Investors accumulate textile stocks in wake of getting GSP Plus status

In most of the five trading sessions on the KSE from December 18-24, the textile sector continued to support the market. PHOTO: INP/FILE

KARACHI: Ironically, despite the security and energy problems, investors on the Karachi bourse have been busy accumulating stocks of textile companies.

The buying spree started more than one and a half month ago when it became clear that the country would win the Generalised Scheme of Preferences (GSP) Plus status from the European Union (EU).

Analysts observed that the investors pumped money into the textile sector mainly in anticipation of the GSP Plus status that was expected to give a significant boost to textile exports. After a long wait, the country eventually got the GSP Plus status on December 12 for three years, starting from January 2014.

According to Invest Capital research house, “a gigantic price appreciation (in shares of textile companies) ranging from 16% to 67% has been recorded from November 1 to December 17 on expectations of higher textile exports in coming months.”

The brokerage house took a sample of 10 volume leaders (ignoring loss-making companies) of the textile sector listed on the Karachi bourse and analysed them on the basis of key variables.

In most of the five trading sessions on the Karachi Stock Exchange (KSE) from December 18-24, the textile sector continued to support the market, according to reports prepared by Sherman Securities.

Investors got the decisive signal about GSP Plus in the first week of November, when the country won majority vote in the European Union’s International Trade Committee.

“The anticipation and initial reaction to GSP Plus has been positive for the textile sector,” JS Global Capital analyst Atif Zafar said. “It seems that the buying spree in textile stocks will continue in the near future.”

In fiscal year 2012-13, the textile sector outperformed the benchmark KSE 100-Share Index by a big margin.

According to a sample of Topline Securities based on selected 55 textile companies including spinners, weavers and composites, the textile sector gave a huge return of 94% against the benchmark KSE-100 index return of 49% in 2012-13.

Profits of these listed textile firms increased by 150% to Rs30.6 billion in FY13 compared to just Rs12.3 billion in FY12.

With strong fundamentals like stable cotton prices and depreciation of the rupee, margins of the textile sector have grown strongly. Now that the country has secured the GSP Plus status, its exports are expected to grow by $1 billion a year over the next three years.

Pakistan exported over $13 billion of textile products in FY13, almost half the total exports of $24.6 billion in the same year.

Threats to portfolio investment

With positive sentiments about the textile industry, almost all analysts appear upbeat on the portfolio investment in this sector. However, some say incoming portfolio investments may slow down if export-oriented industries fail to meet orders owing to the energy crisis.

“One of the biggest concerns is that whether the country would be able to meet textile orders that are expected to come after the GSP Plus status,” asked Zafar. “The energy crisis, especially gas shortages, is going to hit textile exports in the near future.

Symbios.pk: Entrepreneur takes shopping portal among top three

Saad Jangda’s product wins business contest held by MIT.

KARACHI: 

When Saad Jangda launched his startup in 2006, not many people were aware of online shopping in Pakistan. Seven years later, his product is one of the leading e-commerce portals in what, according to him, has become a $10 million (tapped) market with a lot of room to grow.

Jangda embarked on an entrepreneurial spree by launching Sybiosistec.com – a software development house. However, it was not the company itself but one of its products that earned him a notable success.

“The child is now even bigger than its parent company,” Jangda told The Express Tribunewhile referring to Symbios.pk, an e-commerce portal and one of the productsSymbiosistec.com had launched.

Starting from a basement car garage with savings from his monthly pocket money, Jangda has transformed Symbios.pk into one of the top players in Pakistan’s online retail market– an emerging market segment that largely remains untapped.

With more than 22,000 products in 15 categories, it has already served over half a million customers. This is a milestone for a company that is set to get international exposure.

This year, Jangda’s Symbios has won a prestigious business contest – the Massachusetts Institute of Technology (MIT) Enterprise Forum’s Business Acceleration Programme (MITEFP-BAP).

MITEFP-BAP is a highly competitive annual event with an objective to help Pakistani IT, ITES, telecom and new media companies improve their business. The winners get a chance to attend an entrepreneurship development programme (EDP) at MIT in Cambridge, the United States.

The EDP is an intensive training programme through which Pakistani entrepreneurs will meet venture capitalists, Angel investors and serial entrepreneurs in the US.

The programme, which has helped previous winners increase their sales manifold, is certainly going to help Jangda take his venture to the next level.

“I want to convert Symbios.pk into the Amazon of Pakistan,” said Jangda, who holds a BS in Computer Engineering from Sir Syed University of Engineering and Technology and an MBA from College of Business Management. With the kind of progress the company has made, this looks very practical.

Symbios.pk, according to Jangda, is already among the top three players in the e-commerce market. Daraz.pk and Homeshopping.pk are the other two. It attracts over 30,000 visitors daily. Of these, only 1% or 300 people give orders, he said, an indication that there is a lot of room to grow.

On the conservative side, Jangda said, the online retail market that has been tapped so far is about $10 million and is growing. The figure, he said, is based on market share of top e-commerce portals.

As part of its plan to grow further, Symbios has done some research on the impact of high-speed mobile internet on e-commerce.

The research showed a 50% increase in the size of the e-commerce market within three months of India launching third generation (3G) mobile technology, Jangda said. Bangladesh, too, saw its online retail market increase by 30% in the first three months following its 3G auction, he said.

“We expect Pakistan will have a 40% increase in e-commerce,” he said referring to similarities and advantages the country’s telecom sector has. For example, in Pakistan many people already have 3G-enabled devices, all they need is a high-speed mobile internet service.

Given that 30% of their orders come from rural areas, Jangda’s expectations from the upcoming spectrum auction seem logical. As high-speed mobile internet services are likely to increase broadband penetration in rural areas because of the country’s high cellular teledensity, more rural customers will be able to connect with the online market easily.

“IT, marketing and supply chain are main components of e-commerce. We are more in supply chain as we source our products from Singapore, Dubai and the US to offer best prices,” Jangda said summarising his success strategy.

Borrowing from SBP shrinks as government turns to commercial banks

Data shows that commercial banks have been interested in investing in three-month market treasury bills only with little or no participation in longer duration bills. ILLUSTRATION: TALHA KHAN

KARACHI: The federal government’s net borrowings from the central bank for budgetary support between July 1 and December 13 remained Rs685.8 billion, latest data released by the State Bank of Pakistan (SBP) shows.

Net government borrowings from the SBP amounted to more than Rs800 billion before November 27. The drop over the last one month appears to be the consequence of an increase in government borrowings from commercial banks through auctions of market treasury bills.

In its latest auction held on December 24, the government raised Rs392.6 billion by selling three- and six-month market treasury bills at the cut-off yield of 9.95% and 9.97%, respectively. Selected commercial banks, known as primary dealers, bought three-month market treasury bills amounting to Rs391.4 billion. The sum invested in six-month bills totalled Rs1.2 billion while no bids were received for 12-month bills.

Data shows banks’ participation in the last three auctions of market treasury bills has increased significantly. For instance, in the preceding two auctions held on November 28 and December 12, the government raised Rs546 billion and Rs531 billion, respectively. In contrast, it could raise only Rs58 billion in the auction held on November 13.

According to KASB Securities research analyst Farrukh Khan, the excess liquidity with commercial banks that has led to higher participation in treasury bills’ auctions should be attributed to two factors – banks’ lack of interest in open market operations (OMOs) and a sharp expansion in their deposit base.

Prior to the announcement of the monetary policy statement (MPS) in the middle of November that increased the discount rate by 50 basis points to 10%, banks were reluctant to put money into even three-month bills, Khan said. Apparently, they preferred to keep it invested in shorter duration OMOs.

However, after the hike in the discount rate, liquidity was taken out of OMOs and placed in three-month treasury bills. “In fact, the swing was so significant that the SBP had moved from mopping up more than Rs200 billion in OMOs pre-November MPS to injecting more than Rs100 billion post-MPS,” Khan noted.

Similarly, the central bank’s data shows banks were flushed with liquidity in the form of deposits in November. Compared with a decline of Rs184 billion in July-October, commercial banks’ deposits increased Rs176 billion in November, resulting in their healthy participation in the auctions of market treasury bills, Khan said.

Rate hike on the cards

Data shows that commercial banks have been interested in investing in three-month market treasury bills only with little or no participation in longer duration bills. In the last three auctions held on December 24, December 12 and November 28, commercial banks did not submit even a single bid for 12-month market treasury bills.

“The last time there was a pickup in the 12-month bills was 11 auctions ago, back in July 2013. Thus, despite the surge in participation in recent T-bill auctions, market expectations of further discount rate hikes remain intact,” Khan observed

TUSDEC trains technicians to promote solar power industry

The high-tech solar lab that the company has established costs Rs3 million. PHOTO: FILE

LAHORE: The Technology Upgradation and Skill Development Company (Tusdec) awarded certificates to the first two batches of solar technicians trained by it in a programme being run in association with GIZ Pakistan.

In an effort to promote technological advancement in the industry, Tusdec has tied up with GIZ Pakistan to support the solar power industry by providing technically trained manpower in specialised areas of photovoltaics and solar water heating.

Under the training programme, being implemented with the assistance of GIZ Funds for Innovative Trainings (FIT), 125 students will be trained as solar technicians by March next year.

The programme is co-funded by the European Union, the embassy of the Netherlands and Germany and implemented through GIZ GmbH in collaboration with the National Vocational and Technical Training Commission (NAVTTC).

A display of candidates’ assignments on solar equipment has also been arranged at the high-tech solar lab that the company has established at a cost of Rs3 million to impart practical training.

Speaking on the occasion, Tusdec Chief Executive Officer Basit Maqsood Abbasi said a solar lab with most modern equipment was established in the company premises to focus more on practical and industry-driven training in solar technologies so that graduates could be absorbed in the job market immediately.

The graduates asserted that they had got comprehensive theoretical and practical training in testing, installation and trouble shooting of numerous kinds of solar panels, which were in demand in the solar industry.

The company’s representative said experts from various enterprises and solar engineers were engaged to set the curricula so that the industry’s needs for manpower could be met.

Essentially, the programme is focused on the renewable energy sector. The solar technicians will promote solar technology by curtailing installation and maintenance costs.

Public-private dialogue: Call for policy reforms to boost surgical, pharma sectors

"Pakistan should enhance its productive capacity and comply with required certifications to benefit from zero import duties," says EU Acting Ambassador Pierre Mayaudon. PHOTO: FILE

ISLAMABAD: Participants of a dialogue  on technological advancement, foresight in surgical instruments and pharmaceutical products advocated policy reforms and a  roadmap to overcome  challenges faced by the two sectors. This will help enhance productivity, value addition and export competitiveness.

The 10th Public-Private Dialogue (PPD), hosted by European Union Acting Ambassador Pierre Mayaudon, was attended by representatives of the federal ministries and chambers of commerce in Islamabad.

Positive developments under the EU-funded trade programme, Trade Related Technical Assistance II (TRTA-II) as well as the autonomous trade preference granted to Pakistan after the devastating earthquakes in 2010 and 2011 were brought to light by Mayaudon.

Regarding the EU’s GSP Plus status that would come into force on January 1, 2014, he said, “Pakistan should enhance its productive capacity and comply with required certifications to benefit from zero import duties and quotas on 90% of tariff lines.”

However, he emphasised the need for overcoming energy shortages, inviting all stakeholders to benefit from the opportunities offered by the new Innovation Programme Horizon 2020.

Speaking on the occasion, Commerce Secretary Qasim Niaz stated an export development roadmap for pharmaceutical and surgical instrument sectors was being prepared by the Ministry of Commerce.

Niaz appreciated the technical assistance provided by the EU and the International Trade Centre’s (ITC) role in institutionalising the PPD process to facilitate policymaking in different sectors of the economy.

He stressed that value addition and export enhancement in the pharmaceutical and surgical sectors were crucial. In order to ensure diversification in national exports, he said, these sectors would be the focus of the ministry’s trade policy interventions.

Stating that the government was taking steps to address energy issues faced by industries, he underlined the need for developing a skilled and trained labour force through public-private collaboration. .

A presentation was organised, explaining the TRTA II programme, the process of PPD and the success achieved. This was given by Pakistan Institute of Trade and Development (PITAD) Director General Sajid Hussain and ITC representative Mohammad Owais Khan.

As a representative of the Ministry of Commerce, PITAD pledged more such dialogues with the ITC to address the issues faced by the business community and undertake reforms through policy initiatives.

The technical session was chaired by Dr Idrees Khawaja of the Pakistan Institute of Development Economics (PIDE), while Dr Ather Osama presented a research study conducted for the purpose.

In panel discussions, private sector representatives from the Pharmaceutical Manufacturers Association of Pakistan, Surgical Instruments Manufacturers and Exporters Association and Sialkot Chamber of Commerce and Industry explained the issues and gave recommendations

Cross-border: Pakistan business delegation visits Afghanistan

The visit will enable the business community across the border to interact with Pakistani businessmen.

KARACHI: A high-level 20-member trade delegation of the Pakistan Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) under the leadership of PAJCCI Co-President Mohammad Zubair Motiwala is visiting Afghanistan with an aim to explore trade and investment opportunities.

The trip comes following an Afghan delegation’s visit to Pakistan in September this year that participated in Expo Pakistan. The Afghan delegation also met the information minister of Sindh and participated in business-to-business match-making and networking events.

A group of business delegates from Pakistan have joined the PAJCCI, which is in Afghanistan for a business and networking trip.

The prime objective of the visit is to provide an opportunity to the business community across the border to interact with Pakistani businessmen for clinching bilateral economic deals. Additionally, it will also provide a forum for high-level officials and dignitaries of Afghanistan to work together with their Pakistani counterparts.

The exchange of delegations will provide feedback for PAJCCI’s progress and what further may be done with the support of these entities for augmenting mutual efforts through resolution of disputes and addressing grievances of the business community across the border.

The PAJCCI delegation met Afghanistan’s Second Vice President Mohammad Karim Khalili and discussed important matters that needed to be resolved immediately for enhancing bilateral ties and strengthening political and economic stability in Kabul.

The delegation also met Afghanistan Investment Support Agency President Wafiullah Iftekhar and Minister of Commerce and Industry Mohammad Shakir Kargar.

Both the president and co-president of PAJCCI emphasised the importance of improving transit and bilateral trade for the benefit of the two countries

Agreements with Turkey: Monitoring of projects is a key to success

Turkey’s collaboration in low-cost housing schemes, at a time when demand is steadily outstripping supply, would be of great significance. CREATIVE COMMONS

LAHORE: 

At a time when the economy of Pakistan is facing some serious challenges, the visit of Turkish premier Recep Tayyip Erdogan, along with a high-powered business delegation, has provided some respite.

Turkey agreed to support and invest in Pakistan, primarily in infrastructure development projects like motorways and road networks, metro bus, transport, housing and the struggling energy sector. Turkey also signed memoranda of understanding for a preferential trade agreement, exchange of students, business groups, civil society activists, Islamabad-Istanbul container train service and defence cooperation.

The government is happy and hopeful and so are the experts and business community, who although describe this visit as a significant development but also give some suggestions about how to get the best outcome from cooperation between the two sides.

“I believe that these agreements are positive for the economy of Pakistan, but continuous monitoring of projects at the high level would be the key to success and a meaningful contribution to the society,” said Dr Ishrat Husain, former governor of the State Bank of Pakistan while talking to The Express Tribune.

“This is just the beginning, however, feasibilities of these projects would present a true picture,” he added.

For Husain, Pakistan’s development depends on infrastructural projects, especially in underdeveloped swathes of the country, where basic necessities of life are still missing. Motorways, highways and metro bus service have their own economic impact which cannot be denied, but such projects need private investment. “It’s not the government’s job to operate the transport system,” Husain remarked.

Turkey has already been working with the Punjab government. Prominent examples of Turkish investments include the Lahore Metro Bus Service and the Lahore Waste Management Company. Besides these, Turkey is also cooperating in different energy projects.

Turkey’s collaboration in low-cost housing schemes, at a time when demand is steadily outstripping supply, would be of great significance.

“We encourage and welcome foreign investment in the housing sector, it will create an atmosphere of competition which is good for the overall economy,” said Akbar Sheikh, Regional Chairman of the Association of Builders and Developers. “But I am sure if a level playing field is provided, then local contractors would outperform foreign firms.”

The banking sector is also excited about the agreements, which say both countries will encourage their respective state and private banks to open branches in Pakistan and Turkey. This collaboration in the banking sector will ensure regular operation of the Istanbul-Islamabad container train for land connectivity.

“Banks are always happy to open a branch where they find some opportunity,” said Mubashar Bashir, Corporate Communications and Marketing Head of MCB Bank.

If the governments are working to open a trade link, then the role of banks is a must for better trade volumes and long-term infrastructure projects, he added.

Exchange of delegations to gain experience is another agreement which is drawing appreciation from the academia. “This is a step in the right direction, internationalisation is an important part of education,” said Dr Sohail Naqvi, Vice Chancellor of the Lahore University of Management Sciences, while talking to The Express Tribune.