Weekly Review: Political uncertainty keeps bourse at bay

The stock market witnessed a dull week and remained range-bound due to heightened political uncertainty in the country. The benchmark KSE-100 index closed flat, down 14 points (0.1%) during the week.

Investors chose to be cautious throughout the week, with several parties making statements about their participation in Dr Tahirul Qadri’s ‘million-man’ march, which intends to bring a change in the government. The march is planned to take place on January 14 and has created friction between the government and its allies.
While most political parties chose to abstain from the march, the MQM, which is also a government ally, initially announced that it would participate in the rally. However, a day later it backtracked on its statement and decided not to participate. Investors welcomed the decision, which led to a small relief rally on the final trading session of the week.
The law and order situation also played on investor’s minds as a series of bomb blasts took place across the country, which resulted in a heavy loss of life. Furthermore, tensions erupted at the line of control with India, as border skirmishes led to the death of several soldiers on both sides of the fence.

However, all news was not bad news, as foreigners again turned net buyers at the bourse. With the earnings season set to get in flow in the coming week, foreigners picked up equities at attractive valuations and were net buyers of equity worth $8.4 million.
Macro numbers were mixed, with the highlight being the double-digit growth in remittances for the first six months of the current fiscal year. Remittances grew 12.5% year-on-year and stood at $7.12 billion for the first half of the fiscal year 2012-13.
The figures were dampened by the declining forex reserves of the country, which dropped $249 million on account of repayments to the International Monetary Fund. The government is now discussing a second bailout package from the IMF, as the country’s forex reserves continue to drop to critical levels.
The cement sector was again in the limelight as cement sales surged 5.9% year-on-year during December 2012 and as a result, activity was witnessed in the sector, with Fauji Cement and Lucky Cement being the main beneficiaries.
The banking and power sectors also witnessed activity as investors expect good payouts during the earnings season. While the fertiliser sector also made news with Fauji Fertilizer Bin Qasim announced a decrease in earnings by 60% during 2012.
The cautious approach of investors was reflected in the sharp drop in average daily volumes, which plummeted 35% and stood at 96 million shares per day as compared to 148 million shares in the previous week.
Average daily values, however, dropped only by 17.5% and stood at Rs2.81 billion, as most of the foreign investment took place in blue-chip stocks. The market capitalisation of the KSE dropped 0.1% to Rs4.17 trillion by the end of the week.
Winners
Fauji Cement

Fauji Cement Company Limited manufactures and sells cement.
Askari Bank

Askari Commercial Bank Limited provides commercial banking services. The bank has branches in Pakistan, Azad Jammu and Kashmir and Bahrain.
Pakistan Tobacco

Pakistan Tobacco Company Limited manufactures and sells cigarettes.
Losers
Grays of Cambridge

Grays of Cambridge (Pakistan) is a holding company. The company, through its subsidiaries, manufactures and exports sporting goods, specialising in hockey sticks.
JDW Sugar

JDW Sugar Mills produces and sells crystalline sugar. The company is located in Rahimyar Khan, and was formerly named United Sugar Mills Limited.
Abbott Laboratories

Abbott Laboratories (Pakistan) manufactures, imports, and markets research-based pharmaceutical, nutritional, diagnostic, hospital, and consumer products.

Food and beverages: Pakistan among PepsiCo’s top 10 non-US markets

Pakistan is one of the top 10 markets outside the United States for PepsiCo, says Qasim Khan, a senior executive in the global food and beverage giant’s management team for Asia.

“Pakistan is one of the largest and fastest growing markets for PepsiCo around the world,” said Khan, the Rawalpindi-born head of PepsiCo’s North and South Asia business unit. His division covers Japan, South Korea, Thailand, Indonesia, the Philippines, Malaysia, Singapore, Pakistan, Mongolia, and the island states in the Pacific Ocean.

Somewhat surprisingly for PepsiCo, its biggest brand in Pakistan is not the signature Pepsi cola, but rather Mountain Dew. “Pakistan is the second-largest market in the world for Mountain Dew after the United States,” said Muhammad Khosa, head of corporate affairs at PepsiCo Pakistan.

Pepsi began its operations in Pakistan with carbonated beverages in 1967, and currently has eight bottling franchisees operating throughout the country. In addition to Pepsi and Mountain Dew, they produce 7up and Mirinda in the carbonated beverage category, and Sting in the energy drink segment. Over the past decade, Pepsi has added snack foods and fruit juices to its portfolio of products in Pakistan, which it manufactures primarily out of a factory in Lahore.

The addition of the snack food business – as well as strong growth in its beverage lines – has resulted in PepsiCo becoming the largest food and beverage company in Pakistan. According to sources familiar with the matter, the revenues of PepsiCo Pakistan and its eight bottlers came to a combined Rs82 billion for the financial year ending June 30, 2012, up 19% compared to the previous year.

Growth seems to be moving at breakneck speed in the snack food business, which the company started in 2006. “The Pakistan snack food business was the fastest growing in the Asia Pacific region for PepsiCo last year,” said Khan.

Breach of contract: 3G consultants rule out lawsuit against PTA, for now

  Far from pursuing legal action, the three consultants – who had been assisting the government for the rollout of the third generation (3G) cellular spectrum till their contracts were not cancelled – have taken a flexible position on the issue: they are more interested in finishing the job than suing Pakistan Telecommunication Authority (PTA) for breach of contract.

The 3G consultants Martin Sims, Rob Nicholls and Dennis Ward rubbished a recent media report, which said they were considering filing a law suit against PTA for illegally terminating their contracts – the report, which was based on anonymous sources, also said that the consultants wanted PTA to pay their consultation fee.
The consultants – who share among them, 60 years of combined experience in advising governments on telecom issues – further said they were in a professional relationship with the telecom regulator and “it will be unethical on their part to anonymously brief the media” on details of that relationship or to release details of confidential discussions.
“We have no desire to take legal action against the Pakistani government or the PTA,” they said in a joint statement while responding to the queries of The Express Tribune. “Instead, we prefer to come to an amicable arrangement whereby we do the work that we were contracted to do at the price agreed and the people of Pakistan get the auction they paid for,” said the statement, which was emailed by Martin Sims.
Since day one, the appointment of these consultants had remained a bone of contention among the three members of the PTA – of whom any two members, being the majority, can exercise the power of telecom regulatory authority.
Two members of PTA, Khawar Khokhar and Nasarul Karim Ghaznavi had refused to cooperate with their own chairman Farooq Awan for 3G auction on the grounds that the hiring of these consultants had violated the Public Procurement Regulatory Authority’s rules and The Pakistan Telecommunication (Re-organisation) Act.
The squabble within PTA set the stage for the National Accountability Bureau (NAB) to intervene. The NAB, after listening to all stakeholders, declared the hiring of consultants as illegal. This led the authority to terminate contracts of the aforesaid consultants in the last week of 2012 – a development that ended 3G process prematurely for the third in the same year.

The government, PTA to be more specific, had already spent Rs20 million in 3G related advertisements without achieving any results so far – it will cost even more if the consultant chose to seek legal options.
Though the consultants ruled out a lawsuit, at least for a while, they confirmed that they want payment for services delivered already.
“We are very happy to be flexible in finding a way to resolve this but we are professionals and ultimately we must be paid for the work we have done,” their statement said.
They further said that they did not receive any payment from the telecom regulator, not even for the expenses they already made in this regard.
“None of us received any payment for the work we have done nor received any compensation for the expenses incurred in software development and travelling to Pakistan,” they said.
Explaining, they said they were issued cheques for the deposit, which was stipulated in their contracts but two of the cheques were cancelled by the PTA. “The third has yet to be honoured and we are assuming it will also be cancelled,” they said.

Indian, Pakistan soldiers to hold talks on rising Kashmir violence

Military officials from India and Pakistan will hold talks on Monday at the Line of Control (LoC), which divides disputed Kashmir, in a bid to defuse tensions after a series of deadly attacks in the region, Indian army officials said.  
Four soldiers were killed last week in the worst outbreak of violence in Kashmir since the nuclear-armed neighbours agreed a ceasefire nearly a decade ago.
“Yes the two sides will be meeting on Monday. This is a local commander meet,” Colonel Rajesh Kalia, a spokesperson for Indian Army’s Northern Command, told Reuters by phone.
Another Indian Army spokesperson, Colonel Jagdeep Dahiya, said in New Delhi that the meeting would take place in Mendhar, the scene of one of the deadly attacks, at 1pm.
India and Pakistan have fought three wars since their independence in 1947, two of them over the Himalayan region of Kashmir.
India considers the entire region of snow-capped mountains and fertile valleys an integral part of its territory. Muslim Pakistan contests that and demands implementation of a 1948 UN Security Council resolution for a plebiscite to determine the wishes of the mostly Muslim people of Kashmir.
India-Pakistan ties had shown signs of improving in the past year after souring again in 2008 when gunmen killed 166 people in Mumbai in a three-day rampage. India blames a Pakistan militant group for the massacre.
Firing and small skirmishes are common along the 740km LoC despite a ceasefire that was agreed in 2003. The Indian army says eight of its soldiers were killed in 2012, in 75 incidents of ceasefire violations.
Last Sunday, a Pakistani soldier was killed in what Islamabad said was a cross-border raid mounted by the Indians. The Indian army denied any of its troops breached the control line, but said there had been an exchange of fire.

Pak-Saudi war games underway to face common challenges

It needs no emphasis that present day navies are increasingly focused on policing roles and sharing of resources for maritime security operations against asymmetric threats as well as contemporary challenges like piracy, terrorism, narcotics, arms and human smuggling which have a great impact on the maritime environment. “Countering these multifarious maritime security challenges requires collaborative approach at regional as well as international level,” Commander Pakistan Fleet Rear Admiral M. Zakaullah told a briefing Saturday. To this end, he said, Pakistan Navy as a responsible maritime power was contributing relentlessly in maintaining legitimate maritime order at sea through conduct of Maritime Security Operations in Arabian Sea and beyond.

The Pakistan Navy regularly conducts bilateral and multilateral exercises with regional and extra regional navies to improve its interoperability with international navies, he added.

These exercises were a clear manifestation of Pakistan’s commitment towards maintaining peace and stability in the region, said he. Naseem Al Bahr (NAB) is one such bilateral maritime exercise conducted with brotherly navy, Royal Saudi Naval Forces.

Pakistan and the Saudi Arabia not only enjoy deep-rooted fraternal ties, but also share historic maritime traditions. NAB is a biennial exercise, which was evolved as manifestation of the unique Pak-Saudi interpersonal relationship and mutual resolve to enhance bilateral cooperation in facing the common challenges. Participation of RSNF ships in this exercise will further strengthen existing bilateral relations between two brotherly navies. “At this juncture, we thank Kingdom of Saudi Arabia and particularly, Royal Saudi Naval Forces, for their participation in Exercise NAB – X which is scheduled from 12 to 22 Jan 13 off Makran coast,” said Zakaullah.

Party symbol: The ‘scale’ likely to tip against PTI

The Jamaat-e-Islami (JI) and Pakistan Tehreek-e-Insaf (PTI) formally applied to the Election Commission of Pakistan last year in a bid to reserve Tarazoo (scale) as party symbol for the upcoming general elections. After hearing arguments from both sides, the commission reserved judgment on Friday.

Analysts say the PTI is likely to lose the legal battle to JI for the symbol. JI lawyers came prepared with convincing arguments centered on file date and historical context.
The JI filed their application on April 16, 2012, while the PTI filed later in June. Therefore, lawyers said the JI should be given preference. Furthermore, the symbol has been allotted to Jamaat-e-Islami in the past. When the JI took part in the 1970 general elections following the separation of East Pakistan, scale was its symbol. Even later, the JI contested polls as a part of an alliance of religious parties (like the MMA in 2002).
The JI lawyers also mentioned that scale was taken out of the list of election symbols in the 80’s by military ruler General Ziaul Haq.

Italian consul in Libya escapes attack

Italy's consul to Benghazi in eastern Libya escaped unscathed after an attack on his bullet-proof car in the city on Saturday, Italian news agency ANSA and local security sources said.

The car in which the consul, Guido De Sanctis, was travelling was shot at when it stopped at a crossroads, but no one was injured, ANSA said.

The consul was returning home after work and the car was hit by several bullets, which were reportedly fired from another car and aimed directly at where the consul and his driver were sitting.

In Benghazi, a security official said "unknown assailants opened fire at the vehicle of the Italian consul as he reached his residence. No one was hurt."

The source added that "members of the supreme security committee deployed to the scene and escorted the consul to a safe location."

He said no arrests had yet been made.

The incident comes four months after US Ambassador Chris Stevens and three other Americans were killed in the city in an attack on the US mission there.

Italy is Libya's former colonial ruler and enjoyed close ties with slain dictator Moamer Kadhafi, though it then joined NATO-led efforts to unseat him.

Largest structure in universe discovered

Astronomers have discovered the largest known structure in the universe - a group of quasars so large it would take 4 billion years to cross it while traveling at speed of light.

The immense scale also challenges Albert Einstein's Cosmological Principle, the assumption that the universe looks the same from every point of view, researchers said.

The findings by academics from Britain's University of Central Lancashire were published in the journal Monthly Notices of the Royal Astronomical Society and reported on the society's website on Friday.

Quasars are believed to be the brightest objects in the universe, with light emanating from the nuclei of galaxies from the early days of the universe and visible billions of light-years away.

"Since 1982 it has been known that quasars tend to group together in clumps or 'structures' of surprisingly large sizes, forming large quasar groups or LQGs," the society said.

This newly discovered large quasar group has a dimension of 500 megaparsecs, each megaparsec measuring 3.3 million light-years.

Because the LQG is elongated, its longest dimension is 1,200 megaparsecs, or 4 billion light-years, the society said.

That size is 1,600 times larger than the distance from Earth's Milky Way to the nearest galaxy, the Andromeda.

Sleeping with the enemy

This week, I am going to lay off the people who have made the citizens of this country unrelentingly miserable and review a book on divorce, which happened to come my way. In her first delightful commentary, Down Bureaucracy Lane, the author Talat Rahim had a dig at members of the administrative service that played an exceptional role in hampering economic progress in our country. Now, the irrepressible writer has done it again. This time the focus has been on conjugal rupture. In Down Matrimonial Lane, she has, in a series of interviews, exhumed the private lives of 30 divorced Pakistani women who belong to the world’s most misogynistic and testerone fuelled society and some of whom live abroad. The way she has welded together personal experiences in the hope that a bit of gravitas might rub off on the reader is marvellously involving.
Though the narrative makes interesting reading, this is in many ways a sad, sad book. While some women have eventually triumphed over tragedy and reconstructed their lives in what for many has been a truly traumatic experience, the reader cannot help feeling compassion for the divorcees, especially in those cases where children are involved. However, when I got to the end of the book, I came to the inescapable conclusion that Pakistani men and women are in essence no different from the men and women of any other country, and the reasons for divorce are often the same. Thailand is a glorious exception. In the land of smiles, one hell of a lot of females divorce their husbands and end up as single parents because their spouses are lazy, just refuse to work and support the family.
If a reader expects to find in this book the odd salacious passage, which might titillate the senses, he will be sorely disappointed. The account has an almost clinical simplicity. It tells the story of the women in an easy-to-read style, without the psychological gobbledygook that often accompanies accounts of family ruptures in the West. And fortunately, the author doesn’t adopt a moralising tone. The names of the women who feature in the book have, of course, been changed for obvious reasons. But there will be readers who, after soaking in personal details and specific episodes in their lives, will recognise the identity of some of the women who have been interviewed. Incidents in a person’s life are often a complete giveaway.

What’s the drama all about?

Do not let foreign culture infiltrate your society, unless as a nation you have a clear vision regarding what to accept and what to reject that is being fed to you through foreign culture.” — Mao Zedong to Ashfaq Ahmed.

This was the vision for a great China — shutting its doors to the world, compelling its own people to build their industries, guarding its cultural heritage and yet, keeping its windows open to reach out to the world with its own products. India does the same; protects its own with a state ban on Pakistani channels and content, yet manages to utilise Pakistani talent and showcases its own content in Pakistan!

Vision, strategy, foresight, planning — these things builds nations. Pakistan’s tragedy has been that we have neither built nor consolidated institutions as we do not view them as ‘national’ issues. We fail to unite our strengths and continue to become weaker individually. Today, our nascent television drama industry is facing circumstances that may stunt its growth, if not wipe it out completely. But sadly, the stakeholders themselves are at war with each other… allowing an outsider to ‘divide and rule’.

Channels, Pemra, United Producers Association (UPA) — the three main stakeholders seem to be at war with each other over imported content from India and Turkey. Channels accuse drama professionals of being insecure, who in turn accuse the channels of being unfair and unethical. Collectively, they accuse Pemra of ambiguities and irregularities in its policies.

The channels’ argument
They have a business to run and if one entity (a foreign channel called Urdu1) is taking away their ratings and revenue through the foreign content Pemra allows it to show (with no percentage restriction), they have the legal right to fight for their market share according to the 10% foreign content per day Pemra allows them. They will sell what the viewer wants even if that means showing Turkish content dubbed in Urdu during primetime — because the 10% allowance does not leave them room for repeat telecasts and by law, 90% of their programming still has to be Pakistani.

The UPA’s argument
They too have a business to run, but reruns of inexpensive foreign content dubbed in Urdu, aired on primetime results in loss of revenue for their fresh and hence, more expensive content. This ultimately would make it financially unviable for them to produce dramas, leading to a sharp reduction in local productions. Eventually, less work for everyone connected with the drama industry — from spot boys to senior and junior actors, producers, directors, writers, singers, musicians, DoPs, technicians, editors, audio engineers, light men, transporters, vendors, caterers, advertisers, marketing personnel, media students…the list is endless!