies to locate employees, overtaking Hong Kong, which had topped the ranking for five years. Hong Kong was followed by New York, Paris, Tokyo, Singapore, Moscow and Sydney.
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ANNOUNCEMENT

Zarai Taraqiati Bank Limited (ZTBL) and the Institute of Cost and Management Accountants of Pakistan (ICMA Pakistan) on the 18th September, 2014 signed a Memorandum of Understanding (MoU) under ICMA Pakistan’s corporate partnership scheme for business organization.
A signing ceremony in this regard was held here in ZTBL, Head Office. The MoU was signed by Syed Talat Mehmood, President ZTBL and Mr. Zia ul Mustafa, President ICMA Pakistan. The Bank’s executives were also present on the occasion..
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COVER STORY
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PHYSICAL ONE-STOP SHOP SET TO BE ESTABLISHED
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Taking a giant leap forward in terms of building a world class facilitation business community, Federal Board of Revenue (FBR), Securities & Exchange Commission of Pakistan (SECP), Employees Old Age Benefits Institution (EOBI) and Lahore Chamber of Commerce & Industry (LCCI) this Saturday signed a Memorandum of Understanding (MoU) to establish Physical One-Stop Shop at the LCCI premises to facilitate business community to get registration of SECP, FBR and EOBI...........

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EXCHANGE RATES
Pakistan Open Market Rates

BUYING SELLING
US $ 102.65 102.9
UK POUNDS 166.5 166.75
KUWAITI DINAR 355 355.25
SAUDI RIYAL 27.25 27.5
UAE DIRHAM 27.85 28.1
CANADIAN DOLLAR 91.25 91.5
EURO 130 130.25
JAPANESE YEN 0.97 1

MORE RATES

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COVER STORY
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BRITAIN READY TO HELP IMPROVE TAX, REVENUE SYSTEM
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Pakistan’s Federal Board of Revenue (FBR) and Department for International Development (DFID} of United Kingdom signed a Memorandum of Understanding (MoU) to improve the taxation system and enhance revenue generating process significantly. The MoU was signed in Islamabad last week by Head of DFID for Pakistan, Richard Montgomery and Chairman FBR, Tariq Bajwa. Federal Minister for Finance, Senator Ishaq Dar and British High Commissioner to Pakistan, Phillip Barton witnessed the signing ceremony.............

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COVER STORY
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ROLE OF SMES AND ITS BENEFITS ASSOCIATED WITH ONGOING BUSINESS
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In today’s times, small and medium enterprises (SMEs) are seen to be a universal solution to a majority of the problems being faced by the less-developed countries. Unemployment, lack of economic growth, and poverty are some of the problems, which are expected to be solved under this small scale sector. The faith in SME is constantly on the rise as the concept of manufacturing occurring anywhere is on the rise. This is because since production methods are now more flexible, manufacturing can occur anywhere and at any level.......

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12Sep14 19Sep14 26Sep14
NASDAQ

4,591.81

4,103.08

4,466.75

H.SENG

24,606.04

24,377.31

23,691.24

SENSEX

26,999.12

27,153.21

26,431.42

NIKKEI

15,948.29

16,321.17

16,240.42

CAC-40

4,441.04

4,464.70

4,355.28

DAX

9,688.36

9,798.13

9,510.01

FTSE

6,809.17

6,819.29

6,639.71

S&P

1,997.45

2,011.36

1,965.99

DJIA

17,049.00

17,265.99

16,945.80

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As On Sep 26, 2014

TENOR

BID

OFFER

1 Week

9.74

10.24

2 Week

9.78 10.28

1 Month

9.82 10.32

3 Month

9.93 10.18

6 Month

9.93 10.18

9 Month

9.95 10.45

1 Year

10.03 10.53

2 Year

11.76 12.26

3 Year

12.29 12.79
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RESEARCH CORNER
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TAMEER BANK TIGHTENS GRIP ON MICRO LENDING, SAVING PROSPECT

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Tameer Micro Finance Bank Limited is the first scheduled Micro Finance Bank in Pakistan and a majority owned subsidiary of Telenor Pakistan. It offers micro finance and related financial services to the unbanked section and less privileged of the society.
The Bank presently has over 134 client touch points through more than 45,000 branchless banking agents, along with greater than 40,000 easypaisa agents, countrywide. The Bank provides a wide range of financial services including mobile accounts, remittances, loans, deposits, health insurance, cash management services and bank on wheels. Tameer Bank has partnered with domestic insurance firms to offer health insurance facilitates at hundreds of panel hospitals countrywide.......

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BUSINESS QUOTATIONS
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“I’ve seen the power of microfinance all over the world in the eyes of mothers and fathers. It’s unmistakable—the joy and deep satisfaction they feel from being able to work hard and provide for their children and their future.”
RICH STEARNS
“Small loans can transform lives, especially the lives of women and children. The poor can become empowered instead of disenfranchised. Homes can be built, jobs can be created, businesses can be launched, and individuals can feel a sense of worth again.”
NATALIE PORTMAN
“This is not charity. This is business: business with a social objective, which is to help people get out of poverty.”
MUHAMMAD YUNUS
"I know of no more encouraging fact than the unquestionable ability of man to elevate his life by conscious endeavor. "
HENRY DAVID THOREAU
"The key to ending extreme poverty is to enable the poorest of the poor to get their foot on the ladder of development. The ladder of development hovers overhead, and the poorest of the poor are stuck beneath it. They lack the minimum amount of capital necessary to get a foothold, and therefore need a boost up to the first rung. "
JEFFREY D. SACHS
"Microfinance recognizes that poor people are remarkable reservoirs of energy and knowledge. And while the lack of financial services is a sign of poverty, today it is also understood as an untapped opportunity to create markets, bring people in from the margins and give them the tools with which to help themselves."
KOFI ANNAN

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COVER STORY
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BRANCHLESS BANKING: THE FASTEST GROWING SEGMENT IN PAKISTAN
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Information and Communication Technologies (ICT) have transformed the global economy bringing about a revolutionary change in the financial sector. This revolution finds manifestations today in shape of innovative banking products and services such as Automated Teller Machines (ATMs), Internet banking, tele-banking and so on. Online banking has introduced non-traditional channels of delivering services in the banking industry.

 Pakistan needs to place ICT on its priority list to keep pace with the advancement in technology and minimize digital divide. The government needs to take measures for creating a conducive environment for technological innovation and its effective use in financial sector...........

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THIS WEEK TOP STORIES
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BANKS DISBURSE RS54BN IN AGRI CREDIT (DAWN NEWS)
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TORIES PLAN UNDER-40S HOMES DISCOUNT (BBC NEWS)
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PAKISTAN 11TH LARGEST PRODUCER OF BROILER CHICKENS (THE NATION)
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EID-UL-AZHA BRINGS GOOD BUSINESS TO BLACKSMITHS (BUSINESS RECORDER)
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DUBAI RETAILERS QUICKLY RUN OUT OF IPHONE 6 AND 6 PLUS (GULF NEWS)
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PIA TO BE SPLIT INTO TWO, GULF AIRLINES MAY BUY CORE BUSINESS (DAWN NEWS)
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ILLEGAL IMPORT OF CEMENT FROM IRAN ON THE RISE (THE NATION)
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CAPITAL MARKETS
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STOCK MARKET ROUND UP
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Amidst no change in policy rate by the State Bank of Pakistan (SBP) and a spur of negative news inflow, the market closed in the red during this past week, falling by a nominal 1.03%WoW to close at 29,706 points. Severity of news inflow regarding continuity of GIDC through a presidential ordinance, potential 20% increase in gas prices excluding domestic consumers and the GoP’s plan to sell a stake in OGDC likely at a discount to current market price kept the KSE-100 Index under pressure.
Broader news flow included: 1) pauses in decision making amidst populist considerations delaying planned 7% increase in power tariffs by the GoP and putting into question future IMF payments, 2)
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