The government has decided to
make the National Investment Trust (NIT) further vibrant by providing it all kind of
financial and technical support. During the post budget news conference held on June 13,
Minister for Finance and Commerce Muhammad Ishaq Dar surprisingly, put a lot of emphasis
on the role of the NIT and said that the organisation has been doing a great work to
strengthen stock market in Pakistan. "We need to stress on the highly positive role
of the NIT for strengthening the stock market in Pakistan", he had said.
And now the officials of the ministry of finance have been given the
task to reinvigorate the role of the NIT and provide it all kinds of facilities so that
the objectives of improving the stock market in Pakistan could be achieved. "We will
not allow the NIT to become defunct", an official of the ministry of finance said
quoting the minister for finance and commerce.
NIT has paid over Rs. 15 billion in redemption over the last two years.
Its retail redemption requests had slowed down to Rs. 0.10 billion in the first half of
the financial year 1988-99, from Rs. 5 billion in the corresponding period of last year.
All requests for redemptions had been granted except of National Bank
of Pakistan and Faysal Bank whose redemption orders aggregating to Rs. 8 billion were in
the final stage of amicable settlement. The concerned officials are happy that Trust has
no immediate fund flow problems as these redemptions would not be required to be made at
any time before five years. At the end of that period NIT would pay these institutions at
the then prevailing Net Asset Value (NAV). NIT's NAV had improved 15.16 per cent to Rs.
7.52 per unit at March 16, 1999, from Rs. 6.53 at June 30, 1998. NIT's NAV had
outperformed the KSE. All share index dividend yield on NIT's portfolio had risen to 5 per
cent from 4 per cent in 1997 and the expected yield for 1999 was 10 per cent. Many see
this an encouraging development that the government had finally lifted the embargo on sale
of shares of PSO, KESC, HBL, SSGC and SNGPI. These had remained as frozen blocks in the
Trust's portfolio for many years. Also NIT did not intend to flood the market with these
stocks as some people had speculate. Stock market outlook seems largely, positive owning
to a number of developments specially when one finds a drop in interest rate by 1 per
cent; SBP permission for repatriation of profits; elimination of risk of default by the
country and the decline in foreign portfolio investment to dollar 200 300 million,
all of which can positively help attract local and foreign investors into the market.
Also NIT had recommended to the SBP to allow banks to invest 1 per cent
of deposits in equities and hoped that if and when allowed, it would have positive
impaction the KSE. Other positive developments could be the implementation of the hostile
takeover law and treasury stock.
Pakistan stocks produced dividend yield at 10 per cent which was higher
than most South Asian markets, including hose of India, Malaysia, Hong Kong and
Philippines. Most of them were producing dividend yield, which remained well below 3 per
NITL established in 1962, manages the largest one ended mutual fund in
Pakistan, with investment in approximately 630 out of 780 listed Pakistani Companies.
NIT's portfolio have over 90% correlation with the Karachi Stock Exchange. All Share Index
and is as such the nearest proxy to an index fund in Pakistan. NIT's Net Assets are valued
at approximately Rs. 14 billion over dollar 275 million at market levels by March 31,
1999. The fund has 93% weightage in equities and 7% in Debt securities. NIT's investment
objective is to provide its unit holders with a balance between their regular income needs
and long term capital growth.
Why invest through NIT?
a) Professional Management
To modernise and better manage its affairs, the Management Company has
hired a group of professionals including MBAs, Chartered Accountants and a Doctorate in
Finance (to head Asset Management). This will enable NIT to make financial-research driven
asset allocation and selection decision to better manage your money and keep control over
its assets and liabilities.
Nit offers the diversification advantage being invested in 630
companies so that you avoid putting all your eggs in one basket.
Economics of Scale
Due to NIT's large size, NIT gets better rates than an ordinary
individual in brokerage.
NIT makes investing simple, accessible and affordable.
Why Investing Through NIT is preferable
The two main options to invest in financial assets are equity (stock
market investment) and debt (bank deposits or government saving schemes). Investing in
stock market carries more risk, however, it is also more rewarding over the long run.
Over the last twenty-five years the average return on bank deposits has
been 9% on government savings schemes 14% and on the stock market 18.5%. If an investor
had invested Rs. 100 in a bank in June 1974 he would have Rs. 813 on November 1998
ignoring taxes and Zakat). Same Rs. 100 invested in defence savings certificate would have
grown to Rs. 2441. The best investment has been the stock market investment where Rs. 100
invested in June 1974 would have grown to Rs. 4394 in Nov, 1998. This is inspite the fact
the stock market of Pakistan has shown very poor performance over the last four years.
The return from investment in stock market comprises of two components;
(i) capital gains/loss) resulting from appreciation/drop in stock prices; and (ii)
dividends paid by companies to their shareholders. NIT projects a 18% return to investors
investing in the stock market either directly or by investing in NIT Unites for the long
term (more than 5 years).
This is based on the following;
9% capital gains return per annum:
This has been the average capital gains return per annum over the last
25 years, using SBP Share Price Index as a proxy for the stock market. Based on extremely
low price levels in the market, the capital gains can be higher than 9%.
10% dividend yield per annum on current price levels:
NIT has a diversified portfolio that can be used as a proxy for the
over all stock market. NIT will experience a 10% dividend yield on its equity investments
this year (FY 98-99). Assuming a 10% capital gains per annum and a 10% growth in dividends
per year, the dividend yield is expected to remain stable at 10%.
All investments in mutual funds and securities are subject to market
risks. Its target return/dividend range cannot be guaranteed. NIT's Unit price is neither
guaranteed nor administered/managed. It is based on Net Asset Value and the NAV of unit
may go up or down depending upon the factors and forces affecting the stock market. Past
performance is not necessary indicative of future results.
NIT's management has put proper systems and procedures in place to
ensure transparency. This includes taping of office phones and setting up of an Internal
Audit Department reporting to the Audit Committee of the Board. All NIT staff is required
to give a declaration of their share holding and to in form the management on all
acquisition/disposal of shares. All employees privy to the investment decision making
process, or having access to information relating to investment/disinvestment are barred
from buying or selling shares on the stock market. They may sell their holding if acquired
prior to joining NIT with proper disclosure to the company.
b) Voluntary Separation Scheme
To make NIT a lean and efficient Asset Management company and in
compliance with government policy NIT has offered a Voluntary Separation Scheme to its
employees. And 180 employees out of 273 have exercised the option to retire, of whom 18
have been retained due to their professional skills and the balance relieved of their
duties and dues paid off.
c) Corporate Governance
A large number of companies listed on the stock exchange have a poor
record of creating value and paying dividends to their minority shareholders. NIT is
playing a proactive role to safeguard its own and other minority shareholders interests.
During the last, year NIT has strived hard to extract value from its investments. These
efforts included persuading management of companies in which NIT has significant holding
to offer better dividends and improve their operational efficiency. NIT's corporate
governance initiatives have paid off and the Trust has generated Rs 566 million in cash
and created over Rs. 300 million in value by selling shares of 11 companies at prices
significantly above their prevailing market price.
And now when the government plans to give a real patronage to the
orgaisation, NIT is bound to make more successes by attracting those who want to have
better return of their money.
Name: NASIM BEG
Date of Birth: 19th August 1947
Address: F-61/6, Block 4, Clifton, Karachi-75600
Telephone Number. Home (92-21) 587 0060.
Educational & Professional
Chartered Accountant-Qualified in 1970 Bachelor of Commerce - Karachi University Early
schooling St Mary's School, Rawalpindi and Cadet College.
July 1997 to date Deputy Chief Executive, National Investment Trust Limited, Pakistan's
largest open-end Mutual fund management company.
Acting Chief Executive as of 1st May, 1999.
June'96 to June'97 Chief Executive of State Asset Management Company, Karachi set up in
collaboration with State Life Insurance Corporation.
The company is licensed to operate open end Mutual funds in Pakistan.
Nov'94 to Oct'96 Managing Director of Beg Associates (Pvt) Ltd., Karachi, a Licensed
Investment Advisor registered with the Corporate Law Authority. Primarily involved in
serving retail clients for investing in the domestic stock market and foreign mutual
1985 to Oct'94 With Allied Engineering Group, Karachi initially as Director Development
and thereafter as Chief Executive of Polymer & Precision Engineers. Set up a component
manufacturing subsidiary, negotiated foreign collaborations in the UK, Japan and China
negotiated orders with customers and took the company to full operation. Subsequently CE0
of Allied Motors Limited (Assemblers of Farm Tractors)
1983 to 1984 With Eroseed Limited, London as Finance Director. Handled the company's
trade finance activities, represented it's sponsor in processing an application at the
Bank of England for a Licensed Deposit Taker and negotiated take over of established
1977 to 1982 With Abu Dhabi Investment Co, UAE, as Senior Vice President. Responsible
for the company's Operations, Treasury, Foreign Exchange and Deposit Dealing desk, Euro
Bonds and International Equities dealing desks
1974 to 1976 With Republic Motors (Pvt) Ltd., Karachi (Assemblers of Chrysler
products) as Chief Financial Officer. Overall responsibility for the company's finance
1971to 1974 With National Motors Limited, Karachi (Assemblers of GM products) as
Assistant Manager Finance. Responsible for the company's financial planning.
1965 to 1970 With A.F.Ferguson & Co., Pakistan's premier firm of Chartered
Accountants as an Articled Clerk. (Trainee)