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Pessimism persists.

The stock market during the month under review depicted a downturn. It touched the highest on January 14, at 168.89 with aggregate market capitalisation of Rs. 208.711 billion and the lowest at 160.85 on February 18 with aggregate market capitalisation of Rs. 199.389 billion. The monthly turnover of shares declined from 103.107 million in December 1992 to 85.475 million in January 1993.
 General Aggregate
 Index Market
Year Number Capitalisation
 (Rs. in billion)
14.01.93 168.89 208.711
20.01.93 166.81 205.770
28.01.93 166.34 206.247
04.02.93 166.06 206.174
11.02.93 164.41 203.575
18.02.93 160.85 199.389

Downward Swing

The downswing in the stock market was attributed to the widening budget deficit which may induce the government to impose higher taxes. There may be increase in the users charges, like gas and power rates due to pressure from the IMF. The significant decision of the Indian government to make Indian rupee fully convertible may have an adverse impact on the exports of Pakistan. Cotton production is estimated to be lower this year. Analysts said the reduced cotton production would badly affect the calculations of the country's gross domestic production (GDP) this year. Cotton and textile sector had represented nearly 60 per cent of the GDP, estimated at about 50 billion dollars in the last fiscal year 1991-92 July/June. About 30,000 power looms have been reported as closed down due to increase in duty on silk and polyester yarn. Closing of power looms is likely to reduce the production of silk fabric.

Factors which favour the stock market were 6.14 per cent increase in exports during the six months period ending December 31, 1992. Another factor was the news that the government has provided an additional package of incentives to industries to be set up in special Industrial Zones in the shape of exemption of Iqra surcharge and import finance fee.

Another news of significance was Japanese textile exports offer to help acquire all possible technical and financial assistance including machinery and equipment to modernise Pakistan's textile sector. The scheme envisages low interest and long-term financing to help promote joint operation, grouping of factories among small and medium scale units including related processing firms engaged in weaving, knitting, dyeing, finishing and other ancillary industries in order to strengthen the corporate structure and promote their modernization through structural reforms.


ICP: Chairman Investment Corporation of Pakistan (ICP) M. Khalil Mian, informed the shareholders that gross income of ICP showed significant improvement during the year 1991-92 as it achieved 36 per cent increase of Rs. 127.7 million and amounted to Rs. 482.8 million compared to Rs. 355.1 million in the preceding year. Addressing the 26th Annual General Meeting of ICP he said that this noteworthy increase was possible due to exceptional boom in the stock market generated by the fiscal measures adopted by the government of which privatisation was one of the major factors.

Elaborating further, he said that sale of investment resulted in revenue of Rs. 230.5 million and constituted 47.7 per cent of the total income compared to 19.3 per cent in the preceding year. The income from dividend, return and mark-up on PTC/TFC and PLS and Investors Sharing Scheme etc. constituted 52.3 per cent of the income of 1991-92 compared to 80.7 per cent of the preceding year.

First Leasing Corporation: First Leasing Corporation Limited in the first nine months of its operations earned an operating profit of Rs. 18.44 million. The company went for public subscription in the second week of January 1992, and started leasing operations from March 1992. The accounts as adopted by the board of directors in their meeting held on January 31, 1993, show income of Rs. 28.48 million, out of which expenses were Rs. 10.03 million. The paid up capital of the company is Rs. 130 million. The company has disbursed and committed leased assets of over Rs. 264 million, mainly consisting of machinery (77.5 per cent), equipment (7.9 per cent), vehicles (9.1 per cent), generators and computers (5.5 per cent. It plans to achieve a substantial growth in the coming year. First Leasing will expand its network by opening a branch office in Lahore very shortly.

PIA: A meeting of the Board of Directors of PIAC was held under the chairmanship of M. Anwar Zahid. The Board approved the airline's half yearly unaudited accounts for the period ending December, 31, 1992. During the period under review the Airline earned an operating surplus of over Rs. 740 million and a profit of Rs. 491 million. A comparison of the half yearly accounts with those of the previous year is as under:
 (Rs. in million)
Operating 1992 1991 (%) Increase
Revenue 10981 9608 14.29
Expenses 10241 8938 14.58
Income 740 670 9.14
Profit 491 343 43.15

The Board noted with satisfaction the continuous sound financial health of the airline and its high credibility with the international financial institutions. During this period the 4th Airbus A310-300 was inducted and the purchase option for 5th and 6th A310-300 was exercised for deliveries in December 1993 and June 1994 respectively. The Board approved the short term fleet plan which envisages acquisition of two wide body aircraft on lease to meet its immediate capacity requirements.
 Bonus Book
 Dividend Right Closing
Annoor Textile Mills Ltd. Nil 50R(i) 20.03.93
A.A. Textile Mills 20 -- 19.03.93
Bawany Sugar Mills Ltd. 12.5 10B 16.03.93
Burewala Textile Mills Ltd. 55 -- 14.03.93
Bannu Woollen Mills Ltd. 10 30B 18.03.93
Bank of Punjab -- 75B 19.03.93
D.G. Khan Cement 30(i) -- 20.03.93
Fateh Textile Mills Ltd. 25(F) -- 25.03.93
I.C.C. Textile Mills Ltd. 22.5 40R(*) --
I.C.I. Pakistan Ltd. 22.5 40R(*) 07.03.93
Pakistan State Oil 30(i) -- 01.04.93
Reckitt & Colman 18F -- 17.03.93
Trust Modaraba -- 30B 14.03.93
* Subject to CCI Approval.

Metropolitan Steel: The Metropolitan Steel Corporation Limited (MSC) recently privatised, has practically overcome all the crises and the company is now poised for take-off, Chairman of the unit Jamal Hassan denied all reports appearing in a section of the Press regarding re-possession notice served by the Privatisation Commission on the new management and the default by the management in the re-payment of loans. He said no notice had ever been served by the Privatisation Commission on the management. To a question, he said that the company at present had orders worth Rs. 65 crore in hand.

Pakistan State Oil Co.: Pakistan State Oil (PSO), a public sector organisation of Ministry of Petroleum and natural Resources has declared its highest-ever interim dividend of 30 per cent for the period of July-December, 1992. The dividend was 27.5 per cent for the same period during the last year. Managing Director PSO M. Farid informed about an increase of 10 per cent in profit after tax made by PSO, earning Rs. 207.525 million during the period under review whereas it was Rs. 189.513 million during the same period in 1991. Growth in sales was noticed at 10.6 per cent as the PSO sold 4.345 million tonnes petroleum products during July-December 1992 while it was 3.928 million during the corresponding period last year.

PBS and Burshane: After two decades, the world famous yellow fan logo of Shell Oil will once again be seen throughout the length and breadth of the country with the acquisition of Burmah Castrol plc shareholding in Pakistan Burmah Shell (PBS) and Burshane has been acquired by the Royal Dutch Shell Group. The Shell oil yearly turnover is over 100 billion dollars and the annual profit is between 12 to 14 billion dollars. The decision by Shell to increase its exploration and marketing activities in Pakistan is an encouraging response to the liberal petroleum policy of the present government.

Shell is already participating with Lasmo Oil in drilling activity. And after acquisition of over 52 per cent stake in Burshane and PBS, it is keen to acquire an additional 15 per cent stake in Pakistan Refinery Limited. The legal formalities in this regard are expected to be completed within next month. Shell has acquired Burmah Castrol plc 24.5 per cent shareholding in Pakistan Burmah Shell and 2 per cent shares from the market, raising total Shell investment in the company to 51 per cent. "Consequently, Pakistan Burmah Shell is now a company of the Royal Dutch/Shell Group. Once the necessary amendments to the Memorandum and Articles of Association of the Company have been carried out, a process which has begun, the name of the Pakistan Burmah Shell will change to Shell Pakistan Limited.
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Title Annotation:Pakistani stock market
Author:Haidari, Iqbal
Publication:Economic Review
Date:Feb 1, 1993
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