KARACHI: UK Trade and Investment Pakistan delegation visited Karachi Stock Exchange (KSE) and met Managing Director and Board of Directors of KSE on Thursday. The delegation was led by Sir Andrew Cahn CEO UKTI and accompanied by Robert Gibson, Deputy High Commissioner Karachi/Director UKTI, Duncan Archibald, private secretary to CEO UKTI and Ahmer Arif, Deputy Director UKTI. Also present from KSE Board were Yasin Lakhani, Farrukh Junaidy, Farrukh Ansari and Farhan Malik.
Adnan Afridi, MD KSE presented a brief overview of Pakistan’s economy and Karachi Stock Exchange. He particularly highlighted that Pakistani Capital markets are most competitive and easy to transact with very sound and liberal laws of investment and repatriation of funds. “The Exchange, he highlighted, is fully automated and global investors can transact from anywhere with KSE.” Adnan Afridi said that collectively entrepreneurs in Pakistani do not use the capital markets for raising funds for growth and acquisition, but with third generation business leaders emerging fast in Pakistan, there is a bright future for Initial Public Offerings in 2010.
Sir Andrew Cahn congratulated the MD and Board of Directors on making a successful contribution to the Pakistani Capital Markets and economy. He said that Pakistan and Britain should have increased cooperation in the fields of training, skill, qualification etc, for boosting economic ties and mentioned that Securities & Investment Institute of UK has shown significant interest in introducing the capital market. staff report
Nepal Stock Exchange (Nepse) protested directives from Nepal Rastra Bank (NRB) on converting 19 percent of promoter shares into general shares, arguing that this could lead to a market crash. Conversion of 19 percent promoter shares will double the supply of stock. It would force the market to lose another 200 points. This must be avoided,” said Tanka Paneru, Nepse chairman.
Briefing lawmakers at the Parliamentary Finance and Labor Relations Committee, Paneru argued that a tight marginal lending policy, the inflation-shrunk savings of small investors, other market dynamics and liquidity crunch have already forced the market to correct.
“The market has already corrected to 540 points from some 1,200 points of two years ago. We need not implement another correction measure that we worked out during the overheated era,” Paneru stated.
Lawmakers at the committee were divided over the issue. Dr Ram Sharan Mahat, a lawmaker, stood in favor of NRB´s directives, saying these will free the promoters´ locked-up money and foster entrepreneurship.
Dr Tilak Rawal, another lawmaker, opposed it, saying that it will squeeze the market further, spark distress selling and crash Nepse, sending an adverse wave throughout the economy.
Because of differences among lawmakers, the committee failed to give its decision over the case.
The National Commodity Exchange Limited (NCEL) is all set to launch the first crude oil futures trading in the private sector from January 2010, NCEL Chairman Sameer Ahmad said in Karachi. “The required formalities and arrangements at NCEL have been completed and the stakeholders are ready to participate in the future trading,” he added. He said NCEL is a transparent and trustworthy platform to trade on because of its modern risk management techniques such as pre-trade risk check in real-time.
He said, “future trading in crude oil will save the importers from financial loss as prices in the international market and landing cost usually differ before or after the maturity of import contract.” He said there was an increasing awareness among investors globally and domestically that commodities are now a significant and investible asset class. The commodity trading in Pakistan is now possible on a regulated and organised institution under a recognised legal framework, he asserted. He said oil companies would be beneficiaries as they could start hedging on the imported orders of the oil products.
Ahmad said following start of crude oil future contracts trading through NCEL’s floor, the silver futures listing was expected in the near future. The commodity futures offers insurance against the periods of unanticipated inflation besides it will keep the participants aware of happenings in the commodities’ world as it now increasingly affects all other areas of economic activity, he said. Commodities as an asset class is now equal in importance to other traditional markets like stocks, bonds and currencies. The current shift in global economies has placed commodities at the centre stage in terms of world growth.
He said NCEL has planed to introduce sector sub-indexes, representing the major commodity sectors within the index.
Commodity index is based on the composition of five commodities available for trading on NCEL covering palm olien, gold, silver, crude oil and Irri-6 rice,” he added. NCEL is Pakistan’s first and only commodities and futures exchange with a technological infrastructure allowing trading hubs all across the country.
The NCEL was incorporated in April 2002 and authorised by the Securities and Exchange Commission of Pakistan in May 2002. Its paid-up capital is Rs 40 million (post Zarai Taraqiati Bank) and its authorised capital is Rs 50 million.
NCEL continues to offer fresh memberships with lucrative opportunities in a growing commodity trade market, he added. The financial institutions and shareholders of NCEL are National Bank of Pakistan, Zarai Taraqiati Bank, Pak Kuwait Investment Co and the three national stock exchanges.
India’s oldest exchange, the Bombay Stock Exchange (BSE), has approached the Securities and Exchange Board of India (Sebi) for listing its shares. Sources said the listing would be through an initial public offering. This will make BSE India’s first listed exchange.
The agenda paper of a recent Sebi board meeting said, “Many exchanges are actively contemplating seeking permission to list their shares. One exchange has submitted a preliminary proposal.” While there are no clear guidelines for listing a stock exchange either on its own or its rival’s trading platform, the agenda paper has made a proposal for self-listing. Sebi has suggested three models for coping with any possible conflict of interest arising out of self-listing. These are committee model, company model and independent company model.
Sebi, on its part, seems to be favouring the company model. “It is felt that in the current scenario, the company model may be more suited to the requirements of self-listing,” it said.Under the company model, a wholly-owned subsidiary of the exchange will be entrusted with monitoring the conduct of the market players and their compliance with the exchange’s operating rules. The securities regulator will step in at the time of any conflict.
As on March 31, 2009, six foreign investors, including Deutsche Borse and Singapore Exchange, held 25.65 per cent in BSE. Dubai Financial Group LLC owned 3.92 per cent while State Bank of India and Life Insurance Corporation held 4.9 per cent shares each. A little over 62 per cent of the shares are widely held. Among key Indian shareholders are Bajaj Holdings and Investment Ltd, which owns 2.94 per cent, Infosys Technologies Ltd’s CEO and MD, S Gopalakrishnan, who owns 1.04 per cent, and Bennett, Coleman and Co, which owns 1.04 per cent. The listing will help boost the valuation of the exchange and provide investors an exit opportunity.
Sebi had asked the 134-year-old exchange to put its house in order before a listing could be considered. Since then, BSE has been taken several initiatives. It is investing heavily in technology. Over the years, BSE has been losing out to NSE on the technology front and new players such as Financial Technologies, which are trying to ride the technology path while setting up the MCX Stock Exchange. Although BSE has more companies listed on it than NSE, it has lost the top slot in terms of turnover.
The listing could also pave the way for several financial investors to exit at an attractive valuation. BSE members have been asking for a listing saying this will result in better price discovery and provide shareholders an opportunity to exit their investments.
General investors in the Chittagong stocks are reluctant to use internet-based trading system (ITS) due to ignorance about the advantage the system offers.
The ITS was launched in 2005, but in the last five years the exchange could not attract investors to the facility, Chittagong Stock Exchange (CSE) chief executive officer Mohammad Abdullah Mamun told in Dhaka. Dhaka Stock Exchange (DSE) has yet to introduce the ITS.
Only 121 investors have registered themselves for using the ITS and out of that 72 actively trade on the market. The CSE permitted 19 brokerage houses to offer ITS to their clients out of a total member of 135. "Registered investors can trade at any place any time under the system and they do not need go to brokerage house physically for trading," Mr Abdullah explained. An investor can place his or her order even at midnight and it would be executed the following day, he said. "It is difficult for many investors to physically go to the brokerage houses as they are busy with their regular work schedule and ITS is a perfect solution for them," he added.
The main advantage of the system is that investors can execute their decisions themselves, the CSE chief executive officer said. The CSE has taken steps to make the system popular among regular investors, he added. The whole system is very user-friendly and if the investors become aware of it, the trade volume and value of the exchange will increase manifold, he hoped.
The average log-in of ITS users is 35 with average trade value at Tk 1.1 million every day. "We want to shift 20 per cent of the total investors to ITS in two years and 50 per cent in seven years," Mr Abdullah said adding, "With proper marketing campaign, it can be achievable." CSE general manager Mohammad Atiquzzaman said the exchange would motivate the brokerage houses to set up ITS facilities and make the general investors aware of the use of the system for efficient trading."We are going to organise a road show this month in Sylhet, and later on it will be arranged in other places," he said. The brokerage houses can encourage their clients to opt for ITS, he added.
The brokerage houses will need small offices upon installation of ITS as not many people will visit the offices resulting in the formers' revenue going up due to the user-friendly trading system, he added. "We have started giving demonstration to different brokerage houses to make the system a popular platform for trading," Mr Atiq said. He, however, said not all brokerage houses can provide the service as they need to equip themselves with certain technical and human resource facilities. "In our assessment, about 60 per cent of the brokerage houses will be qualified for providing the service," he said. The ITS platform can also encourage non-resident Bangladeshis to take part in trading from abroad, Mr Atiq said. "There are two types of NRB investors. The first one comprises those, who invest in the market believing when they come back home they will enjoy the profit," he said. The second type of NRB investors want to repatriate the investment and profit through non-resident investors' Taka account (NITA), he added. The average trading value of the CSE was Tk 660 million in 2009 and it was Tk 420 million in 2008. Over 200 companies are listed with the second bourse of the country.
A commodities and currency exchange expected to go live in Mauritius in late March plans to offer Africa's first currency futures and derivatives market for the Kenyan shilling and Ugandan shilling.
Joseph Bosco, Chief Operating Officer of Global Board of Trade (GBOT) that will run the exchange, told Reuters it would allow market players to better hedge themselves in a region where political risk weighs heavily on the markets.
"We intended to start off with six currency pairs and now we are expanding to eight pairs with the dollar as the base. The two additions are the Kenyan and Ugandan shillings," Bosco said in a telephone interview on Wednesday.
"Today these markets (Kenya and Uganda) obviously have their own currency trading, but that doesn't give them the required risk management mechanisms."
Kenya's economy spiralled down and its currency weakened sharply when violence erupted after disputed elections at the end of 2007, before being hit by the global downturn last year.
This year is seen by many investors as a year to cement recovery in east Africa's largest economy.
But there are fears any failure by the country's fragile coalition government to address constitutional reform and the perceived immunity of the architects of the post-election crisis could trigger more fighting and destabilise the economy again.
"We are giving them risk containment mechanisms, we are helping them to hedge themselves against uncertainty of unforeseen circumstances," said Bosco
Pakistan Allows Trading Of National Savings Bonds On Stock Exchanges
Pakistan has announced new rules that allow the trade of National Savings Bonds on the country's three stock exchanges, in a move aimed at boosting investments into government bonds.
The new rules will apply to the government bonds with a maturity of three, five and 10 years, the government said in a notification sent to the Karachi Stock Exchange late Tuesday.The bonds may be issued to individuals and mutual funds, provident, pension, gratuity funds and trusts, irrespective of their residential status, it said.The bonds can be issued to domestic corporate bodies and banks, but not overseas ones.The bonds, to be listed and traded on the exchanges, will have a minimum investment limit of PKR20,000 and will not have any maximum limit, the notification said, adding that the bonds will be issued in multiples of PKR 10, 000.Pakistanis living abroad can invest in them through remittances from official banking channels, it said.The bonds will also be transferable through the Central Depository System.
Bhutan government’s debt has decreased by US$ 77.1 million, and the ratio of outstanding debt-to-gross domestic product has also declined by 27.7 percent in 2008-2009.
According to reports, Bhutan’s ability to maintain a robust GDP growth, averaging around six percent a year over the past several years, has helped reduce the debt-to-GDP ratio. The GDP growth has been driven significantly by growth in power sector, which has been mainly supported by bilateral assistance from India.
Out of the total external debt of US$ 702.2 million in 2008-2009, Bhutan owes almost half to India. Borrowings from India are tied to buy back arrangements for the power generated from the projects funded by these loans.
According to Dr H K Pradhan, Professor of Finance and Economics, XLRI Jamshedpur, India, the evolving trend in Bhutan’s external debt should also be seen in the light of its external sector development and capital flows, following the turmoil in global financial markets.
“The management of public debt also requires effective coordination with macroeconomic policies, including reserve management and exchange rate policy. The implication of the present uncertain global financial environment with its impact on the climate of concessional flows also needs consideration,” he said.
He added that external borrowings serve as an important source for financing investments and imports, enabling the developing countries to achieve higher economic growth as well as consumption smoothing.
However, he said that several recent experiences show that a high level of external debt can also become an obstacle to development. “The inescapable conclusion of a higher level of external debt is that the borrowing country must generate sufficient resources in future, in foreign exchange, through higher economic growth and exports, and that the outstanding debt obligations are serviced without disruptions to macroeconomic policies,” he said.
External borrowings, in addition to being used for current consumptions and investments, should expand the country’s capacity to produce exports so that future obligations are serviced. Therefore, external debt management involves the crucial role of balancing resource mobilisation, their deployment, as well as repayment of future obligations.
Debt management authorities also need to focus on allocations of borrowed resources in sectors generating return, he said. Unsustainable level of public debt can create multiple undesirable consequences such as currency devaluation, foreign exchange crisis and erosion of a country’s creditworthiness.
“Excessive external borrowings as well as their irrational deployments can become obstacles to economic development, if borrowed resources are not properly utilized,” said Nagesh Kumar, Chief economist of UN-ESCAP.
The Managing Director of RMA, Daw Tenzin, said that in medium-term, Bhutan is comfortable in terms of external debts. However, he said that if the country was not careful in commercial borrowing, it could create problems. RMA officials said external borrowing for Bhutan is of long-term nature, with significant concessions, and are used primarily to fund projects involving hydropower development.
According to economists, for a small economy like Bhutan, the relatively high level of debt-to-GDP ratio, high level of external debt in relation to total public debt, and the implications of debt servicing vulnerability makes it necessary to analyze the sustainability of public debt.
LankaBangla Securities Ltd, the top broker of Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) has taken a series of plans under which country's growing securities market will get further boost. "We are going to streamline a product from today (Sunday) under which the non-resident Bangladeshis (NRBs) will be able to transact under Non-resident Investor's Taka Account (NITA)," chief executive officer (CEO) of LankaBangla Securities Ltd, Md Nasir Uddin Chowdhury told in an interview. LankaBangla Securities grabbed the top position for the fourth consecutive year on DSE and fifth consecutive year on CSE in 2009. The brokerage house accounted for about 8.0 per cent and 13.0 per cent of the total turnover of DSE and CSE respectively in the outgoing year.The daily average transaction on DSE whopped to Tk 6.0 billion in 2009 against Tk 2.82 billion of 2008 showing a 112.76 per cent rise. " We have taken a good number of plans for the new year which include opening of new branches, arranging road-show in big cities of the world and holding an international conference on capital market in Bangladesh," Md Nasir Uddin Chowdhury said.
The company will soon open two new branches in Narayangonj and Comilla.The company has now 7 branches. He said with the intense growth of the company's business over the last couple of years, the commitments are focused to research-based professionalism, technology through new integrated broker software-Blue Chip & network development. "Our mission reflects our understanding that providing service to the clients with professionalism and transparency is instrumental to sustain in the short, medium and long term," Mr Nasir said."All along, we have been continuing to serve our securities market through awareness programmes and international road shows," he added.
Commenting on the company's vision, he said: Our continuous process is to develop human resources. This year, we will train up a dealer team on future financial products like derivatives.To ensure professional services at international standards, we have been affiliated with an international financial provider. This year, our aim is to be attached with one of the international information service providers to provide authentic and reliable information on our capital market. LankaBangla Securities, the first brokerage house of the country to start trading outside Dhaka is a 99.99 per cent subsidiary of LankaBangla Finance Ltd, a leading non-banking financial institution (NBFI).The company began stock trading in CSE in 1997 and DSE in 1998.
Jan 9: Bombay Stock Exchange (BSE), a leading stock exchange in South Asia, has approached Nepal Stock Exchange (Nepse), expressing interest in investing in as much as a 10 percent stake and working as a strategic partner.
During the talks, BSE officials had referred to the induction of two of the world´s best exchanges, Deutsche Börse and Singapore Exchange, as strategic partners in BSE, and said the stock exchange was interested in jumping into a similar partnership in Nepal.
They had even said that BSE could instantly invest 5 to 10 percent of capital in Nepse.
Officials at Nepse believed that induction of a modern and competent strategic partner like BSE would greatly raise capacity and efficiency in the secondary market in Nepal.
Nepse has proposed to MoF induction of a strategic partner as one of the options among privatization models. “Our only worry on this is; it could take a longer time to formalize the deal,” Paneru said.
Given the delay Nepse has seen in its privatization, policymakers are currently in a mood to hasten the process.
For its privatization, Nepse has suggested to the government to either divest its shares through competitive bidding under the Privatization Act or follow the initial public offering (IPO) model, as was done in case of Nepal Telecom, but without tagging a minimum price.
MoF officials stated that following the Privatization Act would yield better returns for the government. But they are worried that the protracted process could cost privatization dear, especially given the instability on the political front.
Under the IPO model, Nepse has proposed to issue 30 percent share to the general public and auction off another 20 percent to institutional investors. “If MoF wants, we can even set aside a portion of shares for inducting strategic partners like BSE,” said Paneru.
For executing this process, Nepse has said it will raise its paid up capital to Rs 200 million, from less than Rs 40 million now, by issuing bonus shares to its present shareholders -- the government, Nepal Rastra Bank and Nepal Industrial Development Corporation
Securities and Exchange Board of India (SEBI) has increased the tenure for stock lending and borrowing (SLB) to 12 months from 30 days earlier. “The tenure of contracts in the SLB mechanism may be up to a maximum period of 12 months. The approved intermediary (clearing corporation or clearing house) shall have the flexibility to decide the tenure within this period,” the SEBI said. SLB mechanism will help the participants to borrow the stocks via an approved intermediary, primarily to short sell the stocks. This particular thing comes in vogue when Indian markets have sharply recovered from the global crisis and are looking more stable. Though SLB mechanism is used only for stocks in the futures & options (F&O) segment. The lender and borrower will be free to repay the shares earlier than the defined time frame. “The regulator seems to be less apprehensive of the prevailing market conditions. The extension of tenure is a step in the right direction and indicates that our market is maturing,” said Saurabh Mukherjee, head of Indian equities at Noble Group. “Extending the time frame provides a reasonably good time for borrowers to take advantage of market movements. We may see volumes going up in this segment after these changes.” said Santanu Syam, executive director - operations, Angel Broking.
Again the researchers and experts declared that the investors will be able to take advantage of this route as they can lend the shares sitting idle in their portfolio and can also earn interest rates over it as decided upon the agreement. “Fair valuations of a stock can be achieved through this, as bears can also participate in the rising market when bulls raise valuations to unrealistic levels. Going forward, we may see the number of scrips allowed to trade in this segment going up,” Syam added. SEBI has introduced the notion of SLB in April, 2008 and revised it on October 31, 2008 to boost the time frame from 7 days to 30 days.
The Emirates Securities and Commodities Authority (SCA) said Saturday that it will fine-tune the stock market regulation to bring it in line with the latest practices of international financial markets.
"The SCA continues to develop a number of rules and regulations to boost the legislative infrastructure of the UAE's financial market sector, while on the other hand, it continues to organise awareness and counselling campaigns to serve the interest of all stakeholders and concerned parties in that sector," the SCA said in a statement yesterday.
Abdullah Al Turifi, SCA Chief Executive Officer, said the SCA was striving to develop further the legislative system of the UAE's financial market and had input some necessary amendments into the rules and regulations to strengthen the legislation further to raise them to the level of those of the international markets.
Sultan Bin Saeed Al Mansouri, Minister of Economy and SCA Board Chairman, issued Ministerial Decree No 518 of 2009 on the rules and regulations of Corporate Governance and Institutional Code of Conduct, which will be compulsory from May 1, 2010.
The minister also issued other decrees, including a decree regulating the "Custodian" Stock Exchange which allows the regulation of new activities needed on stock markets in the country.
Brokerages
Other decrees include Resolution 30/R of 2009 amending the brokers' by-law, including Article 1 and 17 of the by-law which allows a brokerage company to trade in its name and for itself.
The amendments include rules and regulations governing the practice of a brokerage company trading in securities in its name and for itself, which must be done after getting approval from the SCA and in accordance with the rules indicated by the resolution.
As part of market supervision, the SCA promises to be vigilant and proactive. Last year it cancelled the licences of two brokerage companies. The SCA also reviewed 83 complaints by investors and companies and suspended 11 investors, three brokerage companies and brokers' representative, as well as seven non-brokers' representatives
Bangladesh is seeking Indian investment for its two power plants of 1,300 MW power plant each and transmission link between the two countries. An agreement to fund to the power projects is likely to be signed during the forthcoming visit of Bangladesh Prime Minister Sheikh Hasina, Bangladesh Power Development Board Chairman A S M Alamgir Kabir told in New Delhi on the sideline of the 3rd Japan-SAARC Energy Symposium. "We have planned to set up two coal-fired power generation plants in Bangladesh. The energy agreement between the two countries would pave way for India's investment in these power plants," he said.
The pact, Kabir added, will be mutually beneficial as it would open the gate for Indian equity participation in various power projects in Bangladesh. Asked whether Bangladesh wants to be minority stakeholder in various power projects in India, he said, "it would depend on the negotiations. We do not mind having a majority stake in power projects in India." Besides this, the agreement would help to start power exchange programmes, under which a HVDC transmission line would be set up for the transmission of electricity between the countries entailing an investment of over half a billion dollars, Kabir said
The Securities and Exchange Board of India (Sebi) in consultation with the stock exchanges has decided to standardise the Lot Size for derivative contracts on individual securities.
According to a Sebi circular, the new Lot Size will be as follows: any stock future with an underlying price of equal to or over Rs 1,601 will have a lot Size of 125 units. Stock price between Rs 801-1,600, the Lot Size will be 250 units, and for price band of Rs 401-800, it will be 500 units.
Similarly, for price band of Rs 201-400, Rs 101-200, Rs 51-100 and Rs 25-50 will have Lot Sizes of 1,000, 2,000, 4,000 and 8,000 units, respectively. Any stock below Rs 25, will have Lot Size in multiple of 1,000 units.
For e.g. The lot size for an underlying with a price of Rs 250, i.e., in the price band of Rs 201-400, shall be 1000 units.
The stock exchanges shall review the Lot Size once in every six months based on the average of the closing price of the underlying for last one month and wherever warranted, revise the Lot Size by giving an advance notice of atleast two weeks to the market. If the revised Lot Size is higher than the existing one, it will be effective for only new contracts. In case of corporate action, the revision in Lot Size of existing contracts shall be carried out as per Sebi circular SMDRP/DC/CIR-15/02 dated December 18, 2002.
The circular states that the above changes shall come into effect from March 31, 2010.
