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Chinese investors keen to pour $2 bn into PSX

Chinese investors have expressed keen interest in pouring at least $2 billion into Pakistan’s stock market.

“Small Chinese stockbrokers having $52 billion in assets under management have shown interest in investing at least $2 billion in shares at the Pakistan Stock Exchange (PSX),” announced PSX Chairman Sulaiman S Mehdi on Friday, as the bourse was being integrated with regional and international stock markets at a cost of $2.85 million.

The Chinese investors expressed the interest in a meeting held last week in China.

Low share prices hovering at 6.5 multiples at the PSX and average dividend yield of 6.2% encouraged them to consider injecting money into the PSX, he said.

Now, the government of Pakistan has to persuade the Chinese government to let its investors invest in Pakistan. Beijing laws require Chinese investors to take permission from the regulators for investment in other countries.

Mehdi said the PSX had signed a contract with the Shenzhen Stock Exchange (SZSE) to acquire a new trading and surveillance system at a cost of $2.85 million.

The new system would connect the PSX with three Chinese international stock markets including the SZSE, Shanghai and Hong Kong exchanges. The linkage will allow cross-listing of companies and attract foreign investment in each other’s stocks.

Earlier, a Chinese consortium acquired a 40% stake in the PSX – the company running the stock trading platform – at Rs28 per share in January 2017.

A high PSX official told on the sidelines of a conference that the bourse had written three letters to the Ministry of Finance, requesting it to initiate talks with the Chinese government for seeking approval for Chinese investment in the PSX.

“However, no progress has been made so far,” he said. “Now, we are planning to take a delegation to meet Prime Minster Imran Khan in this regard.”

The PSX chairman revealed that the new trading and surveillance system would be fully deployed over the next 12 to 14 months. “However, an interim surveillance system will be in place by February 2020.”

Earlier, the apex regulator – Securities and Exchange Commission of Pakistan (SECP) – had given the PSX a deadline to deploy a surveillance system by December 2019.

The new system will replace the existing Karachi Automated Trading System (KATS). Initially, both the trading systems will run parallel for the stockbrokers and investors.

“The new trading system will completely replace the existing one after users get fully familiar with the new system,” Mehdi said.

PSX had shortlisted two global stock markets for buying the trading and surveillance system, including the London Stock Exchange.

The offer and terms and conditions of the SZSE were found suitable for the PSX. “PSX will pay the price ($2.85 million) in installments over a period of five years. Moreover, it will be a one-time cost rather than paying the system licence renewal fee every year,” he said.

SZSE is the third largest stock market in the world in terms of trading value. It is also part of the Chinese consortium that has acquired 40% stake in the PSX.

Government to offer 35 offshore sites for oil, gas exploration

Pakistan has decided to auction 35 offshore sites next month for drilling to find oil and gas reserves in a major move to step up hydrocarbon production and meet growing demand.

The decision came after public-sector companies including Oil and Gas Development Company (OGDC), in a joint venture with Italy’s Eni and US energy giant ExxonMobil, made efforts to discover oil and gas deposits at an offshore site in the Arabian Sea near Karachi. However, they could not find anything but were able to collect data that could be useful for upcoming offshore ventures.

In addition to the 35 offshore sites, the government is poised to auction 10 onshore sites for hydrocarbon exploration, starting December 2019, said Power and Petroleum Minister Omar Ayub Khan in a meeting with German Ambassador Bernhard Schlagheck on Friday.

Special Assistant to the Prime Minister on Petroleum Nadeem Babar was also present in the meeting.

The minister emphasised that Pakistan’s energy sector was developing fast as it was offering around $60-billion market for renewable energy generation, transmission and distribution along with the petroleum sub-sector, which offered huge oil and gas exploration opportunities at around 40 new sites. Auction for these sites would be held next month.

He pointed out that for the first time provinces in Pakistan had been given a major and leading role in decision-making on new renewable energy projects as well as project implementation. A steering committee, with representation from all provinces, would be constituted for the purpose in the Alternative Energy Development Board (AEDB), he added.

He said the government had formulated a 25-year power generation plan alongside the transmission plan for commissioning new projects in the country.

Regarding exploration of new oil and gas reserves, the German ambassador was apprised that due to the absence of a clear globally acceptable policy, there was little exploration work as compared to the potential Pakistan had.

Now, after the policy has been revamped, the government is ready to auction around 35 offshore and 10 onshore sites for oil and gas exploration, starting December 2019.

The power minister briefed the envoy about the huge potential of increase in per capita electricity consumption in Pakistan, which currently stood around 500 kilowatts (kw) lower than the 2,500kw per capita consumption in China.

“This means electricity consumption will further increase in Pakistan with the adoption of business-friendly policies by the government,” he remarked.


Tracking firm set to raise Pkr 1.4 bn through IPO

Considering the evolving dimensions of the vehicle tracking business, TPL Trakker is all set to raise Rs1.4 billion through an initial public offering (IPO) at the Pakistan Stock Exchange (PSX) in order to expand its operations.

“We are pleased to announce that the board of directors of TPL Trakker Limited (TPLT), a wholly owned subsidiary of TPL Corp Limited, has accorded its approval to TPLT for listing at the Pakistan Stock Exchange and in this respect to submit its listing application before the PSX and the SECP as per applicable rules and regulations,” said a notice of the company sent to the PSX on Friday.

TPL Trakker would be offering 115.7 million ordinary shares of the face value of Rs10 each at a price of Rs12 aggregating up to Rs1.4 billion through the IPO at the fixed price in accordance with the Public Offering Regulations 2017, the notice said.

“We are no longer functioning in the vehicle tracking segment only,” said TPL Trakker Group CFO Adnan Khandwala. “We are now in the business of internet of things (IoT) as well, for which we need additional funds and the IPO is the best option for that purpose in these times.”

He elaborated that IoT helped businesses track their supply chain through internet, thus increasing their efficiency manifold.

The official regretted that the benchmark policy rate in Pakistan had been jacked up to 13.25%, hence, borrowing from banks for business expansion was not feasible, therefore, the company resorted to the IPO.

The company has 140,000 to 150,000 active customers in the vehicle tracking segment. Pakistan Telecommunication Authority (PTA) has issued more than 100 licences for such businesses.

TPL Trakker has already diversified its business as it provides container tracking services to the Customs authorities.

The company also provides generator fuel monitoring services, which is a massive expense for banks. Similarly, it is facilitating water usage monitoring in the textile sector where numerous tankers could be traced in one day.

The company is providing IoT services to the firms having a huge fleet of vehicles like oil marketing companies.

APTMA demands electricity at flat rate

The All Pakistan Textile Mills Association (APTMA) leadership has demanded uninterrupted electricity supply at the committed tariff of 7.5 cents per kilowatt-hour (kWh) to the export-oriented industry.

At a press conference at the Aptma Punjab office on Friday, Association’s Central Chairman Dr Amanullah Kassim Machiara said the industry was planning fresh investment despite the prevailing liquidity crunch caused by the stuck tax refund claims.

He pointed out that an increase in energy tariffs following the withdrawal of the facility of electricity supply at a flat rate of 7.5 cents had sparked panic within the industry.

Aptma Punjab Chairman Adil Bashir urged the government to fulfill its commitment of providing energy at a regionally competitive cost, ie at 7.5 cents per kWh.

“Government’s commitment to provide electricity at 7.5 cents led to an increase in textile exports whereas garment exports alone registered a rise of 35% in the past four months,” he pointed out.

“However, the government has imposed various surcharges following the withdrawal of zero-rating status including general sales tax and income tax.” Besides these, the industry has also been burdened with quarterly tariff adjustments in addition to the additional distribution surcharge effective July 1, 2019.

Owing to the government’s export-friendly policies, the industry had invited fresh investment, which was in the pipeline, he revealed. “Only the assurance of constant energy supply in the remaining period will make the industry pour new investment, which is currently in doldrums,” he cautioned.

Government may allow duty-free import of hybrid cars

To give a boost to the flow of remittances into the country, the government is going to permit overseas Pakistanis duty-free import of hybrid cars of up to 3,000cc engine capacity provided that an expatriate remits a minimum of $100,000 in two years.

The move is aimed at attracting offshore money into the country.

The Engineering Development Board (EDB) has issued a notice to the stakeholders, inviting their comments on the proposal of duty-free import of one hybrid car of up to 3,000cc by Foreign Exchange Remittances Card (FERC) holders who remit $100,000 over a period of two years.

“In recognition of our overseas Pakistanis who utilise banking channels to send money back home, my ministry has proposed to reward them for their contribution to the national exchequer,” tweeted Special Assistant to Prime Minister on Overseas Pakistanis Syed Zulfiqar Abbas Bukhari.

“I will be backing this initiative with full force; with this we can deal with the menace of hundi/hawala.” After coming to power, the Pakistan Tehreek-e-Insaf (PTI) government initially tried to crack down on the people who had stashed money abroad, said JS Global analyst Ahmed Lakhani.

“Now, the government is trying different and soft tactics to bring the money back into the country,” he added. “After trying the stick, the PTI government is using carrot to set the wheels of economy in motion,” he said.

Hybrid cars of 3,000cc engine capacity could be called high-end vehicles which only the affluent Pakistanis could afford, he said.

He pointed out that Toyota Fortuner, with engine capacity of 2,755cc, was the most expensive vehicle in the country. “The engine capacity of 3,000cc means that the vehicle price will be even higher than that for Toyota Fortuner, therefore, the incentive is only applicable to the elite class,” he said.

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