Pakistan Stock Exchange down but not out

DAWN.com

Late last month, some believers slaughtered a couple of goats at the altar of the Pakistan Stock Exchange to drive away evil spirits that have come to haunt what, only a year ago, stood out as the best performing market in Asia, giving out a mouth-watering return of 44pc.

The celebrations continued well into 2017. But as all good things come to an end, so did the investors’ honeymoon with the market.

On May 25, the KSE-100 index hit the intra-day all-time high at 53,127 points. To the surprise of brokers and analysts who were espousing the index would close at above 60,000 points by the winter of 2017, it was a chilling moment when the market started to melt.

Almost four months on, the PSX has not found a foothold. By the middle of last week, the benchmark KSE-100 index stood at 42,310 points, representing a decline of 10,817 points or 20pc. From the closing on Dec 31, 2016 at 47,807 points, the Index has lost 5,497 points, representing the year-to-date negative return of 12pc.As the paper value of corporate Pakistan, signifying market capitalisation of all 561 listed companies combined, lost Rs1.04 trillion — sliding from peak of Rs10.44tr to Rs8.88tr — small investors, particularly, have been ruined.

Almost four months on, the PSX has not found a foothold. But for all that, in the PSX boardroom members continue to exude confidence

Things started to fall apart after an unkind federal budget for the stock market, which piled more taxes and provided few incentives. The deteriorating balance of payments situation and the souring of expectations of immense foreign flows following Pakistan’s MSCI Index reclassification to Emerging Market from Frontier Market were major setbacks.

But the crowning blow was the apparent loss of credibility of the ruling house of Sharif, which gave rise to prolonged ‘uncertainty’. There is a saying that, for the stock market, uncertainty is worse than bad news. Such uncertainty still plagues the market, forcing investors, both institutional and individuals, to stay on the sidelines.

But for all that, in the PSX boardroom members continue to exude confidence.

The Chinese strategic investors — China Financial Futures Exchange Co.Ltd, Shanghai Stock Exchange and Shenzhen Stock Exchange — had bought 30pc or 320 million strategic shares of the PSX for Rs8.96bn, at a per share price of Rs28.

In the ongoing bear run, the stock price has receded to Rs20.24, denting Chinese investment by Rs2.48bn or 28pc. Does that worry the Chinese buyers? “Apparently not”, says Haroon Askari, managing director, PSX. He contends that the Chinese have made a long term strategic investment.

“They are here for the long haul and are keen to launch the derivative market with the ‘Exchange Traded Fund’ as the first product”, says Mr.Haroon. It may be followed by other initiatives streamlined in the SECP’s capital market development programme.

Cross border listing and effort to attract Chinese investors to the local bourse are being pursued.

But many analysts are not very optimistic on immediate market prospects: Says Zubair Ghulam Hussain, CEO at Insight Securities: “Keeping the economic and political picture in mind, we feel that the market may not see broad-based upward movement in the next few months.”

Yet, he said, selective opportunities in specific stocks/sectors could open up, stemming from (possible) currency depreciation; governments focus on control of imports and boosting exports and a likely positive policy rate adjustment.

According to Insight Securities, the KSE-100 index is currently trading at 2018 price-to-earnings multiple of 9 times, compared to average MSCI Emerging Market index forward price-to-earnings of 12 times, indicating a discount of 28.6 times.

Analysts at brokerage Next Capital lamented that while it took about nine months (Aug 31, 2016 to May 25) for the KSE-100 index to add approximately 13,000 points (33pc return), but in barely three months (May 25 to early this month), most of those gains (about 22pc) were washed away.

“This may resonate with the fact that excesses in one direction often leads to an excess in the opposite direction”, they admitted.

But market observers pin much of the blame for the free-fall of the stocks on mutual funds.

In May, the last month of the rally, funds had bought shares worth $47m. All of that helped to absorb foreign portfolio outflows. With a scintillating growth over the last decade, the assets under management (AUM) of the mutual funds industry have surged to Rs625 billion.

Equity funds outperformed, both in size and growth. At the end of May, the size of equity funds stood at Rs309bn, making a half of the entire mutual fund industry’s AUM.

But all that has changed. In the current bear run, funds have been the major sellers and perhaps the spoilers of the market. According to a big broker, mutual funds are currently sitting on a cash pile of Rs70bn, waiting for the stocks to bleed further before entering to buy at cheaper valuations.

“There is nothing wrong or illegal in this strategy”, argued a manager of one of the three largest equity funds in the market. “We are not here to support the market but to protect the interests and returns of our certificate holders”, he asserted.

Published in Dawn, The Business and Finance Weekly, September 18th, 2017

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Paying heed to ECP’s ‘final’ warning, PTI submits financial records of past 7 years

DAWN.com

After months of foot-dragging over the issue, the Pakistan Tehreek-i-Insaf (PTI) on Monday finally submitted details of party accounts and foreign funding received in the last seven years to the Election Commission of Pakistan (ECP).

Unhappy with the constant defiance of its orders, the ECP had last week given PTI yet another final opportunity to submit financial documents and details of funds received from abroad, as well as the party’s accounts, by September 18 [today].

On Monday, the party submitted financial documents and details of funds received from abroad, as well as the party’s accounts of past seven years in five sealed volumes.

The PTI counsel once again urged the five-member ECP bench, headed by Chief Election Commissioner retired Justice Sardar Mohammad Raza, not to give details of party accounts to the petitioner, Akbar S. Babar — a former PTI member.

Hearing this, the chief commissioner remarked that according to a Lahore High Court ruling, the details of assets should be published online. He directed the PTI counsel to get the financial documents verified through concerned officials.

When the bench asked the counsel whether the financial records were the same as what the party had submitted in the Supreme Court, counsel Faisal Chauhdry said that there were additional documents as well.

The bench subsequently adjourned the hearing till October 16.

The ECP bench had made it clear during the hearing of the PTI foreign funding case that this was the last and final chance, failing which the commission would go ahead with ex-parte proceedings.

Prior to last week, the ECP had given numerous chances to PTI to submit financial details over the course of the hearings. On December 1 last year, the ECP had ordered the PTI to submit its accounts or face ‘legal consequences’. Instead of complying with the orders, the party had accused the ECP of ‘political bias’ which led to a contempt application against Imran Khan filed by petitioner Akbar S. Babar.

Long-drawn case

The case was filed on Nov 14, 2014 by Babar, after he developed differences with the PTI chief over internal corruption and abuse of laws governing political funding.

The petitioner had alleged that nearly $3 million in illegal foreign funds were collected through two offshore companies, registered under Imran Khan’s signature, and that money was sent through illegal ‘hundi’ channels from the Middle East to accounts of PTI employees. He also alleged that the foreign accounts used to collect funds were concealed from the annual audit reports submitted to the ECP.

In April 2015, after scrutinising PTI’s annual audit reports, the ECP had ordered that the party had failed to disclose the sources and details of foreign funds received.

But instead of submitting the accounts, the PTI had challenged the ECP’s jurisdiction to scrutinise its accounts.

In July, the Islamabad High Court rejected PTI’s plea to prevent the ECP from hearing Babar’s petition, saying that the case has been going on since 2014 and has already once been referred back to the ECP.

Parliament to elect new PM tomorrow

ISLAMABAD: President Mamnoon Hussain has summoned the National Assembly (NA) session to meet on Tuesday at 3:00pm to elect a new prime minister following the disqualification of Nawaz Sharif by the Supreme Court.

The Pakistan Muslim League-Nawaz (PML-N) leadership following a consultative meeting and parliamentary party meeting nominated Shahid Khaqan Abbasi for the slot of the prime minister for an interim period of nearly two months.

He would continue to hold the slot till (Punjab Chief Minister) Shahbaz Sharif’s election as member of the National Assembly (MNA) from NA-120 Lahore constituency to become permanent prime minister till June 4 next.

As per the election schedule, candidates received nomination papers from NA Speaker office by 3:00pm on Sunday. Nomination papers can be filed by 2:00pm on Monday and the Speaker will scrutinise the papers by 3:00pm the same day.

The election will be held at 3:00pm on Tuesday.

Meanwhile, the opposition has started efforts to bring a consensus candidate against the PML-N for the prime minister’s slot.

The consultations are being spearheaded by leader of opposition in the National Assembly Syed Khursheed Shah by contacting all the like-minded parties.

OPPOSITION GROUPING

Among the opposition parties, the Pakistan Peoples Party (PPP) to which Shah belongs is the largest in the National Assembly followed by the Pakistan Tehrik-e-Insaf (PTI).

Some smaller groups having a few seats also side with the opposition grouping.

Given the superior numerical strength of the PML-N and its allies in the Lower House of Parliament, the election of its candidate as prime minister is likely to be a smooth affair. However, its detractors keenly watch the number of MNAs, who, they believe, might defect from it for being against the party’s policies.

PML-N party has a strong majority in parliament and should have no problem installing Abbasi as the new leader of the nation.

The quick handover could ease political upheaval sparked by the Supreme Court’s decision on Friday to disqualify Nawaz Sharif for not declaring a source of income. The court also ordered a criminal investigation into him and his family.

But his foes slammed PML-N’s plans as dynastic and undemocratic, while opposition leader Imran Khan called it a form of “monarchy.”

Sharif said the plan is for former petroleum minister Abbasi to stay in power for less than two months until Shahbaz, who is the chief minister of the vast Punjab province, wins a by-election to the national assembly and becomes eligible to be prime minister.

“We wanted to make sure there is a smooth transfer of power, and no constitutional crisis,” said Miftah Ismail, a senior PML-N official and Sharif ally.

Abbasi and Shahbaz will have to hit the ground running to tackle Pakistan’s worsening ties with the United States, frayed relations with India, and persistent attacks by militants including the Pakistani Taliban and Daesh.

They will also need to boost economic growth above the current rate of 5.3 per cent to find employment for millions of young people entering the job market every year in a nation of nearly 200 million people.

Economists say this will prove tricky at a time when the current account deficit is ballooning and an overvalued currency is hurting exports.

Pakistan opposition fails to choose candidate for PM slot

ISLAMABAD: Pakistan opposition members on Monday failed to arrive at a consensus on a single candidate for the interim Prime Minister following Nawaz Sharif’s disqualification by the Supreme Court in the Panamagate case.

President Mamnoon Hussain has called a session of the National Assembly on Tuesday for the election of an interim Prime Minister, Dawn reported.

Pakistan Muslim League-Nawaz’s nominee Shahid Khaqan Abbasi, who is currently facing a Rs220 billion corruption inquiry being carried out by the National Accountability Bureau, submitted his nomination papers to Parliament Secretary Jawad Rafiq Malik on Monday.

Abbasi, who was chosen by the PML-N party unanimously, said once elected, he would continue with the policies of ousted Prime Minister Nawaz Sharif.

The opposition failed to agree on one nominee, with each party throwing its weight behind different candidates who too submitted their nomination papers.

The Pakistan Tehrik-e-Insaf (PTI), led by cricketer-turned-politician Imran Khan, put forward Awami Muslim League (AML) leader Sheikh Rashid’s name, but could not gain the support of any other party apart from Pakistan Muslim League-Quaid. The Awami Muslim League, significantly, was floated by former president Parvez Musharraf.

The Pakistan Peoples Party of the late Benazir Bhutto nominated Khursheed Shah and Naveed Qamar, Muttahida Qaumi Movement chose Kishwar Zehra, while Jamaat-i-Islami (JI) suggested the name of Sahibzada Tariqullah.

Defending the party’s decision to nominate Sheikh Rashid, PTI leader Shah Mehmood Qureshi said that the AML leader “deserved the honour” (of becoming the interim PM) as he fought the Panama papers case “on both political and legal fronts” along with PTI chairman Imran Khan.

Qureshi and PPP’s Khursheed Shah both expressed hope that the opposition parties would continue to make efforts to agree on a single candidate to be pitted against former Petroleum Minister Shahid Khaqan Abbasi.

Indo-Asian News Service

Nawaz Sharif steps down as PM after SC’s disqualification verdict

Dawn.com | Haseeb Bhatti

The Supreme Court on Friday disqualified Prime Minister Nawaz Sharif from holding public office in a landmark decision on the Panama Papers case.

Justice Ejaz Afzal Khan, who had headed the apex court’s implementation bench following its April 20 order on the Panama Papers case, announced that the larger bench had unanimously deemed PM Sharif unfit for holding office and would also order an accountability court to open references against him and his family, and other respondents.

Shortly after the order, the PM House issued a notification saying that Nawaz Sharif, despite having “strong reservations” on the SC’s verdict, has stepped down from his post as the premier.

Reacting to the court’s order, a PML-N spokesperson said that the party will utilise all legal and constitutional means to contest the verdict.

The judgement, announced shortly after 12pm, brings Sharif’s third term in power to an unceremonious end, roughly one year before the scheduled general elections which would have seen him become the first Pakistani prime minister to complete a full five-year term. It is unclear at the moment who will be appointed to take over the post till the next general elections, which are scheduled for 2018.

Govt in limbo

The federal cabinet was dissolved after Nawaz Sharif relinquished his responsibilities as the prime minister of Pakistan.

As the head of the ruling PML-N, he will still be able to nominate his successor.

Sharif’s chosen candidate will be put to a vote in the National Assembly — a rubber stamp affair as the PML-N holds a strong majority in the house.

His daughter, Maryam Nawaz, has frequently been touted as his political heir, but she does not currently hold elected office so cannot be a candidate this time around.

‘Disqualified for being dishonest’

“The Election Commission of Pakistan (ECP) shall issue a notification disqualifying Mian Muhammad Nawaz Sharif from being a member of the Parliament with immediate effect, after which he shall cease to be the Prime Minister of Pakistan,” Justice Khan told the packed courtroom Friday afternoon.

The judges ruled that Nawaz had been dishonest to the parliament and the courts in not disclosing his employment in the Dubai-based Capital FZE company in his 2013 nomination papers, and thus, could not be deemed fit for his office.

“It is hereby declared that having failed to disclose his un-withdrawn receivables constituting assets from Capital FZE Jebel Ali, UAE in his nomination papers filed for the General Elections held in 2013 in terms of Section 12(2)(f) of the Representation of the People Act, 1976 (ROPA), and having furnished a false declaration under solemn affirmation respondent No. 1 Mian Muhammad Nawaz Sharif is not honest in terms of Section 99(f) of ROPA and Article 62(1)(f) of the Constitution of the Islamic Republic of Pakistan, 1973 and therefore he is disqualified to be a Member of the Majlis-e-Shoora (Parliament).”

Read the Supreme Court’s complete order in Panama Papers case

References in accountability courts

Justice Khan said that the bench had recommended that all material collected by the joint investigation team (JIT) tasked with probing the Sharif family’s financial dealings be sent to an accountability court within six weeks.

The bench said that on the basis of this information, cases would be opened against Finance Minister Ishaq Dar; MNA Captain Muhammad Safdar; Maryam, Hassan and Hussain Nawaz; as well as the premier.

A judgement on these references should be announced within six months, he said. One judge will oversee the implementation of this order.


The references to be filed by NAB before the accountability court include:

  • References against Nawaz Sharif, Maryam Nawaz Sharif, Hussain Nawaz Sharif, Hassan Nawaz Sharif, and Capt Muhammad Safdar relating to the Avenfield properties in London, United Kingdom.

  • Reference against Nawaz Sharif, and Hussain and Hassan Nawaz regarding Azizia Steel Company and Hill Metal Establishment, along with other companies mentioned in paragraph 9 of the detailed judgement.

  • Reference against Ishaq Dar for possessing assets and funds beyond his known means of income.

  • Supplementary reference(s) if and when any other asset, which is not prima facie reasonably accounted for, is discovered.


A reference against him will also be opened for possessing assets and funds beyond his known sources of income.

Court appreciates JIT’s efforts

The judges “commended and appreciated” the hard work and efforts made by members of the JIT in preparing and filing a comprehensive and detailed report.

“Their tenure of service shall be safeguarded and protected and no adverse action of any nature including transfer and posting shall be taken against them without informing the monitoring Judge of this Court nominated by the Honourable Chief Justice of Pakistan,” reads the court order.

The lead up

The original five-member bench of the Supreme Court which heard the Panama Papers case — comprising Justices Asif Saeed Khosa, Ejaz Afzal Khan, Gulzar Ahmed, Sheikh Azmat Saeed, Ijazul Ahsan — announced the much-awaited verdict in Courtroom No. 1 shortly after 12pm.

According to media reports, the courtroom was filled to capacity as prominent politicians, lawyers and journalists crowded the room to hear the judges decide Prime Minister Nawaz Sharif’s fate.

The twin cities of Islamabad and Rawalpindi were on high alert in anticipation of the SC verdict while the Red Zone was partially sealed.

Paramilitary soldiers and policemen cordon off the main entrance of the Supreme Court building.— AFP
Paramilitary soldiers and policemen cordon off the main entrance of the Supreme Court building.— AFP

Rangers and Frontier Constabulary personnel were deployed at the Supreme Court and the Red Zone to assist the police.

April 20 order and JIT investigation

The April 20 judgement issued by the larger bench in the Panama Papers case had been split 3-2 among the five judges, with two dissenting notes from Justice Asif Saeed Khosa and Justice Gulzar Ahmed. Justice Ejaz Afzal authored the majority opinion in the 540-page judgement.

The two judges who ruled against PM Nawaz Sharif had said he should be disqualified as he could not be considered ‘honest’ and ‘truthful’ (ameen and sadiq), whereas the other three were in favour of forming a joint investigation team (JIT) to definitively answer the question of whether the allegations against the prime minister were true or not.

The court had further said that: “upon receipt of the reports, periodic or final of the JIT, as the case may be, the matter of disqualification of respondent No. 1 [Nawaz Sharif] shall be considered. If found necessary for passing an appropriate order in this behalf, [Nawaz Sharif or any other person may be summoned and examined.”

A special bench of the Supreme Court was subsequently constituted to examine the case under Section 184/3 of the Constitution. The bench comprised the three judges who had prevailed.

The Supreme Court had on May 6 formed the JIT, putting a senior officer of the Federal Investigation Agency (FIA) in charge.

After considering the background and antecedents of the officer, FIA’s Additional Director General Wajid Zia, a grade 21 officer, was appointed head of the probe team.

Amer Aziz of the State Bank of Pakistan, Executive Director of the Securities and Exchange Commission of Pakistan Bilal Rasool, National Accountability Bureau Director Irfan Naeem Mangi, Brig Muha­mmad Nauman Saeed of Inter-Services Intelligence and Brig Kamran Khurshid of the Military Intelligence were appointed as the remaining members of the team.

The six-member JIT’s damning report, submitted after a 60-day investigation that sought answers to 13 questions raised by the Supreme Court’s larger bench, had maintained that Prime Minister’s family owned assets beyond its known sources of income. It declared that both Hussain and Hassan Nawaz were used as proxies to build family assets.

Consequently, the six-man JIT concluded that it was compelled to refer to sections 9(a)(v) and 14(c) of the National Accountability Ordinance (NAO) 1999, which deal with corruption and corrupt practices, though such charges are yet to be proven in an accountability court.

The JIT report also highlighted Articles 122, 117, 129 and other sections of the Qanoon-i-Shahadat Order 1984 (Law of Evidence), which places the burden of disproving the allegations on the person facing accusations.

The JIT pointed out failure on the part of the Sharifs to produce the required information that would confirm their “known sources of income”, saying that prima facie, it amounted to saying that they were not able to reconcile their assets with their means of income.

The prime minister’s daughter, Maryam Nawaz, had on the same evening issued a strongly-worded statement on behalf of the PML-N, saying:

“JIT report REJECTED. Every contradiction will not only be contested but decimated in SC. NOT a penny of public exchequer involved: PMLN.”

Her tweet followed a press conference conducted by four senior PML-N leaders, who had taken turns to criticise the JIT report as ‘serving Imran Khan’s agenda’.

The Sharif family’s legal team’s strategy in subsequent hearings had focused on discrediting the report, the evidence collected and the means used to do so, and raising questions about the impartiality and capability of the six men who had comprised the JIT.

— Additional reporting by Naveed Siddiqui and Javed Hussain

Correction: This story has been amended to reflect that Ishaq Dar and Capt Muhammad Safdar have not been disqualified from their membership of the National Assembly; rather the Supreme Court has only ordered separate references to be opened against both. The error is regretted.

ECP denotifies Nawaz Sharif from National Assembly

DAWN.com

Following the directives of the Supreme Court, the Election Commission of Pakistan (ECP) on Friday issued a notification disqualifying Nawaz Sharif as a member of the National Assembly.

“The Election Commission of Pakistan hereby de-notify Muhammad Nawaz Sharif as Member National Assembly on Pakistan from Constituency No.NA-120 Lahore-III with immediate effect,” reads the ECP notification.

Giving their judgement in the Panamagate case, the SC judges ruled that Nawaz Sharif had been dishonest to the parliament and the courts in not disclosing his employment in the Dubai-based Capital FZE company in his 2013 nomination papers, and thus, could not be deemed fit for his office.

“The Election Commission of Pakistan shall issue a notification disqualifying respondent No. 1 Mian Muhammad Nawaz Sharif from being a Member of the Majlis-e-Shoora (Parliament) with immediate effect, whereafter he shall cease to be the Prime Minister of Pakistan,” reads the order, the full text of which is available with Dawn.

“It is hereby declared that having failed to disclose his un-withdrawn receivables constituting assets from Capital FZE Jebel Ali, UAE in his nomination papers filed for the General Elections held in 2013 in terms of Section 12(2)(f) of the Representation of the People Act, 1976 (ROPA), and having furnished a false declaration under solemn affirmation respondent No. 1 Mian Muhammad Nawaz Sharif is not honest in terms of Section 99(f) of ROPA and Article 62(1)(f) of the Constitution of the Islamic Republic of Pakistan, 1973 and therefore he is disqualified to be a Member of the Majlis-e-Shoora (Parliament),” reads the judgement, elaborating on the technicality that cost Nawaz Sharif his post as the premier.

Shortly after the judgment, Nawaz Sharif stepped down as the prime minister.

Pakistan has won today: Imran Khan

DAWN.com

Khan thanked the SC, the JIT and the people of the country for their continuous struggle against corruption. — DawnNews

Pakistan Tehreek-i-Insaf (PTI) chief Imran Khan said on Friday that the Supreme Court’s (SC) decision to disqualify Nawaz Sharif marks the start of a new era in the history of Pakistan, where justice will be held supreme.

“Pakistan has won today,” Khan said while congratulating the nation, also thanking the SC and the JIT for upholding the law.

He added: “I have no personal agenda against Nawaz Sharif; I have known his family for 40 years, he did not take anything of mine — he had done wrong to the people of this country and that was why we wanted him to be held accountable.”

“Historically there have always been two kinds of laws prevailing in the country; one for the weak and poor and the other for the rich and powerful,” he said, adding that he spent eight days in jail and all he saw there was poor people held on minor charges while the biggest thieves in the country sat in the assembly.

Khan asked: “I have a question for the nation today: are those poor people rotting in jail responsible for laundering money in this country, or are those crooks responsible for illegal practices who live in houses worth billions of rupees?”

“This country is standing at the brink of destruction; we have never taken more loans than we took in the past year, there is not enough money here to run this country — and yet, a US report says that millions of dollars are laundered and sent out of Pakistan each year,” Khan said, while emphasising that Nawaz Sharif’s disqualification is the first step towards saving he country.

“Today, for the first time the law has worked against a sitting PM who had a hold on all offices capable of holding him accountable,” he said. “It has been established that the chief of the National Accountability Bureau was involved in covering Nawaz Sharif’s tracks. That man is responsible for keeping the country’s assets safe.”

“I hope and pray that this win brings the nation together and we are able to save Pakistan, and turn it into the country Allama Iqbal dreamed of and Quiad-e-Azam would be proud of,” he said, asking the nation to continue the struggle for a better Pakistan.

Khan announced that the PTI will hold a Youm-i-Tashakkur (day of thanksgiving) gathering at Rawalpindi’s Parade Ground on July 30 to celebrate Pakistan’s victory against corruption.

He instructed party workers to not engage in any kind of actions causing chaos and wait for July 30 to celebrate the victory.

He added that the party will announce the course of action at the celebration.