INTERVIEW: SAEED AZIZ KHAN, CHIEF EXECUTIVE OFFICER ASKARI INVESTMENT MANAGEMENT LTD.

MUTUAL FUNDS OFFER SAFE & ATTRACTIVE TAX FREE RETURNS

AMANULLAH BASHAR
Oct 26 - Nov 01, 2009

It was really a pleasant experience to meet Saeed Aziz Khan, an astute financial analyst with a great command to speak over complex issues, challenges and achievements of the fund management in general and the Askari Investment Management.

The volume of confidence while discussing the issues confronted the fund management industry naturally was the outcome of his extensive international and local experiences in senior management, propitiatory trading in cash and derivatives, risk management, debt and cash flow management and trading in cash and derivatives. Areas of exposure include money and debt markets, equities, currencies and commodities.

It goes to the credit of his professional capacity as CEO of the company that guided the company's staffing, marketing and profitability strategies to make AIM the leading assets management company in Pakistan. He has guided AIM through the financial turmoil of 2008 into a fresh growth trajectory, with the launch of several new products and expansion of the company's footprint in the Pakistan market.

As Senior Portfolio Manager, Saeed Khan helped create and expand the Askari Income Fund with fund size currently at just over Rs 10 billion (inception May 2006) and he was instrumental in establishing the firm's second fund, The Askari Asset Allocation Fund (inception May 2007), which is still modest in size (Rs 800 million). The role was essentially a CIO role involving launching and actively managing the company's funds, playing an active role in the investment and management committees of the company and formulating strategies for the company's future expansion.

Saeed Khan became more conspicuous as CEO by managing a turnaround for his company which was formerly loss making group unit over the past year or so. The company has started showing modest profits. He has created an operational plan to expand the business to a national level. This is something which speaks in volume of his capacity to lead his company as a going concern. This unit has now been taken over by Askari Bank.

Saeed Khan having the art of conversation touched upon some critical issues like tightening of the monetary policy by the State Bank of Pakistan very intelligently. He however said what he desired to say but without antagonizing to any one. He was in agreement that tightening of monetary policy, which has a direct bearing on financial sector especially the capital market or fund management, in principal meant to contain or control the inflationary pressures yet the other side of the picture was also important which needed to be taken care off.

He cited the example of the United States which despite confronted with the huge financial turmoil continued to pump money in the economy with an objective to carry on generating economic activity instead of allowing a stagnant posture of the economy.

As far as the performance of the Mutual Fund Industry is concerned he said that it had a great potential to support economic development and a bright future as well. However, since the industry has not carried out an awareness campaign to educate people about what the mutual fund industry is in the real sense, it has yet to tap a huge retailers market in Pakistan.

Another problem he pointed out that people did not get what they had expected from income funds. They get very low return. People who invested in equity fund lost a lot of money obviously due to stock market collapse on the back of financial crisis.

That consequently affected the level of confidence of the investors. In fact we need to have created investors awareness about mutual fund industry. People generally feel mutual fund is a risky venture which is not true. In order to restore the confidence of the people we launched a new fund "Askari Sovereign Cash Fund" specifically to address the needs of the people whose confidence was shaken due to collapse of the stock market.

This new product is a completely liquid fund. It invests minimum 70 percent of all the money in the fund to short term government treasury bills while duration of the portfolio cannot exceed 90 days. Even if billions are invested in this fund the investor can get back the money after a short notice. Hence there are mutual funds which are very safe and give attractive tax free returns to the investor. If the investor wants to take risk on stock market funds it is his choice otherwise safe havens are available, he said.

He agreed that there existed some misconception regarding Mutual Funds as many people considered it as the part of stock market. In fact a campaign regarding awareness of the about the nature of different funds is important, he conceded.

In fact the size of the mutual fund industry as compared to the banking industry in Pakistan is very small. It is probably around 4-5 percent of the assets in banking sector. In the United States it makes 130-140 percent of the banking sector. That means the size of its mutual fund industry is larger than the banking sector. The mutual industry has more funds than the bank deposits in the United States.

It is generally observed that the more developed economies have more investment in the mutual funds as compared to bank deposits. In India it is 13 percent of bank deposits and 20 percent in Malaysia however the numbers keep on changing, he remarked to be on the safe side.

He was of the opinion that the quality of the products in mutual funds offers greater return and safety to the retail investors and there is a comparison with the bank deposits in all terms. 'For example, if you have an amount of Rs100,000 and you go to the bank deposit it offers 5-6 percent at the most, in some case the bank might offer 8-10 percent according to volume of deposit but in mutual fund if you deposit Rs5000 or Rs5 billion you get the same return.' Another advantage offered by the mutual funds is that the investment in mutual funds is tax exempted.

This segment of the financial sector needs some structural support and a pro-active regulatory body to come to help at the time of need. He said that when the financial melt down stemmed from the developed economies like US or Western Europe it had its impact on Pakistan financial sector as well though it was not so severe like developed economies. However, there was a run for withdrawals especially from open ended mutual funds as well. At that critical time the industry needed some support from the regulatory bodies like SECP. Though it is doing well yet it needs to do more as a proactive body for strengthening this sector on sound footing. Since Askari Investment has a back up of the Askari Bank it managed to observe the shock but certain funds had to suffer to get back their money.

DAWOOD ISLAMIC BANK (PVT) LIMITED

DIBPL signs a deal with TPS for Online banking service for its corporate clients

Dubai Islamic Bank Pakistan Ltd., one of the most innovative Islamic banks in the industry, has signed a deal with TPS for 'PRISM - Corporate Internet Banking Solution'.

Offering a wide range of online banking and cash management services, TPS provides businesses with real-time technology and rigorous security in a versatile, yet simple-to-use application. The signing ceremony was attended by high level officials from TPS, DIBPL and media personnel.

The phenomenon of Online banking for corporates is relatively new in the Pakistani market, making DIBPL one of the leading banks in the industry to offer this service. With PRISM's powerful features and well structured user experience, DIBPL's customers would have the convenience of 24/7 online services that will enable them to undertake complex financial activity, meeting the demands of the modern enterprises and corporate groups. In addition to a comprehensive back-office, a combination of multiple levels of security has been embedded in PRISM knowing the sensitivity of information and security threats posed to online banking. The services include powerful payments and reporting tools that will provide maximum convenience and control to DIBPL's corporate customers.

"After a careful evaluation, we have chosen TPS as a company and PRISM as its Online Banking Product offering everything that DIBPL is looking for to ensure the success of this strategic initiative." commented Ammar Bin Mujeeb, Head of Information Technology Division, Dubai Islamic Bank.

"TPS feels privileged to be associated with DIBPL as a trusted technology partner for its Internet banking initiative and will enthusiastically work towards the realization and successful implementation of PRISM. "Shahzad Shahid, Global Head - Business Development, TPS.


PAKISTAN'S LIQUID FOREIGN RESERVES POSITION

The total liquid foreign reserves held by the country stood at $ 14,480.5million on 17th October, 2009. The break-up of the foreign reserves position is as under:-

i) Foreign reserves held by the State Bank of Pakistan: $10,910.1 million
ii) Net foreign reserves held by banks (other than SBP): $3,570.4 million
iii) Total liquid foreign reserves: $14,480.5 million