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No hope for immediate revival.

The stock market is on the downswing. Even the extension of exemption on capital gains could not arrest the downward movement. Other factors which are likely to have healthy effects on the stock market are: withdrawal of export duty on yarn, withdrawal of 12.5 per cent sales tax from two wheelers. Vegetable ghee industry has been allowed to export its products. A price increase has also been allowed to vegetable ghee units. The market however could not come out of the recessionary spell. Financial Experts are of the view that the government has lost its credibility vis-a-vis its promises and commitments.

Measures like taxing Modarabas earlier exempted, imposition of Turnover Tax on Tax holiday projects and on exports, slicing of concessions to Gadoon Industrial Estate - all have been responsible in convincing the investors that the government has no words that could be relied upon. One may mention here that the government's volte-face on concessions to Gadoon by which investors had flocked to put their all in " in that virgin land" has caused a lot of bitterness in the community of entrepreneurs especially when a member of the Dewan family had a fatal heart attack following a heated argument with the authorities in Islamabad against withdrawal of concessions. Roughly speaking, concessions nearly upto 50 per cent have been withdrawal from Gadoon investors.

Besides lack of credibility being one of the major factors in causing slump, falling profits in textiles due to international recession and "publicised interference" as an expert put it, influenced by Cop Scam due to non enforcement of law on modarabas and banks cannot be ruled out as having adverse bearing on the entire economic scenario. It is the view of the experts that besides stopping "publicised interference" deregulation measures should be speeded up.

Export duty of one rupee per kg. on yarn has been removed. However crisis in textiles spinning is not yet over. Textile shares are the leaders and they have affected the wide spectrum of the stock market.


The privatisation policy of the government received a setback due to poor response of the investors in the Sui Northern Gas Pipelines Ltd. The public picked up only 19 per cent of the total number of shares put on sale. This was a rude shock for the government especially considering that the price of share was just over 2.5 tims its break-up value. The government has decided not to privatise PIA. Moreover, it has become doubtful that the Government would be able to get bids for UBL and HBL according to its desire.


Pak Suzuki Motor Co.: suffered a collosal loss of Rs. 500 million during 1991-92.. The main reason of the huge loss incurred by the company was that it did not make any increase in the price of Suzuki cars, jeeps, pick-ups and other vehicles during the couple of years. Effective August 20, Pak Suzuki has enhanced the prices of all of its products at a rate of Rs. 10,000 per vehicle.

Rupali Polyester Limited: The Company's sales during the half year ending December 31, 1991 stood at Rs. 824.122 million as compared to preceding year's sales of Rs. 871.140 million. Pretax Profit however, improved from Rs. 136.987 million to Rs. 148.549 million. The profitability of the company remained under pressured due to dumping of polyester by Far Eastern suppliers. Moreover, a new unit of polyester plant has gone into production from January 1992. By addition of this unit the supply demand gap has come under pressure because the total current production exceeds the total deman.

Pakistan Industrial Leasing Corporation (PILCOPR): The International Finance Corporation (IFC) has decided to take equity in Pakistan Industrial Leasing Corporation (Pilcorp) as a shareholder by converting 10 per cent of their loan of 5 million dollars (equivalent Rs. 10.4 million) accorded to the company in foreign exchange last year. State Bank of Pakistan has given the necessary approval in this respect By taking over 9 per cent of the share capital of Pilcorp, IFC has reposed its confidence in the company. This has resulted in an increase of paid-up capital from Rs. 100 million to Rs. 110.04 million. The increase will help enhance leasing capability of the company.

ICP Dollar Fund: ICP is considering floatation of a Dollar denominated Mutual Fund for Non-Residen Pakistanis in October this year and the proceed thus received to be invested here in stock market.
 General Market
 Index Capitalisation
 (Rs. in billion)
02.07.92 186.11 216.949
09.07.92 179.02 208.635
16.07.92 178.48 207.174
23.07.92 174.28 207.888
30.07.92 166.57 197.742
06.08.92 165.35 197.895
12.08.92 168.06 201.344
19.08.92 163.42 195.723
27.08.92 156.99 188.250
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Title Annotation:Pakistani stock market report
Publication:Economic Review
Date:Aug 1, 1992
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