[four_fifth_last]Elixir Securities Limited – Elixir Insight

Karachi, September 20, 2016 (PPI-OT): Pakistan Economy

Inflation Preview September 2016

Elixir Securities Limited expects headline inflation for the month of September to clock in at 4.04% YoY (Aug 3.56% YoY) with MoM inflation expected at 0.36%, taking FYTD average inflation to 3.9%.

While sequential dip in inflation in outgoing month was led by food deflation, Elixir Securities Limited expects food inflation to rise by 0.83% driven by rise in prices of perishable food items.

While Elixir Securities Limited does not rule out the possibility of another 25bps rate cut in the upcoming monetary policy given adequate RIR cushion but challenges on external account and currency management would likely induce a cautionary approach in Elixir Securities Limited’s view.

Elixir Securities Limited thus believe that the monetary easing cycle has concluded with SBP to remain remain cognizant of the upcoming challenges on external account and currency.

Food inflation to drive CPI in Sep-16: Elixir Securities Limited expects headline inflation for the month of September 2016 to clock in at 4.04% YoY with MoM inflation expected at 0.36% compared to 3.6% YoY in August 2016. This would take FYTD average inflation to 3.9%. While sequential dip in inflation in August 2016 (i.e. -0.29%) was primarily driven by food deflation where prices of various food items normalized following a surge in the month of Ramadan (+3.2% in Jul-16), Elixir Securities Limited expects inflation to rise 0.35% MoM. Sequential rise is primarily driven by food inflation (+0.83% MoM) with prices of perishable items rising (i.e. Potatoes+2.1%, Onion+16.9% and Tomatoes+8.3%).

Room for another 25bps rate cut intact… Elixir Securities Limited does not rule out the possibility of another 25bps rate cut in the upcoming monetary policy meeting scheduled in Sep-2016 (date not yet announced) given adequate RIR cushion which is expected to remain in the range of 100-190bps in FY17. Elixir Securities Limited maintains Elixir Securities Limited’s full year average inflation expectations at ~4.5-5%.

But prudency indicates otherwise: Having said that, Elixir Securities Limited believes prudent monetary policy management indicate otherwise considering potential challenges on the external account front given 1) conclusion of payments under IMF program, 2) risks on remittances given increasing likelihood of sustained low oil price scenario, iii) impending US fed rate hike iv) gradual economic recovery to improve aggregate demand and v) redirection of government’s borrowings for budgetary support towards SBP from commercial banks with FYTD borrowing from SBP and commercial banks amounting to PKR791bn and PKR-522bn (net retirement).

Assistant Secretary Frank A. Rose to travel to Hawaii and Australia

Assistant Secretary for Arms Control, Verification and Compliance Frank A. Rose will travel to Australia and Hawaii September 17-24 for meetings and to participate in events focused on international security, strategic stability, and space security.

On September 20, A/S Rose will meet with the Lowy Institute and other members of the non-governmental community in Sydney, Australia. On September 21, A/S Rose will participate in a roundtable meeting at the Australia Strategic Policy Institute followed by meetings at the Department of Foreign Affairs and Trade and the Australian Department of Defense.

On September 22, A/S Rose will provide a keynote address on space situational awareness at the Advanced Maui Optical and Space Surveillance (AMOS) Conference in Maui, Hawaii. On September 23, he will meet with senior leaders from United States Pacific Command (USPACOM) to discuss strategic issues.

Source: U.S.Department of State

Pakistani Minority Victimized in Name of Fighting Extremism

Her hands shook slightly – a sign of age – as she held her thin, long dupatta scarf in front of her face and turned slightly away. Years of covering her face in front of men had made her shy.

In her 53 years of marriage, this was the first time she was alone. Her 80-year-old spouse Abdul Shakoor had been convicted on charges of selling banned books and is serving a five-year jail term. The books, which Nayeema claims he removed from the shop after a government notice, were comprised of religious literature intended for their own sect.

Nayeema and Abdul Shakoor belong to Pakistan’s Ahmadiyya community, one of the most persecuted religious minorities in the country according to human rights activists.

Shakoor’s small shop, which sold books and spectacles, was in the main bazaar of Chanab Nagar, a town of 60,000 – 95 percent of them Ahmadiyyas. The town, in the heartland of Pakistan’s most populous Punjab province, is the de facto headquarters for the million or so Ahmadiyyas living across Pakistan.

New actions

Community representatives claim that while they have faced decades of government-sanctioned discrimination, it has recently increased under the country’s new National Action Plan (NAP), a comprehensive strategy introduced to counter years of religious terrorism and growing violence in the country.

The plan calls for banning all materials, books, CDs, DVDs, even pamphlets that could be labeled hate speech, or that were deemed to incite violence against any group.

Ahmadiyyas complain that the government of Punjab, the country’s most populous province, has used this as a pretext to ban most of their religious literature, including all the books written by Mirza Ghulam Ahmad, a man they consider their messiah and the founder of their religious sect. The banned material also includes community newspapers and periodicals, including those catering to children.

Copies of legal notices provided to VOA state that the books are “treasonable and seditious” and intend to “promote feelings of enmity and hatred between different classes of citizens.”

“We wrote to the government and asked the chief minister to at least pin point what part of our literature was hate speech? Why were they banning it all?” said Syed Qamar Suleiman Ahmed, a senior member of the community who heads the press coordination committee. “But they did not respond. They usually don’t bother responding to us.”

Ahmed added that while various official notifications had been issued to ban some of these books before the NAP, no one took action on them until after the plan was introduced in late December 2014.

Starting in 2015, the community claims they noticed a renewed vigor to go after their literature, with reminders and new notices in the newspapers. Shakoor was arrested in December 2015.

As a result of such actions, members of the community can no longer purchase these books from their bookshops and can no longer keep them in their community library. Even websites carrying this literature have been blocked.

“I cannot obtain these books for my children. How am I supposed to teach them about our founder?” asked Amir Mahmood, who is in charge of the press section for the community.

Muhammad Nasir, the librarian for the main Ahmadiyya library in Chanab Nagar, said he had to get rid of almost 75,000 books out of the 200,000 previously displayed.

Islamic teachings

Unlike the country’s other religious minorities, the Ahmadiyyas insist they are followers of Islam and its Prophet Muhammad. However, they also consider their founder Mirza Ghulam Ahmad a metaphorical second coming of Jesus as well as Imam Mehdi, a messiah whose advent was foretold by Muhammad. That irks many mainstream Muslims who believe Muhammad was the last prophet and the Ahmadiyyas are muddying their religion.

Posters, pamphlets, and booklets by certain far right religious groups openly declare that Ahmadiyyas should be killed.

Islamist political movements against the Ahmadiyyas resulted in a change in the country’s constitution in 1974 to declare them non-Muslims, followed by a 1984 law that barred them from “posing as a Muslim.” They are not allowed to use the Muslim call to prayer “azaan” or call their houses of worship mosques. Such actions could result in a jail term of up to three years.

Over the years, various Ahmadiyya places of worship have been torn down, sometimes under court orders, because their structures included domes and minarets, which are associated with mosques.

Critics say the Ahmadiyyas invite the ire of mainstream Muslim clerics because they propagate their beliefs as the true version of Islam.

However, Ahmed said there was no way for people in his community to clarify their position. “Whatever the mullah (Muslim religious cleric) claims we believe is not true. But we’re not even allowed to defend ourselves as per law.”

Legal marginalization

The ban on their books, Ahmadiyyas say, is the latest in a long list of government actions designed to ostracize them.

An advertisement for a low-income government housing scheme near Chanab Nagar placed in local newspapers earlier this year by the Punjab government’s Housing and Town Planning Agency clearly specified that anyone participating would have to take an oath that he or she was not Ahmadiyya.

Constitutional law expert Salman Akram Raja was surprised to hear about it.

“I’ve not seen this but I’m shocked and this is completely unconstitutional,” he said.

However, Muhammad Khurram Agha, the secretary of Housing, Urban Development & Public Health and Engineering Department of the Punjab government said the ad in the newspaper was placed erroneously and as soon as it appeared, the relevant authorities took immediate action and the auction was called off.

“Whenever this auction happens again, it will be open to all. The housing department does not discriminate against anyone,” he said.

In other instances, the community complains the local authorities have, over the years, used a perceived danger to law and order as an excuse to stop them from holding open-air rallies, conferences, or even sports events, in a city where 95 percent of the population belongs to their sect. Meanwhile, their critics have been allowed to hold what they said were “anti-Ahmadiyya” rallies in their city.

They provided VOA with copies of several legal notices dating as far back as 1994, ordering planned sports events to be cancelled due to what the notices claimed was a “danger to peace.”

No comment

Various officials of the Punjab government did not respond to VOA’s repeated requests for a comment. Political leaders from the ruling PML-N party, including some who are usually happy to defend their government on other issues, excused themselves once they found out the questions were about the Ahmadiyya community.

Human rights activists contacted for this story were not surprised. Political leaders, they said, either agreed with the discrimination, or feared speaking up.

According to activist Tahira Abdullah, certain Pakistani groups that were closely affiliated with the Saudi-style, ultraconservative version of Islam “killed without compunction.”

“Thus, most politicians and political parties are too scared and afraid of a violent reaction if they voice any sympathy or solidarity with the plight of the Pakistani Ahmadiyyas,” she said. “Only a few human rights defenders and a handful of journalists are willing to speak on the record now.”

Supporting the persecuted community was also perceived to be politically damaging.

Imran Khan, the leader of Pakistan Tehreek e Insaaf, one of Pakistan’s main opposition parties, who had made various statements earlier in his career in favor of Ahmadiyyas and against “any laws that discriminate among human beings” made a reversal before the parliamentary elections in 2013 and declared that he considered Ahmadiyyas non-Muslims and that his party would not repeal laws declaring them so.

Members of the community faced a dilemma. On one hand, they wanted to raise awareness about the persecution they faced. On the other hand, they were so fearful of a violent backlash that they wanted to keep a low profile.

Meanwhile, Nayeema was worried about her old husband, incarcerated in a cell in the blistering summer heat. He had lost weight in jail and developed health issues. She has appealed his conviction, with little hope of winning.

Source: Voice of America

JS Global Capital Limited – Morning Briefing

Karachi, September 01, 2016 (PPI-OT): BAFL: ‘Hold’ intact with a revised TP of Rs30

JS Global Capital Limited reiterates JS Global Capital Limited’s ‘Hold’ call on Bank Alfalah Limited (BAFL) with a revised Target Price of Rs30 (Rs25 earlier).

JS Global Capital Limited revises up JS Global Capital Limited’s 2016E-18F earnings estimates for BAFL by 11%-18% on (1) ~30% lower-than-anticipated PIBs maturity in 3Q2016 and (2) impressive 12% QoQ jump in zero-cost deposits during 2Q2016.

BAFL trades at 2016E P/B of 0.78x, though offers a relatively low 2016E dividend yield of 3% as JS Global Capital Limited expects the bank to continue to support its Tier II CAR with a low payout ratio.

BAFL posted strong 1H2016 PAT of Rs4.35bn (EPS: Rs2.73), up 17% YoY on the back of (1) 13% YoY lower Interest Expense and (2) 66% YoY lower provisioning expenses.

BAFL’s 2Q2016 financials reflect a strategy of increasing lower or zero cost deposits over increase in deposit base. During 2Q2016, the bank’s cost of deposits declined by 163bps/24bps YoY/QoQ due to impressive 12% QoQ growth in zero cost deposits.

BAFL’s investments in long-term government papers (PIBs) further increased to Rs250bn, where investments in PIBs now stand at 5.5x BAFL’s total equity. However, share of T-bills declined to 14% in overall investments, taking IDR down to 66% (-353bps QoQ).

‘Hold’ with a revised TP of Rs30

JS Global Capital Limited reiterates JS Global Capital Limited’s ‘Hold’ call on Bank Alfalah Limited (BAFL) with a revised Target Price of Rs30 (Rs25 earlier). JS Global Capital Limited revises up JS Global Capital Limited’s 2016E-18F earnings estimates for BAFL by 11%-18% on (1) ~30% lower-than-anticipated PIBs maturity in 3Q2016 and (2) impressive 12% QoQ jump in zero-cost deposits during 2Q2016. BAFL trades at 2016E P/B of 0.78x, though offers a relatively low 2016E dividend yield of 3% as JS Global Capital Limited expects the bank to continue to support its Tier II CAR with a low payout ratio. The bank’s Tier II CAR stands at 13.8% as of Jun-16.

1H2016 profits up 17% YoY on zero-cost deposits

BAFL posted strong 1H2016 PAT of Rs4.35bn (EPS: Rs2.73), up 17% YoY on the back of (1) 13% YoY lower Interest Expense and (2) 66% YoY lower provisioning expenses. In 2Q2016 alone, earnings clocked in 10% YoY higher at Rs1.89bn (EPS: Rs1.18), however declined by 24% QoQ because of 4% Super Tax. BAFL’s 2Q2016 financials reflect a strategy of increasing lower or zero cost deposits over increase in deposit base. During 2Q2016, the bank’s cost of deposits declined by 163bps/24bps YoY/QoQ due to impressive 12% QoQ growth in zero cost deposits. On the other hand, deposits grew by 3% QoQ only.

Higher current account deposits resultantly took the bank’s CASA to an all-time high of 81%. In addition to a decent core income, bank’s (1) provisions and write offs also declined by 67%/30% YoY/QoQ and (2) Non-Interest Income improved by 12% QoQ. Higher Non-Interest Income was due to 43% QoQ higher Fee Income recorded in 2Q2016. That said, higher Admin expenses (up 10% YoY and 15% QoQ) somewhat curtailed bottom-line growth.

Advances growth remain sluggish

BAFL’s investments in long-term government papers (PIBs) further increased to Rs250bn, where investments in PIBs now stand at 5.5x BAFL’s total equity. However, share of T-bills declined to 14% in overall investments, taking IDR down to 66% (-353bps QoQ). Advances also picked up slower than the industry as the management explained it keeps preference for superior quality and high yielding assets and would remain selective in loan disbursement in the future as well. Moreover, focus on SME and consumer sector remains intact.

Pakistan inks agreements worth US$650mn with WB

Pakistan signed four agreements with World Bank (WB) amounting to US$650mn related to projects in education, health, water and other sectors. The agreements include (1) Balochistan Integrated Water Resources Management and Development Project worth US$200mn, (2) Third Punjab Education Sector Project worth US$300mn, (3) Sindh Resilience Project, worth US$100mn and (4) National Immunization Support Project worth US$50mn.

JS Global Capital Limited – Pakistan Market: Technical Outlook

Karachi, September 01, 2016 (PPI-OT): KSE-100 to test support at the 30 DMA; stay cautious

The KSE-100 index showed negative movement to close at 39,810, a loss of 182 points. Volumes stood low at 351mn shares versus 424mn shares traded previously. The index is expected to test support at the 30-DMA standing at 39,638; where a fall below will kick off the corrective trend with 39,149 as the next target. However, any upside will revisit yesterday’s high; where a break above will continue the uptrend with 40,214 and 40,581 in sight. Meanwhile, the RSI and the Stochastic Oscillator have taken a downturn, suggesting a negative trend ahead. JS Global Capital Limited recommends investors to ‘Sell’ below the 30-DMA. The support and resistance are at 39,695 and 39,924, respectively.

Bangladesh’s Top Court Rejects Final Death Sentence Appeal By Islamist Leader

Bangladesh’s top court has rejected a final appeal by the leader of an Islamist party against a death sentence for atrocities committed during the country’s 1971 war for independence from Pakistan.

The August 30 ruling by a five-judge panel in the case against Mir Quasem Ali means the 63-year-old financier of the Jamaat-e-Islami party could be hanged at any time unless he obtains clemency from the president.

Ali’s lawyer, Khandaker Mahbub Hossain, said on August 30 that the Jamaat-e-Islami leader and his family have yet to decide whether to seek clemency.

The ruling against Ali comes amid a wave attacks by Islamic militants in Bangladesh.

The most deadly was on July 1, when gunmen stormed into a cafe in the capital, Dhaka, and killed 20 hostages.

Most of the slain victims were foreigners.

Copyright (c) 2015. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave NW, Ste 400, Washington DC 20036.

PRESIDENT KOC GROUP TURKEY CALLS ON THE PRIME MINISTER Islamabad

Mr. Fatih Kemal Ebiclioglu, President KOC Group Turkey along with delegation called on Prime Minister Muhammad Nawaz Sharif at PM House today.Ambassador of Turkey to Pakistan Mr. Babur Girgin was also present during the meeting.Welcoming the delegation, the Prime Minister said that the government and people of Pakistan attach great importance to relationship with Turkey. Pakistan and Turkey share common perceptions on all regional and international issues, added the Prime Minister.Prime Minister Muhammad Nawaz Sharif appreciated the initiative of the KOC Group to enter into the Pakistani market by acquiring Dawlance, a premium home appliances company of Pakistan. Pakistan’s outlook for attracting Foreign Direct Investment is continuously improving, the Prime Minister said. Improvement in security situation has enhanced Pakistan’s position as an attractive destination for Foreign Direct Investment in the last three years, the Prime Minister expressed with satisfaction.Appreciating the current Foreign Direct Investment from Turkey to Pakistan in energy, infrastructure, construction and services sectors, the Prime Minister expressed hope for substantial increase in investment from Turkish companies in future.Our Investment Policy has been designed to provide a comprehensive framework for creating a conducive business environment for the attraction of Foreign Direct Investment; Pakistan’s policy trends have been consistent, with liberalization, de-regulation, privatization, and facilitation being its foremost cornerstone, the Prime Minister said.China Pakistan Economic Corridor (CPEC) includes major infrastructure, energy and communication projects; the Corridor will make Pakistan regional manufacturing hub and very attractive market for Foreign Direct Investment, the Prime Minister said. It is encouraging that Leading Turkish companies are interested in investment in Pakistan’s Energy, Infrastructure, construction and Services sectors, the Prime Minister noted with satisfaction.Appreciating the economic turnaround achieved by the present government, Mr. Fatih Kemal Ebiclioglu said that Pakistan is an ideal place for investment and his company is determined to further invest in various sectors of Pakistan’s economy. The acknowledgement of Pakistan’s improved economic credentials by credible International Financial Institutions the world over is indeed commendable. Pakistan has immense potential for investment which is bound to increase phenomenally in near future due to the prudent economic and investor friendly policies of the present government, the President said.Other members of the delegation included Mr. Levent Cakirogiu, Mr. Hakan Hamdi Bulgurlu and Mr. Salih Arslantas. Mr. Muhammad Ishaq Dar, Minister for Finance, Engr. Khurram Dastgir Khan, Minister for Commerce, Mr. Mifta Ismail, Chairman BOI and other senior government officials were also present during the meeting.

Source: Ministry of Information, Broadcasting and National Heritage.