The stock market in Pakistan saw significant gains over the week, with the KSE-100 index rising 4.1% driven by heavy foreign buying of $33 million. Foreign inflows were up 159% from the previous week and represented 6% of total flows to the Asia-Pacific region. Individual stocks like Engro Foods and Pakistan Telecommunication Company rose over 20% on strong earnings and news of pricing arrangements. However, inflation rose to 11.3% and political instability remained an ongoing concern.

1.  Energy crisis: Choosing between necessities and luxurie
LAHORE:
As soon the summer approaches as the electricity demand soars since domestic consumers
switch on their fans/air conditioners to beat the heat. There is a need to devise ways and
means to meet the electricity deficit which has soared up to 15 percent of the total peak
demand of 19,000MW.A permanent solution to the present energy crises lies in quantum
addition in the generation capacity. This is probably easier said than done, since power
generation projects are capital intensive and involve long gestation periods.Despite recent
additions to total generation there is little hope of respite from load-shedding because of
the annual increase in demand. It would make sense therefore to use the available power
prudently. A way has to be found to ensure that the wheels of industry and agriculture,
which drive our economy, are provided electricity on priority with minimum disruption to
the daily routine of the common man.The present government has recently approved a plan
to conserve energy, as part of short term measures to minimize the impact of shortage in
power. In this connection, it was decided at the second energy conference to reintroduce
five-day a week in all provinces, closure of shops by 8 pm, ban on use of air conditioners in
government offices before 11 am, launching of an awareness campaign through the media
to educate the masses on the utility of conservation, staggering of industrial holidays,
induction of energy saver bulbs, banning of neon signs, and switching off alternate street
lights. These measures are likely to result in saving of over 1,200 MW. The adage that a
megawatt (MW) saved is better than a megawatt produced was the moving spirit behind
the conservation plan.All over the world businesses and shops close early therefore early
closure of businesses and shops is critical to energy conservation, as this measure alone will
save over 700MW. Bangladesh is also facing energy crisis, traders and shopkeepers there

2. use a single bulb to light their businesses.The success of the implementation of early closure
of shops lies in the cooperation of traders and shopkeepers, they will have to set the trend
of “open early and close early” and change the present culture in keeping with international
practices.Domestic and commercial consumers in the country consume over 9,000 MW of
electricity, a sizeable chunk of the total peak demand of 19,000MW in summers. There is
ample room for saving, if we change our lifestyles and discourage extravagant use of
electricity. According to experts air conditioners and home appliances consume over 6,000
MWs of electricity.
Leaving lights and energy inefficient home appliances on even when they are not being used
is a common practice. It is our energy-inefficient lifestyle that is in many ways responsible
for the present energy crises. We have to rise above our personal and vested interests to
face this energy crisis through a collective national effort by changing our lifestyles. The
nation has to clearly draw a line between necessities and luxuries.
The long road ahead: Reforming the labour market in
Pakistan
KARACHI: Every leading portfolio analyst and fund manager today is looking for new ways to
identify potential emerging markets for higher returns on capital employed, with indicators
pushing its way towards South Asia, including Pakistan. By definition, frontier markets are
those countries which have potential to be economically viable, having growth potential
and substantial investment opportunities based on their natural abundant resources, labour
cost and tax benefits, for corporations to drive their income and earnings to get adequate
return on their investments. Such countries provide more room to grow against the global
volatile investment climate while managing risks due to the slow recovery rates within such

3. markets. For example, Africa promises to be next big potential emerging markets with
Europe and China investing there in recent times. Similarly, Pakistan is one of the frontier
markets for the next decade as an “optimistic long-term market “for soaring profit
management in future years.The real value or growth can only be seen by looking at the
labour policy of the country as despite having a fairly low cost of labour, the government is
not able manage the labour force or create adequate policy measures for them, by
adjusting their base wage rate accordingly, due to inflation or cost of living that has risen
sharply in the last ten years. Recently, on May 1, the government announced the wage rate
to increase by Rs1,000 to 8,000 rupee per month. But more needs to be done than just that
decision. Pakistan has major issues, its labour force, with a dire need to ensure protection
for workers by striking a balance between their labour rights, primarily in the informal
sector who are not covered by social protection while enhancing their incentives for income
growth.Key focus is needed on two fronts: reforming statutory regulations that encourage
job creation within the formal economy and creating programmes that help informal
workers adjust to labour market shocks and build future earnings potential.A lot of our
skilled labour force today is being poached by foreign countries getting better wages,
sometimes 10 times what they get here, slowly devouring our labour force and leaving a big
gap within the country, affecting internal productivity. This is obviously having a direct
impact in our formal job market , as lot of people who are on contract tend to go for other
jobs , where they are incentivised better or more efficiently leading us further away from
the solution. We do believe in protecting jobs but the focus should be to protect
workers.With the whole world turning towards South Asia, what are we doing for the
economic stability of our masses? Profits that are churned out by foreigners are taken back
to their country. The question is what are we investing back in our Pakistan and its people?
We need to get our competitiveness back!

4. KARACHI: The “Global Competitive Report” issued by the World Economic Forum is one of
the most comprehensive annual benchmarking of the state of competitiveness of various
global economies. In the latest report for 2011-1012 Pakistan has improved by five places,
up from its worst placement at 123 in 2010-2011 to 118 (sample of 142 countries). Our best
ranking was back in 2006, when we ranked 91 but have sadly dropped 27 places since. This
benchmarking takes into account 12 key pillars of any economy ranging from institutions,
infrastructure, macroeconomic environment, education (primary and higher), goods and
labour market efficiency, financial markets, technological readiness, market size, business
sophistication and innovation.Today eight Asian and four Middle Eastern countries rank in
the top 30 competitive nations in the world. However, two of the largest economics in Asia,
Pakistan and Bangladesh, continue to rank very poorly. Bangladesh has however over the
last decade risen from being ranked eight positions below Pakistan, to now ranking 10
positions above Pakistan.Despite moving up 5 places, Pakistan remains one of the poorest
performers of the developing Asian economies today. It is also distressing to note that
Pakistan earns its lowest marks, with no sign of improvement, in the most basic areas of
competitiveness, i.e. institutions (107th), Infrastructure (115th), health and primary
education (121st) and macroeconomic environment (138th). Pakistan desperately needs a
policy framework and a strategy to enhance its global competitiveness.Pakistan which
historically had led the developing nations in Asia on GDP (PPP) per capita lost its
competitiveness after 1996 and the gap has been growing as the rest of Asia has been
growing their GDP at a much faster rate (see graph). India, our biggest neighbour, and soon
to be our biggest trading partner is rated 56th; 62 positions ahead of Pakistan.Pakistan
industries and entrepreneurs are unfortunately playing with a serious handicap. Despite
being ranked 30th in market potential, due to this handicap Pakistan has less than 0.2%
share of global trade. It is vital that we as a nation address the core issues behind this
uncompetitiveness. We need a three pronged approach consisting of enhancing governance
by improving institutional building coupled with focus in developing our human resources
and infrastructure.As we progress in strengthening democratic norms in Pakistan with the
first parliament soon to complete its term, we must not take our eyes away from our global
competitiveness as that drives our economic growth. Economic development reduces
poverty, provides funds for education, infrastructure improvement and investment in
institution building.Our biggest advantage is our sheer scale as it relates to our market and
population size. However, the more sustainable advantage was highlighted in the recent
“INSEAD Innovation Index 2011” study which was our “Innovation Efficiency”; the immense
resilience shown by Pakistani businesses and entrepreneurs in an adverse environment to
deliver impressive results.We have a hardworking, innovative and resilient workforce. If we
have to play in the big leagues we must take stock of our core competences – innovation,

5. market size, strategic location, mineral wealth and solid entrepreneurial spirit to create
value.
Weekly review: Foreign buying pushes KSE-100 up by
4%
Net foreign inflows stood at $33 million, up 159% from previous
week.
KARACHI:
The stock market received a shot in the arm in the form of heavy foreign buying which
resulted in the benchmark KSE-100 index climbing 570 points (4.1%) during the week ended
May 4. After crossing the 14,000-point barrier in the previous week, the KSE-100 index
solidified its position above the psychological barrier as heavy foreign buying in the final
three trading sessions of the week pushed the index to 14,612 points – a level last seen on
May 5, 2008.Foreign buying stood at $33 million during the week, jumping 159% over the
previous week, as Pakistan was the recipient of 6% of total foreign inflows in the Asia-Pacific
region (excluding Japan). The bourse, which has been devoid of any major foreign activity in
recent times, reacted positively as a result.The market’s gains came despite the fragile
political situation of the country and weak macro-economic numbers, which would
otherwise have a negative impact on it. Individual performances were also witnessed which
aided the market’s growth.On the political front, the opposition parties announced that
they would launch protests across the country demanding the resignation of the prime

6. minister, after he was convicted in a contempt of court case. The prime minister, however,
remained defiant and has refused to relinquish his post.Macro-economic data was another
concern, as inflation for April 2012 stood at 11.3%, as compared to 10.8% in the previous
month. The rise in the inflation number is likely to dent any chances of a discount rate cut.
However, the number still remains below the 12% target for financial year 2011-
12.Furthermore, the rupee continued to slide against the US dollar and dropped to an all-
time low of Rs91.07 per dollar. At the same time, the country’s foreign exchange reserves
grew nominally and stood at $16.43 billion as compared to $16.42 billion in the previous
week.Stock-specific activity was also witnessed at the bourse, with Engro Foods leading the
way with gains of 20.3% during the week. The company’s impressive earnings growth in the
first quarter provided stimulus to the stock, which now trades at Rs66.91 on the KSE. The
share traded in the region of Rs20 at the start of 2012.Pakistan Telecommunication
Company also climbed 20.1% during the week, on news of a pricing arrangement between
Long Distance International operators, according to a report by JS Research.The fertiliser
sector also performed well, with Fatima Fertilizer and Engro Corporation climbing by 12.4%
and 7.5% respectively.Volumes grew marginally by 1.2% and stood at an average of 259.9
million shares per day during the week. Average daily value also climbed by 0.5% and stood
at Rs7.27 billion per day. The market capitalisation increased 4% to Rs3.73 trillion by the
end of the week.
Monday, April 30th
The stock market plummeted on its opening day, but recovered some losses as the day
progressed. The law and order situation in Karachi – coupled with the political situation in
the country – kept the trading session dull.
Tuesday, May 1st
The stock market was closed owing to the Labour Day holiday.
Wednesday, May 2nd
The stock market kicked-off May on a strong note, with the index rising healthily on the
opening day of trading for the month.

7. Thursday, May 3rd
The bulls continued their charge; as investors rallied aggressively across the board, riding a
wave of positivity generated by the recently-signed Capital Gains Tax (CGT) ordinance.
Friday, May 4th
The stock exchange rounded off the first week of May with a sustained bull rally that saw
the index close at levels last witnessed four years ago. During the day, the value of shares
traded also surged past the Rs10 billion mark to a 15-month high. Foreign flows have soared
during the week, clocking in at a healthy $13 million for the first three days of trading for
the month, while another $19.57 million worth of securities were bought by foreigners on
Friday.