ASSIGNMENT

SAQIB REHAN 11310

ANALYSIS OF PAKISTAN INDUSTRIES
saqib-rehan@outlook.com
Q1 EXPORTS
These five were generally the top five exports in the concerned period. There individual trends
are as follows:

BED WEAR
2000
1800 COTTON CLOTH
1600
2500
1400
1200 2000
1000
1500
800
600 1000
400
500
200
0 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

KNITWEAR
READY MADE GARMENTS 2000
1800 1800
1600 1600
1400 1400
1200 1200
1000 1000
800 800
600 600
400 400
200 200
0 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

RICE
2000
1800
1600
1400
1200
1000
800
600
400
200
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
 Overall Cotton Cloth industry has assumed the top position among exports
2003-04
The textile industry bolstered during this time period whereby increase observed in both unit
prices and volume in especially towels and knitwear. There was a general rising trend among
overall exports other than textiles whereby a fall in primary commodities and crude oil dragged
down growth rate. Relevant economic survey mentions the deep penetration into European
markets to explain this rising trend.
2005-06
This fiscal year proved to be the one in which textile industry flourished where bed wear, ready-
made garments all increased by large amounts. Growth of other commodities was also in double
figures with major rise in petroleum products and engineering goods (negligible share). It was
general theme that prices stayed firm whereby the quantity of exports rose by large amounts
which is indicative of the improving performance of domestic industries.
2008-09
The change of government led to a sudden fall in overall economic performance with the exports
falling in monetary terms. All of the top contributors including textiles declined in exports with
rice being the exception and showing a rising trend. The reason for major hike was the
substantial increase in prices of rice without which exports would be negative which calls for
alteration in composition of exports through diversification. Textile once again face the declining
global demand and price situation leading to fall in total exports
2010-11
There was witnessed a major dip in rice exports. As per respected economic survey the major
reason behind the dip were heavy floods during the fiscal year which damaged the crops. Textile
industry bolstered in this year due to higher unit prices and an increased demand from EU and
US increasing overall export receipts. During thiss period we witnessed currency appreciation,
improved export prices and new export destinations. Thus other industries like chemicals,
leather, sports and engineering goods contributed $353.2 million in export receipts.
2011-12
The fall in rise exports continued whereby major reason for fall as per economic survey was the
widespread global availability of rice. There was a major fall in international demand and per unit
value of wheat which contributed a major reduction in what export. Cotton cloth, ready-made
garments or textile industry in general faced a major decline in absolute export values due to
severe energy crisis and mitigation of international demand.
2013-14
Pakistan saw an overall rising trend in top 5 exports. Rise saw a similar trend and overall value of
rice exports rose mainly due to the rising international price of rice. There was a global growth in
cotton wear, ready-made garments (textile) which led to higher demand and higher exports.
2014-15
There was a major dip in overall exports statistics of Pakistan. Relevant economic survey clearly
mentions increased cost of production energy crises and falling international prices of major
exported commodities. It was mentioned that overall textile exports remained stagnant due to
the production and eventual export of mostly unfinished materials which are either undesirable
or less in value. Rice exports faced a change in composition of types exported with Basmati rice
facing a major decline and overall price negative growth adversely affected the rice export in
value.
Source: Economic Survey

Q2
 Edible oil Petroleum
2500
9000
8000
2000
7000
1500 6000
5000
1000 4000
3000
500 2000
1000
0 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Crude Iron and Steels

6000 1600
5000 1400
1200
4000
1000
3000 800
2000 600
400
1000
200
0 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Vehicles
1600
1400
1200
1000
800
600
400
200
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14

2003-04
This fiscal year saw a general rise in overall import bills especially in the consistently top 5
import commodities. There was a general boom in the economy inflating demand for machinery
and most consumer goods driving up import bills. Another major development was the general
decline in the import bill of petroleum products despite the ever rising oil prices. This was due to
drastic decrease in the volume of oil products imported due to less reliance on thermal power
generation, use of CNG, higher output by local refineries, etc. It is to note that the changing
composition of import bill is in line with the state of the economy with boom followed by higher
capital investment.
2005-06
The economy continued to flourished and domestic demand escalation showed no sign of
mitigation thus import bills kept on growing for all major commodities. Unprecedented rise in
petroleum prices continued inflating import bill of petroleum commodities. There was a domestic
shortage in sugar, wheat and pulses which forced the government into allowing duty free imports
of food commodities such as these which understandable lead to a hike in food imports. Pakistan,
like most other developing countries, faced the adverse effects of substantial increase in oil
prices. Predicting the trend government in two to three years worked to curb the quantity needed
to import petroleum products but the percentage decrease in the quantity imported was usurped
by percentage rise in petroleum product prices lead to nearly more than $1b extra payments to
import petroleum goods. Growing level of economic activity led to the overall rise in non-food
and non-oil imports as consumption increased exponentially and domestic demand followed the
same pattern. Machinery imports were in line with the overall higher economic activity.
2008-09
Imports generally fell due to falling oil prices, declining economic activity causing lower domestic
demand and depreciation of rupee. All the top imports showed a declining trend due to reasons
mentioned above except for machinery. Edible oil imports too fell due to both fall in quantity and
falling international prices. Energy shortages and increased construction and mining led to a
sustained growth in imports of power generation and mining machinery.
2011-12
There was an increase in palm oil import bill due to an exponential increase in international
prices supported by increase in domestic demand. The Import of petroleum group products grew
by 43.5 percent during this fiscal year reflecting the adverse effect of rising petroleum prices.
There was an increase in the overall motor vehicle import bill due to the increased composition
of complete business units which generally cost more than spares import. Meanwhile textile
machinery import bill fell due to the fall in demand of textile products and declining economic
activity of textile industry due to major internal issues such as worsening energy crisis. Power
generating machinery imports increased due to energy crisis in the country. There was an
increase construction and mining machinery due to higher economic activities in these areas.
2013-14
Textile machinery growth of 59.7 percent can be seen as a reflection of the revival in textile
industry in the country. Government policies have provided marginal incentive to major investors
to revive their confidence in this sector.
2014-15
There was a fall in import bill due to the global fall in crude oil prices. As per economic survey,
even though there was major closure witnessed in CNG industry there was an absolute (in
quantity) fall in crude oil import. There was a continued fall in textile machinery imports in line
with the ever present decline in the textile sector of Pakistan. Iron and steel imports in general
saw a major rise due to increased construction activity throughout the country as telecom
operators got involved in a tactical race of providing the best data connection services with as
much coverage as possible.
2015-16
Petroleum products and petroleum crude has faced a fall due to the global fall in oil prices. Iron
and steel industry witnessed major hike which was again reflective of increased construction
activity.
Source: Economic Survey

Q3 FDI

Foreign Direct Investment in Pakistan increased by 2761.10 USD Million in 2016. Foreign Direct
Investment in Pakistan averaged 2651.26 USD Million from 2010 until 2016, reaching an all-time
high of 3184.30 USD Million in 2010 and a record low of 2099.10 USD Million in 2012. Individual
year by year analysis and explanation of major disparities in trend are as follows:
2000-06
Till 2006 there were no sharp dips or rises apart from in 2002, however there was an overall
upward trend that was observed
2006-07
During the first 10 months of 2006-07 fiscal year FDI stood at $5979.2 Million nearly twice that of
last year. USA and UK were the highest providers of FDI inflow (both above $1b). Apart from
these UAE, China and Netherlands all together 5 countries made up for 78% of total net FDI.
Public sector also contributed through Global depository receipts (GDR) of OGDCL. Top 4 sectors
in the first 10 months were Food, Beverages & Tobacco, communication, financial businesses and
Oil and gas. Communication contributed 34.2%. The major reason for the hike in FDI figures is
the overall macroeconomic stability which has spiked investors confidence.
2007-08
During the first 10 months of 2006-07 fiscal year FDI stood at $3481.6 Million which was about
32% lower as compared to the previous year. 57% of all Net FDI inflows were from UK, USA and
UAE combined. FDI in trade exceeded that of food and beverages in this fiscal year. The major
cause for such decline in overall net inflows is the negative trend of Public foreign investment but
as the reinvested earnings still rose it is clear that the existing investors remain confident in
Pakistans economy.
2008-09
FDI in 2008-09 fell to 3205.4. It is to note that the global financial crisis severely damaged FDI
figures of most developing countries but Pakistan also faces security issues which exacerbated
this trend. US maintained its top spot but Mauritius and Singapore also generated inflows in
Pakistans economy in the similar sectors as before.
2009-10
Global FDI figures continued to fall in the period. Pakistans FDI followed suite and was reported
to fall to approximately $1.8 Billion. Few lumpy transactions in communications and financial
sectors as stated in the respected economic survey was the major reason behind a sharp decline
in net FDI. Despite the negative trend some sectors such as transport construction etc. remained
unharmed. Large disinvestment in the IT services sector was also one of the major reasons
behind the FDI slump.
2010-2011
Following the negative trends in overall investments during the period FDI was recorded at
$1292.8 Million. This was in response to the evident fall in economic activity and the ever
worsening law and order situation, the rise in circular debt and energy crisis. Oil and gas
remained the highest recipient of FDI.
2011-12
Pakistans economy further regressed in this fiscal year as FDI reached the lowest figure in past
few years of $666.7 Million. Major global developments including the Euro Crisis only worsened
the foreign investment position in Pakistan. Once again oil and gas remained top recipient of FDI
making up about 69.8% of total FDI in first 10 months.
2012-13
A rather positive trend in FDI began after 2013 elections. In the first 10 months it peaked to
853.5 million with major net inflows received in oil and gas sector. Positive trend in capital
market resulted in revival of investors confidence for the most part. UK resulted in major inflows
surpassing USA. However non-government sources reported FDI to have further fell instead of
having a positive trend but we will consider the official statistics as the base for this analysis.
2013-14
FDI reached $750.9 Million this fiscal year with government claiming to have successfully
returned confidence of foreign investors. Major inflows were from US, Hong Kong, UK, Switzerland
and UAE. Apart from Oil and gas sector, financial businesses, communications and Chemicals
sector received FDI.
2014-15
This fiscal year witnessed a major hike in FDI figure even though the prior FDI values were
revised to be over $1b which mitigates the growth percentage. FDI was reported to be $ 1,666.2
million. The major cause behind the hike was the returning confidence of the investors
exemplified by the highest KSE 100 index to date. The major FDI inflows were from China, US,
UAE, UK & Italy. The major sectors involved includes: Communications, oil and gas, financial
businesses, power and chemicals. The potential increase in FDI overall could have been much
higher but was dampened by the one of the greatest political demonstrations in recent history.
2015-16
Net FDI inflows fell to $1,016.30 Million. The government did not disclose much details regarding
the reasons behind such fall in FDI as opposed to prior forward trend which shows recognition of
failure to capitalize fully on revived investors confidence. The major FDI inflows were from China,
US, UAE, Hong Kong, UK. China was the highest provider of inflows in response to the CPEC
agreement. Major sectors involved included Power, oil and gas, financial businesses, tobacco
cigarettes, etc.
Sources: http://www.tradingeconomics.com/pakistan/foreign-direct-investment
http://boi.gov.pk/foreigninvestmentinpakistan.aspx
Economic survey
Globalbusniess.com

Q4 KSE
The KSE100 index is defined as a benchmark by which the stock price performance can be
compared. In essence this index is designed to provide investors with a sense of how the
Pakistan equity market is doing. Thus, the KSE100 is similar to other indicators that track various
sectors of the Pakistan economic activity such as the gross national product, consumer price
index, etc. Pakistans stock exchange KSE100 index trend from 2000 to 2016 is as follows
(source: tradingeconomics.com)
We have picked weights of few large companies which are representative of their own sectors.
The data in tabular form is as follows:
Kse Code Company Name Weightage Beta

ANL Azgard Nine Limited 0.64 1.53

BYCO Byco Petroleum Pakistan Limited 3.68 1.13
DCL Dewan Cement Limited 2.02 1.29
DFML Dewan Farooque Motors Limited 0.50 1.08
DSFL Dewan Salman Fibre Limited 0.15 1.92
DSL Dost Steels Limited 0.14 1.22
EFERT Engro Fertilizers Limited 12.61 0.79
EPCL Engro Polymer & Chemicals Limited 0.42 0.98
FCCL Fauji Cement Company Limited 9.52 0.74
JSCL Jahangir Siddiqui & Co. Ltd. 3.29 1.23
JPGL Japan Power Generation Limited 0.16 1.63
KEL K-Electric Limited 35.81 1.08
LOTCHEM Lotte Chemical Pakistan Limited 2.27 1.10
MDTL Media Times Limited 0.12 1.49
PACE Pace (Pakistan) Limited 0.43 1.12
PAEL Pak Elektron Limited 5.41 0.98
PIAA Pakistan International Airlines Corporation Limited (A) 0.28 1.06
PIBTL Pakistan International Bulk Terminal Limited 4.37 0.89
PTC Pakistan Telecommunication Company Limited 1.81 0.90
PASL Pervez Ahmed Securities Limited 0.08 1.46
POWER Power Cement Limited 0.83 1.19
SILK Silkbank Limited 0.74 0.81
SNGP Sui Northern Gas Pipelines Limited 5.28 1.42
SSGC Sui Southern Gas Company Limited 1.91 1.22
SMBL Summit Bank Limited 0.74 0.53
TELE Telecard Limited 0.24 1.45
BOP The Bank of Punjab 1.81 0.83
TPL TPL Trakker Limited 0.46 1.06
TRG TRG Pakistan Limited 3.90 1.35
WTL Worldcall Telecom Limited 0.37 1.55

Market cap, also known as market capitalization is the total market value of all of a company's
outstanding shares (price/share x quantity of outstanding shares). The investment community
uses this figure to determine a company's size, as opposed to using sales or total asset figures.
Free float
Free Float is the proportion of total paid-up shares issued by a company that are readily available
for trading at a Stock market. It implies that locked-in shares which are not available for trading
in the normal course are excluded. So not all free float shares may necessarily be actively
circulating on the market at any given time as many traders purchase shares as part of their
long-term investment. Usually, a larger free float means that the volatility of a stock is lower.
Thus, a small amount of trading will probably not affect the price much. Companies with a
smaller free float are likely to see more share price volatility, as it takes fewer trades to move the
price significantly.
MSCI
The MSCI Pakistan Index is designed to measure the performance of the large and middle sized
segments of the Pakistani market. With 16 constituents, the index covers approximately 85% of
the Pakistans equity market. The index is based on the MSCI Global Investable Indexes (GIMI)
Methodologya comprehensive and consistent approach to index construction that allows for
meaningful global views and cross regional comparisons across all market capitalization size,
sector and style segments and combinations. This methodology aims to provide exhaustive
coverage of the relevant investment opportunity set with a strong emphasis on index liquidity,
investability and replicability. The index is reviewed quarterlyin February, May, August and
Novemberwith the objective of reflecting change in the underlying equity markets in a timely
manner, while limiting undue index turnover. During the May and November semi-annual index
reviews, the index is rebalanced and the large and mid-capitalization cutoff points are
recalculated.

Importance of PSX
The stock market plays an instrumental role in economic development as it is the major source
of injection of investments in the economy boosting economic progression both in short and
long-term. Investments raise capital for businesses, mobilizes savings for investment, creates
investment opportunities for small investors, government capital raising for development
projects by issuing bonds. It has the potential to be the barometer of the economy, the
movement if share prices and in general stock indexes can be an indicator of the general trend in
the economy.