US Dollar 59.9 60
Bahrain Dinar 158 158.1
Canadian $ 50.85 50.95
Euro 70.75 70.85
Hong Kong $ 7.65 7.7
Japanese Yen 0.508 0.51
Kuwaiti Dinar 204 204.1
UK Pound 103.7 103.8
Last updated: Friday 23 Dec, 2005-12.30 P.M (PST)



In oC




Today 12 26 38 Sunny
Tomorrow 11 27 38 Sunny
Day after 11 28 38 Sunny
Today 1 20 87 Sunny
Tomorrow 2 20 87 Sunny
Day after 2 21 87 Sunny
Today 0 18 59 Sunny
Tomorrow 0 18 59 Sunny
Day after 0 21 59 Sunny
HUM%: Humidity In %
FOR.: Weather Forecast
updated: Fri - Sun 23-25 Dec, 2005




KARACHI         - 021 LAHORE          - 042 ISLAMABAD    - 051 FAISALABAD   - 041 MULTAN          - 061 PESHAWAR    - 0521 CANADA          - 1 KUWAIT           - 965 INDIA               - 91 IRAN                - 98 U.K                   - 44 U.A.E                - 971 U.S.A                - 1







Updated Dec 24, 2005

The last bone of contention between the Securities and Exchange Commission of Pakistan (SECP) and Karachi Stock Exchange (KSE) seems to be reaching an amicable resolution. The KSE board in a recently held meeting decided to follow the SECP directive to elect a non-member director as the Chairman of the KSE. The board also decided to seek approval from the SECP to hold an Extra-ordinary General Meeting by 30th December 2005 to make the necessary amendment in the regulations pertaining to election of the Chairman. The SECP had directed the stock exchanges to nominate a non-member director as Chairman of the exchange to ensure smooth demutualization of the exchange. The KSE board had earlier shown its resentment to this directive. However, intervention by Advisor to the Prime Minister on Finance ensured that this dispute was resolved amicably.

The last auction of this calendar year saw T-Bill yields for 3, 6 and 12- month tenors left unchanged. The State Bank of Pakistan accepted bids worth Rs 74.2 billion against target of Rs 45 billion and offers of Rs 95.6 billion. Concentration of bids was seen in 12-month T-bills (Rs 69.6 billion) while accepted amount in 6-month bills was Rs 2.79 billion and 3-months was Rs 1.8 billion. The acceptance of a significantly larger amount compared to the target and to maintain the previous cutoff signals that SBP is unwilling to raise rates any further. Analysts believe that with lower inflation a decline in T-bill rates may be witnessed during second half of the current financial year.

Reportedly, Pakistan has allowed Etisalat to make the payment for 26% shares of Pakistan Telecommunication Company Limited (PTCL) over a period of five years. In an interview Etisalat Chief Executive, Mohamed Hassan Omran stated that one of the major issues pending was deferment of payment over five years. If this comes through, (assuming five equal annual installments), the effective price or present value of the transaction comes to US$1.53 or Rs 92/ share. Etisalat had initially bid US$1.96 or Rs 117/ share for the stake. While it may be said that the government has succeeded in saving the transaction, it may also that the government has to bow down.

As per the decision notified by Oil and Gas Regulatory Authority (OGRA), a 15.2% increase in fuel gas prices for fertilizer companies is to be implemented from January 2006. This is likely to result in Rs 9.5/bag increase in urea cost. Based on the past practice of fertilizer companies, one should expect these companies to pass on more than the impact of increase in gas price to the farmers by raising urea price. Thus with a 15.2% increase in gas prices or Rs9.5/bag increase in urea cost, fertilizer companies may fix price at Rs 490/bag. Present demand and supply position in the country is in favor of fertilizer companies and even acceptable to farmers. One does not expect government interference over the price issue simply because an increase in domestic prices would help the government to reduce the subsidy burden on urea imports. One also expect supply and demand situation to remain tougher during 2006 due to: 1) no supply additions expected in 2006 because Fatima Fertilizer is expected to take two more years for commencement of operations, 2) turnarounds at existing plants during first half 2006 (one month at FFBL for BMR; one week maintenance turnaround at FFC Unit I and II); and 3) delay in arrival of shipment and L/Cs opening process by TCP for imported urea. Farmers are expected to absorb the increase in price due to 1) improved farm credit; 2) better support prices for cotton and 3) retail prices touched of Rs 510.5/bag during July this year-05 and accepted by the farmers.

PICIC is set to launch the first sector specific fund in Pakistan. The fund will invest only in the energy sector comprising of refineries, oil marketing and gas distribution companies, power generation units and oil and gas exploration companies. Applications against public offering will be accepted on 28-29 December 2005. The fund size will be one billion rupees out of this Rs 250 million will be raised from the IPO. The fund also has a green shoe option for another Rs 500 million. A total of 25 million shares are being offered at par value of Rs 10/share. Currently PICIC manages two mutual funds, namely PICIC Growth Fund (PGF) and PICIC Investment Fund (PIF). The net asset value (NAV) of PGF has risen at a 2-year CAGR of 40% (adjusted for right issue) from Rs 4,091 million to Rs 9,047 million in 2005 providing excellent returns to shareholder. Similarly PIF's NAV has also grown at a 2-year CAGR of 20% (adjusted for Right issue), rising from Rs 2,289 million in 2003 to Rs 5,883 million by 2005. The funds managed by PICIC have provided attractive returns year on year, both through considerable appreciation in the form of capital gains, and attractive dividends to the investors. Number of companies in the energy sector is 29 and the size of the sector is substantial, as it contains the bulk of the market capitalization. The sector has over the last few years offered substantial capital gains (specifically Refineries, OMC's and E&P's). However, capital gains in the power generation sector have been limited but returns have been decent due to good dividend yields on Hubco and Kapco). Advantages of investing in the fund are: 1) it allows small investors to park their savings in the energy sector. Since the price of most of the stocks in the sector is quite high, the fund will allow small investors a vehicle for taking a well diversified position in energy. 2) Like all other mutual funds it will allow investors to diversify the risk associated with investing in any one particular company. However, risk diversification will be limited due to the nature of the fund (diversification possible only across companies in the energy sector). 3) It offers good balance between capital gains and dividend yield. Some of the possible disadvantages are: 1) the fund has significant exposure to oil prices, which could lead to volatile returns for investors. Returns in the Refinery, E&P, and OMC sector are highly correlated to international oil prices. It would be difficult to maintain portfolio performance during a low or falling oil price environment, 2) the fund will have limited investment alternatives given only 29 companies will be available for investment.


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