EXPORT - IMPORT
WITHOUT INVESTMENT
There
is a technique that you can use to operate an Import-Export business without
making any direct investment in products. This technique is sometimes referred
to as "GHOSTING." You can
also refer to it as "Exporting or Importing
Without Investment." Here is how this type of import-export
business can be operated:
1.
Find a world importer who is interested in buying a product. This can be done
by using either by subscribing to the online "Trade Leads"
service Export Leads will supply you with up to 10,000 exclusive new
importer/buyer leads in a one year subscription. That's 10,000 buyer
- sales leads per year and now it is all Online which means you have 24 hour
access to a database from any Internet connection in the world!
2.
Identify a source of supply (exporter), either U.S. or foreign, for the product
the importer is seeking to buy. Most libraries have directories of U.S.
manufacturers listing the specific products. Using a service like the Import-Export
Buy/Sell Exchange can help you locate hundreds, if not thousands, of
worldwide manufacturers that are seeking buyers (or agents to help them find
new buyers).
3.
Contact the seller (exporter) of the product, request a firm price quotation
for the exact product that is being sought. Make sure the quote is in total
accordance with the quotation request from the foreign or domestic buyer.
4.
Prepare your price quotation on your printed letterhead to send to the
potential buyer. Add a commission of 5% to 15% to the prices that were
originally quoted to you. Inform the buyer to issue an irrevocable letter of
credit (LOC) if he accepts your price quotation. Special note: if you are
quoting from a foreign supplier to sell to a foreign buyer, request the buyer
issue a irrevocable (Transferable or assignable) LOC. This allows you to keep
your commission and assign or transfer the remainder to the supplier once the
specifications within the LOC have been met.
5.
It is best to arrange with a bank that works with international LOC's prior to
sending your quotation. Should you receive the LOC prior to making the
arrangements, take it to the bank and they will assist you. Ask them to issue a
back-to-back LOC to cover your purchase of the items you plan to buy on behalf
of your buyer. Here again you may use the assignable or transferable aspects of
these particular types of LOC's.
6.
You may also use a international freight forwarder in regards to the
international LOC in addition to having them handle all the details associated
with the shipping of the products to your buyer.
7.
Present your letter of credit to the seller, once they have met the
specifications of the LOC to the letter, they will be paid for the goods and
the international freight forwarder will ship the goods.
8.
Following these steps you have arranged an import-export business transaction
without any investment or taking possession of any products.
"Ghosting" is also referred to as "indirect exporting",
which is a perfectly ethical and legally acceptable way of doing business
internationally. By working within these guide lines you can profit as many
others are now doing.
National Savings of Pakistan
| Bond Draw Schedule for year 2015 | ||||
| Bond | Draw | Date | Day | City |
| Rs. 15,000 | 61 | January, 02 2015 | Friday | Lahore |
| Rs. 750 | 61 | January, 15 2015 | Thursday | Rawalpindi |
| Rs. 25,000 | 8 | February, 02 2015 | Monday | Karachi |
| Rs. 7,500 | 61 | February, 02 2015 | Monday | Multan |
| Rs. 1,500 | 61 | February, 16 2015 | Monday | Faisalabad |
| Rs.100 | 9 | February, 16 2015 | Monday | Muzafarabad |
| Rs. 40,000 | 61 | March, 02 2015 | Monday | Muzafarabad |
| Rs. 200 | 61 | March, 16 2015 | Monday | Hyderabad |
| Rs. 15,000 | 62 | April, 01 2015 | Wednesday | Quetta |
| Rs. 750 | 62 | April, 15 2015 | Wednesday | Lahore |
| Rs. 7,500 | 62 | May, 04 2015 | Monday | Karachi |
| Rs. 25,000 | 9 | May, 04 2015 | Monday | Rawalpindi |
| Rs. 1,500 | 62 | May, 15 2015 | Friday | Multan |
| Rs.100 | 10 | May, 15 2015 | Friday | Faisalabad |
| Rs. 40,000 | 62 | June, 01 2015 | Monday | Peshawar |
| Rs. 200 | 62 | June, 15 2015 | Monday | Muzaffarabad |
| Rs. 15,000 | 63 | July, 01 2015 | Wednesday | Hyderabad |
| Rs. 750 | 63 | July, 15 2015 | Wednesday | Quetta |
| Rs. 7,500 | 63 | August, 03 2015 | Monday | Rawalpindi |
| Rs. 25,000 | 10 | August, 03 2015 | Monday | lahore |
| Rs. 1,500 | 63 | August, 17 2015 | Monday | karachi |
| Rs.100 | 11 | August, 17 2015 | Monday | Karachi |
| Rs. 40,000 | 63 | September, 01 2015 | Tuesday | Faisalbad |
| Rs. 200 | 63 | September, 15 2015 | Tuesday | Peshawar |
| Rs. 15,000 | 64 | October, 01 2015 | Thursday | Muzafarabad |
| Rs. 750 | 64 | October, 15 2015 | Thursday | Hyderabad |
| Rs.25,000 | 11 | November, 02 2015 | Monday | Multan |
| Rs. 7,500 | 64 | November, 02 2015 | Monday | Lahore |
| Rs.100 | 12 | November, 16 2015 | Monday | Quetta |
| Rs. 1,500 | 64 | November, 16 2015 | Monday | Quetta |
| Rs. 40,000 | 64 | December, 01 2015 | Tuesday | Rawalpindi |
| Rs. 200 | 64 | December, 15 2015 | Tuesday | Faisalabad |
| Rate card for calculating gross income tax on the taxable income from salary, excluding flying and submarine allowance | ||
| Tax Year 2014 (FBR) Pakistan | ||
| Taxable income between | Rate of tax | |
| Rs. 0 and Rs. 400,000 | 0% | |
| Rs. 400,001 and Rs. 750,000 | 5% of the amount exceeding Rs. 400,000 | |
| Rs. 750,001 and Rs. 1,400,000 | Rs. 17,500 plus 10% of the amount exceeding Rs. 750,000 | |
| Rs. 1,400,001 and Rs. 1,500,000 | Rs. 82,500 plus 12.50% of the amount exceeding Rs. 1,400,000 | |
| Rs. 1,500,001 and Rs. 1,800,000 | Rs. 95,000 plus 15% of the amount exceeding Rs. 1,500,000 | |
| Rs. 1,800,001 and Rs. 2,500,000 | Rs. 140,000 plus 17.5% of the amount exceeding Rs. 1,800,000 | |
| Rs. 2,500,001 and Rs. 3,000,000 | Rs. 262,500 plus 20% of the amount exceeding Rs. 2,50,000 | |
| Rs. 3,000,001 and Rs. 3,500,000 | Rs. 362,500 plus 22.50% of the amount exceeding Rs.3,000,000 | |
| Rs. 3,500,001 and Rs. 4,000,000 | Rs. 475,000 plus 25% of the amount exceeding Rs.3,500,000 | |
| Rs. 4,000,001 and Rs. 7,000,000 | Rs. 600,000 plus 27.50% of the amount exceeding Rs.4,000,000 | |
| Exceeds Rs. 7,000,000 | Rs. 1,425,000 plus 30% of the amount exceeding Rs. 7,000,000 | |
Weekly review: KSE-100 jumps 982 points on blue-chip buying
Healthy buying was witnessed in the banking and energy sectors.
KARACHI:
The stock market bounced back and recouped its losses from
the previous week as heavy buying in blue-chip stocks resulted in the
benchmark KSE-100 index climbing 982 points (3.2%) during the week ended
December 26.
Despite a shortened week due to the December 25 holiday, the index
put in a strong performance and climbed as high as 32,141 before
receding slightly and closing right below the 32,000-point barrier at
31,993 at the end of trading on Friday.Investors flocked towards blue-chip stocks during the week and healthy activity was witnessed in the banking, energy and fertiliser sectors during the week. Five stocks alone, namely MCB, UBL, OGDC, HUBCO and Engro Corporation, cumulatively contributed 524 points to the index’s gains.
The high activity coincided with the return of foreign buying at the bourse after four weeks of continuous outflows. Foreigners were net buyers of $7.8 million worth of equity during the week, a massive improvement over the net outflow of $30 million in the previous week.
During the course of the week, the International Monetary Fund also released the fifth and sixth installments of the standby programme which pushed the country’s foreign exchange reserves up to $15 billion before the year end which was also an important target of the IMF programme.
The banking sector was the star performer of the week as investors flocked towards banking stocks in anticipation of higher dividends for the year ended 2014 after the sector posted record profits in the preceding quarters. Similarly, it was a good week for the energy sector as global oil prices stabilised around the $60 per barrel mark and resulted in heavy buying in the sector due to attractive valuations. The sector on the whole was up 4% during the week, with Pakistan Oilfields leading the way with a gain of 4.6%.
OGDC and PPL also saw gains with PPL announcing significant new discoveries in the Gambat South block. Yield plays in the energy sector like Hubco and Kapco were also in the spotlight due to anticipation of good payouts at year end.
Engro Corporation put in a strong performance and rose 5.2% during the week after the Economic Coordination Committee approved the continuation of 60 mmcfd supply to the company’s fertiliser plant for another 12 months.
Average trading volumes showed an improvement and were up by 10.7% at 224 million shares traded per day. However, average daily values fell 9.6% and stood at Rs10.8 billion daily. The Karachi Stock Exchange’s market capitalisation stood at Rs7.3 trillion ($ 72.3 billion) at the end of the week. It has been a stellar year for the Karachi Stock Exchange with the KSE-100 posting a gain of 20.8% in the last 12 months. The index currently stands near its all-time high but remains at an attractive multiple compared to its regional peers. That being said, foreign flows and global oil prices will determine the direction of the market as it enters 2015.
Winners of the week
Pakistan Tobacco Company Limited
Pakistan Tobacco Company Limited manufactures and sells cigarettes.
Arif Habib Corporation
Arif Habib Limited operates as a securities brokerage company. The company offers securities brokerage, investment research, and corporate finance services to customers throughout Pakistan.
NIB Bank
NIB Bank Limited is a commercial bank operating in Pakistan.
Losers of the week
Murree Brewery
Murree Brewery Company Limited specialises in the manufacture of beer and Pakistan made foreign liquor. The group also has juice extraction and food manufacturing divisions, located at Rawalpindi and Hattar respectively. Their glass division manufactures all the group’s bottles and jars.
Mari Gas
Mari Gas Company Limited specialises in the drilling, production and selling of natural gas.
Archroma Pakistan Ltd
Archroma Pakistan Limited supplies chemicals and dyes to enhance the properties of clothing and textiles in such diverse applications as high fashion apparels and articles for home textiles.
Published in The Express Tribune, December 28th, 2014.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
Natinal Savings of Pakistan
DEFENCE SAVINGS CERTIFICATE
[Profit Rates]
[Profit Rates]
The Government of Pakistan
introduced Defence Savings Certificate scheme in the year 1966. The
scheme has specifically been designed to meet the future requirements of
the depositors. This is 10 years' maturity scheme with
built in feature of automatic reinvestment after the maturity. These
certificates are available in the denominations of Rs.500,
Rs.1000, Rs.5,000, Rs.10,000, Rs.50,000, Rs.100,000, Rs.500,000 and
Rs.1,000,000/=.
Who Can Invest .
These certificates can be purchased by a single
adult, a minor, two adults in their joint names with the options of
payable to the holders jointly (Joint-A ) or payable to either
(Joint-B). An adult can also purchase these certificates on behalf of a
single minor, two minors jointly or himself/herself and a minor
jointly.Institutions may also invest individual funds such as pension,
gratuity, superannuation, contributory provident funds and trusts etc.
How To Purchase.
These certificates can be purchased from any
National Savings Centre (NSC), Pakistan Post Offices (PPO), Authorized
branches of Scheduled
Banks and State Bank of Pakistan (SBP) by filling in a
prescribed form called
SC-1, which is available at
all the above offices of issue free of cost. A copy of
the Computerized National Identity Card (CNIC) or in case of a foreign national, a copy of
the Passport is required to be attached with the application form.
To download application form in
editable Adobe Acrobat format, please click here.
Mode of Deposit.
These certificates can be purchased by depositing
cash at the issuing office or by presenting a cheque. The certificates
shall immediately be issued on receipt of cash. However, in case of
deposit through cheque the certificates shall be issued from the date of
realization of the cheque after receipt of the clearance advice.
What Is The Investment Limit.
The minimum investment limit is Rs.500/-, however, there is no maximum investment limit in this scheme.
What About Redemption.
What Is The Investment Limit.
The minimum investment limit is Rs.500/-, however, there is no maximum investment limit in this scheme.
What About Redemption.
These certificates are encashable at par any time
after the date of purchase. However, no profit is payable
if encashment is made before completion of one year.
Further, certificates purchased on or after 15-11-2010 can not be automatically reinvested.
However, other better options are available for investment in National Savings Schemes.
NOTE:
The
encashment of certificate(s) may be allowed through a person duly
authorized (in writing) by the investor on an authority letter under his
/ her signature provided that:--
(a). the signatures of the authorized person are attested by the investor on the letter of authority;
(b).
the Officer Incharge of the NSC is personally satisfied that the
authorized person is genuine and the certificate(s) is / are properly
discharged under genuine signatures and both the signatures i.e. on the
back of the certificate(s) and the letter of authority tally 100% with
the specimen on the investor available on the record.
(C).
The receipt of the amount is got acknowledged from the authorized
person on the reverse of certificate(s) personally by the Centre
Incharge.
What is the return.
In this scheme the profit is paid on maturity or
encashment for completed years. Every Rs.100,000/- will become
Rs.106,000/-, Rs.113,000/-, Rs.121,000/-, Rs.131,000/-, Rs.144,000/-,
Rs.161,000/-, Rs.182,000/-, Rs.208,000/-, Rs.242,000/- and Rs.286,000/-
on completion of 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10 years, respectively.
These rates are effective from 1st December, 2014. The average compound
rate of return on maturity presently works to 11.08% p.a. For any other
time period rates table is also available on website.
Tax & Zakat Status.
Exemption of deduction of Withholding tax has been
withdrawn w.e.f 01-07-2013 on profit of investment upto Rs.150,000 .
W.e.f. 1st July,2014 the rate of tax to be deducted under Section 151 of
Income Tax Ordinance 2001 shall be 10% of the yield or profit for
Filers and 15% of the yield or profit paid for Non-Filers. Provided that
for a non-filer, if the yield or profit paid is rupees five hundred
thousand or less, the rate shall be 10%. The Zakat is collected at
source as per rules.
National Savings of Pakistan issued Bonds
Investor's Guide
GENERAL INFORMATION
The KSE website http://www.kse.com.pk
includes a wide range of information about investing, including
information on various market data and Rules & Regulations of the
Exchange.
WHY SHOULD I INVEST IN SHARES?
Almost everyone worldwide has an interest in shares, whether they realize it or not. Millions of people around the world own shares directly. However, many millions more have an indirect stake in the stock market through pension schemes, life insurance policies, NIT units, and other mutual funds. All of these, invest in shares traded on the stock market.
Today, increasing number of people own shares around the world, while many more invest in pension schemes, have an insurance policy, National Saving Schemes (NSS) or another form of collective savings invested in shares traded in stock markets.
However, investing in shares is different from saving in a bank or National Saving Scheme. There is more risk - but there is the opportunity for better reward over the longer term. With deposit accounts, you earn interest on your capital. When you take your cash back, you get back exactly the same amount that you first deposited (plus the interest it has earned). With shares, you may receive dividends but when you sell those shares, you might get back more than you bought them for, which is your reward for taking a risk.
Nevertheless, because shares can go up as well as down in value, it is important to understand that taking a risk means you might get back lesser than you had invested initially. You can minimize your risk by investing in different shares or a collective fund. There is, however, the possibility of greater rewards. Funds invested in equities in the long term (five or more years) have outperformed regular saving accounts.
You should remember that saving through the stock market should be seen as a long-term investment. Historically, money invested in shares over the long term (ten or more years) has almost always outperformed regular saving accounts.
Before investing in stocks and shares, you should understand your own financial position and what you hope to achieve with your investments. Your regular financial obligations should be protected and preparation should be made for unexpected expenses.
Having done this, you are ready to consider investing the surplus in stocks and shares. The three main rationales for owning shares are summarized below:
a. Ownership in a Company - when an individual invests in the stock market, he automatically becomes a shareholder of that company. As a stockholder, he is entitled to the following benefits: 1) voting rights; 2) dividends to be declared by the corporation and 3) share of the remaining assets of the company if it is to be liquidated.
b. Liquidity of Funds - a stock market investor has easier access to funds. Compared to banks, which have a high minimum balance requirement for deposits and credit, as an individual, you can start an investment with very low capital, and can expect high yields for your initial investment. You can always cash in or out your funds anytime, during trading hours, through your broker.
c. Make Money - investors in the stock market make money through dividends and capital appreciation. When a listed company declares dividends, it increases the shareholders' investing power. An investor who buys into the company at a low market price and sells it at a higher price will gain capital appreciation.
WHAT ARE THE RISKS OF INVESTING IN STOCKS?
While it is true, that stock investment is the most volatile of all securities, investors might well recall the fact that uncertainty, is a permanent feature of any investing perspective. This means that risk is always a part of any investment. A better attitude would be to limit and manage your risk. A maximum level of gain or loss should be set, and calculated decisions should be made when this level is reached.
WHAT IS THE MINIMUM AMOUNT OF INITIAL INVESTMENT?
Some brokers may require a minimum initial investment to open an account depending on their requirement or may charge or waive other fees depending on the amount you initially invest.
If you are just getting started with a small investment, look for an investment firm that would not penalize you based on the size of your investment.
The minimum amount of money needed to invest in the stock market depends on the minimum number of shares to be traded for the stock. The minimum shares will be determined by the prevailing market price of a particular stock, as each stock, the minimum number of shares to be traded is fixed, called the market-lot, which depends on the price range of the stock.
The market lot is calculated biannually by NCCPL, keeping the lot size to 500-shares for scrip which are priced less than Rs. 50 and lot size of 100-shares for scrip priced above Rs. 50
HOW CAN I BUY AND SELL SHARES?
You can buy shares when a company first comes to market - that is at flotation or privatization; or you can buy them through the stock market once they are in circulation and being traded.
Companies which are about to issue shares often advertise in a daily newspaper. If you decide to buy these shares, you can seek more information from the company's website or you can fill up the application form at the affiliated bank or ask the company for a prospectus. Fill out the application form and submit it with your pay order, at the bank. There is nothing more to pay. Alternatively, you can go to a stockbroker who will buy them for you.
Most share dealings take place in what is called the secondary market. This is where existing shareholders sell and new investors buy.
Today, buying shares is easy. You can buy and sell shares by making contact with a stockbroker, bank or investment adviser, either in person or over the internet or telephone.
HOW CAN I DECIDE WHICH SHARES TO BUY?
1) A stockbroker carries out buying and selling on his propriety accounts and on behalf of his clients as individuals cannot deal for themselves in the market. A list of stockbrokers is available from the Stock
Exchange on KSE website www.kse.com.pk. Stockbrokers offer a variety of services but if you know exactly what you want, simply call the broker for an 'execution only' service and ask them to buy the shares of your choice. KSE offers three market segments
a) Cash market based on two day clearing and settlement
b) Continuous Funding system (CFS) MKII where cash market's net purchases can be carried over for another 22 working days
c) Deliverable Future Contracts allow investors to purchase or sale on a forward contract basis clearing and settlement of these contract takes place on last Friday of the months and new contract starts on the following Monday Cash settled Future Contract where contract is for 90 days, but investor has a choice to enter into any of the three contracts that are always open for end of the month expiry based of cash settlement with under line cash market price of the scrip.
2) After having instructed your broker to buy shares, the broker will draw up contract notes, which typically are sent to your address or mobile phone number within next 24 hours. This will show details of the transaction carried out on your behalf.
3) You must send payment for your shares immediately upon receiving your contract note. In June 2007 the Stock Exchange adopted a two-day settlement system called T+2 system, under which transactions are due for settlement 2 working days after dealing.
4) Upon receipt of payment, the purchased shares are transferred in your name in your Central Depository Company (CDC) account electronically. You are now the proud owner of a portfolio.
5) At this stage you can sell your shares if you wish. You are now entitled to attend the company's Annual
WHY SHOULD I INVEST IN SHARES?
Almost everyone worldwide has an interest in shares, whether they realize it or not. Millions of people around the world own shares directly. However, many millions more have an indirect stake in the stock market through pension schemes, life insurance policies, NIT units, and other mutual funds. All of these, invest in shares traded on the stock market.
Today, increasing number of people own shares around the world, while many more invest in pension schemes, have an insurance policy, National Saving Schemes (NSS) or another form of collective savings invested in shares traded in stock markets.
However, investing in shares is different from saving in a bank or National Saving Scheme. There is more risk - but there is the opportunity for better reward over the longer term. With deposit accounts, you earn interest on your capital. When you take your cash back, you get back exactly the same amount that you first deposited (plus the interest it has earned). With shares, you may receive dividends but when you sell those shares, you might get back more than you bought them for, which is your reward for taking a risk.
Nevertheless, because shares can go up as well as down in value, it is important to understand that taking a risk means you might get back lesser than you had invested initially. You can minimize your risk by investing in different shares or a collective fund. There is, however, the possibility of greater rewards. Funds invested in equities in the long term (five or more years) have outperformed regular saving accounts.
You should remember that saving through the stock market should be seen as a long-term investment. Historically, money invested in shares over the long term (ten or more years) has almost always outperformed regular saving accounts.
Before investing in stocks and shares, you should understand your own financial position and what you hope to achieve with your investments. Your regular financial obligations should be protected and preparation should be made for unexpected expenses.
Having done this, you are ready to consider investing the surplus in stocks and shares. The three main rationales for owning shares are summarized below:
a. Ownership in a Company - when an individual invests in the stock market, he automatically becomes a shareholder of that company. As a stockholder, he is entitled to the following benefits: 1) voting rights; 2) dividends to be declared by the corporation and 3) share of the remaining assets of the company if it is to be liquidated.
b. Liquidity of Funds - a stock market investor has easier access to funds. Compared to banks, which have a high minimum balance requirement for deposits and credit, as an individual, you can start an investment with very low capital, and can expect high yields for your initial investment. You can always cash in or out your funds anytime, during trading hours, through your broker.
c. Make Money - investors in the stock market make money through dividends and capital appreciation. When a listed company declares dividends, it increases the shareholders' investing power. An investor who buys into the company at a low market price and sells it at a higher price will gain capital appreciation.
WHAT ARE THE RISKS OF INVESTING IN STOCKS?
While it is true, that stock investment is the most volatile of all securities, investors might well recall the fact that uncertainty, is a permanent feature of any investing perspective. This means that risk is always a part of any investment. A better attitude would be to limit and manage your risk. A maximum level of gain or loss should be set, and calculated decisions should be made when this level is reached.
WHAT IS THE MINIMUM AMOUNT OF INITIAL INVESTMENT?
Some brokers may require a minimum initial investment to open an account depending on their requirement or may charge or waive other fees depending on the amount you initially invest.
If you are just getting started with a small investment, look for an investment firm that would not penalize you based on the size of your investment.
The minimum amount of money needed to invest in the stock market depends on the minimum number of shares to be traded for the stock. The minimum shares will be determined by the prevailing market price of a particular stock, as each stock, the minimum number of shares to be traded is fixed, called the market-lot, which depends on the price range of the stock.
The market lot is calculated biannually by NCCPL, keeping the lot size to 500-shares for scrip which are priced less than Rs. 50 and lot size of 100-shares for scrip priced above Rs. 50
HOW CAN I BUY AND SELL SHARES?
You can buy shares when a company first comes to market - that is at flotation or privatization; or you can buy them through the stock market once they are in circulation and being traded.
Companies which are about to issue shares often advertise in a daily newspaper. If you decide to buy these shares, you can seek more information from the company's website or you can fill up the application form at the affiliated bank or ask the company for a prospectus. Fill out the application form and submit it with your pay order, at the bank. There is nothing more to pay. Alternatively, you can go to a stockbroker who will buy them for you.
Most share dealings take place in what is called the secondary market. This is where existing shareholders sell and new investors buy.
Today, buying shares is easy. You can buy and sell shares by making contact with a stockbroker, bank or investment adviser, either in person or over the internet or telephone.
HOW CAN I DECIDE WHICH SHARES TO BUY?
1) A stockbroker carries out buying and selling on his propriety accounts and on behalf of his clients as individuals cannot deal for themselves in the market. A list of stockbrokers is available from the Stock
Exchange on KSE website www.kse.com.pk. Stockbrokers offer a variety of services but if you know exactly what you want, simply call the broker for an 'execution only' service and ask them to buy the shares of your choice. KSE offers three market segments
a) Cash market based on two day clearing and settlement
b) Continuous Funding system (CFS) MKII where cash market's net purchases can be carried over for another 22 working days
c) Deliverable Future Contracts allow investors to purchase or sale on a forward contract basis clearing and settlement of these contract takes place on last Friday of the months and new contract starts on the following Monday Cash settled Future Contract where contract is for 90 days, but investor has a choice to enter into any of the three contracts that are always open for end of the month expiry based of cash settlement with under line cash market price of the scrip.
2) After having instructed your broker to buy shares, the broker will draw up contract notes, which typically are sent to your address or mobile phone number within next 24 hours. This will show details of the transaction carried out on your behalf.
3) You must send payment for your shares immediately upon receiving your contract note. In June 2007 the Stock Exchange adopted a two-day settlement system called T+2 system, under which transactions are due for settlement 2 working days after dealing.
4) Upon receipt of payment, the purchased shares are transferred in your name in your Central Depository Company (CDC) account electronically. You are now the proud owner of a portfolio.
5) At this stage you can sell your shares if you wish. You are now entitled to attend the company's Annual
General Meeting (AGM). Talk to the other
shareholders, especially representatives from the institutional
investors. Just one sizeable disinvestment could make all the difference
to the outcome of your overall operation.
A stockbroker or financial adviser can help you choose which shares to buy, and advice on the best time to sell.
You will need to decide:
Stockbrokers today have a range of services tailored for the needs of the growing numbers of small shareholders. Some operate from the Stock Exchange Building, some from Queens Road and other similar locations around the city, and some only by telephone. Most large banks offer share-dealing services as well.
Before choosing a stockbroker, contact several of them and ask how much they will charge. They expect you to compare their fees with those of other brokers.
An individual investor should choose a retail broker, preferably one that meets his requirements in terms of services needed. When he lacks the time to analyze individual companies and stocks, then a full service broker is recommended. In choosing a broker, the investor should see to it that the broker is a member of good standing at the Karachi Stock Exchange. It is important that the investor should trust his broker and that he is satisfied by the services it is giving him, such as market reports, quality of advice regarding stock selection and timing of purchases and sales, quality of trade executions, on-time delivery of important documents and other services.
There are three levels of service you can take:
DEALING OR EXECUTION ONLY:
You simply call the broker and instruct them to buy or sell the shares you want. They carry out your instructions, but will not give you any advice on your decision. You can always take advice from any other properly qualified financial adviser.
ADVISORY:
With this service you will get the benefit of the broker's expert advice. They will discuss with you their views on various companies and recommend whether you should buy, sell or keep hold of your shares. Make sure you feel comfortable with and understand what your broker is saying to you.
DISCRETIONARY:
The broker will take all the buying and selling decisions, contact you regularly to keep you informed, and tell you how much your portfolio is worth.
You can get a list of stockbrokers from:
1. The Member's Info section of the Karachi Stock Exchange (www.kse.com.pk)
2. By telephoning the Karachi Stock Exchange on (+21) 111-00-11-22
3. By checking with the local branch of your bank or Investment Company.
A. WHEN YOU BUY
Once you instruct your broker to buy shares, he/she buys the shares for you at the best price available at the time. By the end of day's trading, you will receive a confirmation-note. This shows the details of the transaction. Your broker will indicate when he/she needs to have your money to pay for the shares.
B. WHEN YOU SELL
Immediately you give your broker an order to sell, he/she again negotiates the best possible price. By the end of day's trading, you receive a contract note confirming the deal. If you hold the share certificate, you must send this to your broker in accordance with his/her instructions. If your shares are held in Central Depository Company (CDC), you will not have a share certificate to worry about.
HOW DO I SAFE KEEP THE ACQUIRED SHARES?
Once you have bought your shares, there are two ways to hold them: as a certificate or electronically (via CDC account). Your stockbroker can advise which option depending on individual company's shares.
Traditionally shares have been held in paper form, known as certificates. A share certificate is a piece of paper that is evidence that you are the owner of the shares. Your name will appear on the company's share register and this entitles you to receive directly all the benefit of share ownership including dividends, the right to vote at a company's annual meeting and to receive company reports twice a year.
If you decide to sell your shares you will normally need to deliver the certificate to the broker in time for the transaction to be completed.
Today you can choose to hold your shares as an electronic record, receiving a statement from time to time. This is similar to your bank statement, which shows your cash balance as held by the bank.
If you choose to hold your shares electronically they are placed in a nominee account with the Central Depository Company (CDC). These accounts are often run by stockbrokers who administer the shareholding on your behalf. You do not have a certificate to keep safe or deliver to your broker in time for the transaction to be completed. You remain the real owner of the shares and you shall receive the dividends, even though the shares are registered in the name of the nominee.
Your company also provides you with copies of the company reports and with the right to vote at general meetings.
When you have bought or sold the shares, your transaction is completed (or settled) electronically through a service known as National Clearing & Settlement System (NCSS). This system links banks, stockbrokers and Central Depository Company (CDC).
HOW MUCH DOES IT COST TO BUY SHARES?
Costs of trading in stocks vary according to the level of service you get from your broker. You should select the service that meets your needs. Execution-only will generally be the cheapest service. You will pay more for research base advice. The most important figure to ask your broker is about the minimum commission you will be charged. You should also ask whether there are any other charges for their services. Ask if there are any ongoing costs, other than dealing commission, each time you buy or sell.
You should note that you will pay a tax, known as CVT, when you buy shares but not when you sell. This is currently 0.002% percent of the price of the shares.
The way you choose to hold your shares will also vary in cost. If you decide to hold a certificate, there may be an additional charge as it will be necessary to transfer it to you or the new owner.
HOW CAN I KEEP TRACK OF MY SHARES?
Once you have bought shares, you can put them away for a long term or short term, you can keep an eye on how the price is moving. Details of share prices are published in most national newspapers every day. The daily price is also available on our website www.kse.com.pk.
The newspapers' financial pages will comment on companies that are in the news - perhaps because they have published their profit figures, or they are subject to a takeover bid, or they have opened a new factory.
Every piece of information about your company helps you build a clear picture of how it is doing and is expected to do. In addition, there are several specialist magazines to assist private investors. As a shareholder, and therefore part owner, of a business, you can contact the company if you want further information. Alternatively, your stockbroker might keep you informed through a regular newsletter.
HOW ARE SETTLEMENT AND CLEARING DONE?
Clearing and settlement of all stock exchange transactions are provided by National Clearing Company (NCCPL), which acts as go between for KSE and Central Depository Company (CDC) which is the share depository company. Shares move between share-accounts held by the different participant-brokers of the Central Depository Company (CDC).
Stock market transactions are settled on the second day after the trade. Transfers are based on trades done at KSE. Shares are transferred on settlement date (T+2) to the buyer, and the buyer pays the seller through the clearing banks within the same settlement period. This means that transactions done on Monday must be settled by Wednesday. Settlements of accounts are done in the clearing house through National Clearing & Settlement System (NCSS), which is a fully automated electronic settlement system. Visit NCCPL website for further details regarding clearing and settlement, www.nccpl.com.pk.
WHAT IS THE CENTRAL DEPOSITORY COMPANY (CDC)/CENTRAL DEPOSITORY SYSTEM (CDS)?
The CDC is a company that operates an electronic share register called the Central Depositary System (CDS). The CDS eliminates the need for physical movement of share certificates. CDC electronically manages book entry system for custody and transfer of securities. CDS was introduced to replace the manual system of physical handling and settlement of shares at the stock exchange and is managed by the Central Depository Company (CDC), which is incorporated under the Central Depositories Act 1997. Investors can open their accounts directly with CDC called Investor Accounts or open sub accounts with a brokerage firm. It has also solved investor problems related to stock handling on the settlement date, registration of shares, and exercise of corporate action benefits. Visit CDC website for further details regarding shares safe keeping. (www.cdcpakistan.com).
A stockbroker or financial adviser can help you choose which shares to buy, and advice on the best time to sell.
You will need to decide:
- Will I need the money soon?
- On the other hand, can I leave my money to grow over a number of years?
- Alternatively, Do I want a combination of both?
- How much money can I afford to invest?
- Will I spread this over a small number of shares, or a larger number?
- Do I want to invest directly in shares?
- Do I want shares in blue chip companies, medium-sized companies or new, small companies (which can be less secure)?
- On the other hand, do I want the relatively safe government backed investment schemes available through National Saving System (NSS), or Pakistan Investment Bonds (PIBs)?
- Am I interested in indirect ways of investing, through closed end Mutual Funds or through Term Finance Certificates available at the Stock Exchange?
Stockbrokers today have a range of services tailored for the needs of the growing numbers of small shareholders. Some operate from the Stock Exchange Building, some from Queens Road and other similar locations around the city, and some only by telephone. Most large banks offer share-dealing services as well.
Before choosing a stockbroker, contact several of them and ask how much they will charge. They expect you to compare their fees with those of other brokers.
An individual investor should choose a retail broker, preferably one that meets his requirements in terms of services needed. When he lacks the time to analyze individual companies and stocks, then a full service broker is recommended. In choosing a broker, the investor should see to it that the broker is a member of good standing at the Karachi Stock Exchange. It is important that the investor should trust his broker and that he is satisfied by the services it is giving him, such as market reports, quality of advice regarding stock selection and timing of purchases and sales, quality of trade executions, on-time delivery of important documents and other services.
There are three levels of service you can take:
DEALING OR EXECUTION ONLY:
You simply call the broker and instruct them to buy or sell the shares you want. They carry out your instructions, but will not give you any advice on your decision. You can always take advice from any other properly qualified financial adviser.
ADVISORY:
With this service you will get the benefit of the broker's expert advice. They will discuss with you their views on various companies and recommend whether you should buy, sell or keep hold of your shares. Make sure you feel comfortable with and understand what your broker is saying to you.
DISCRETIONARY:
The broker will take all the buying and selling decisions, contact you regularly to keep you informed, and tell you how much your portfolio is worth.
You can get a list of stockbrokers from:
1. The Member's Info section of the Karachi Stock Exchange (www.kse.com.pk)
2. By telephoning the Karachi Stock Exchange on (+21) 111-00-11-22
3. By checking with the local branch of your bank or Investment Company.
A. WHEN YOU BUY
Once you instruct your broker to buy shares, he/she buys the shares for you at the best price available at the time. By the end of day's trading, you will receive a confirmation-note. This shows the details of the transaction. Your broker will indicate when he/she needs to have your money to pay for the shares.
B. WHEN YOU SELL
Immediately you give your broker an order to sell, he/she again negotiates the best possible price. By the end of day's trading, you receive a contract note confirming the deal. If you hold the share certificate, you must send this to your broker in accordance with his/her instructions. If your shares are held in Central Depository Company (CDC), you will not have a share certificate to worry about.
HOW DO I SAFE KEEP THE ACQUIRED SHARES?
Once you have bought your shares, there are two ways to hold them: as a certificate or electronically (via CDC account). Your stockbroker can advise which option depending on individual company's shares.
Traditionally shares have been held in paper form, known as certificates. A share certificate is a piece of paper that is evidence that you are the owner of the shares. Your name will appear on the company's share register and this entitles you to receive directly all the benefit of share ownership including dividends, the right to vote at a company's annual meeting and to receive company reports twice a year.
If you decide to sell your shares you will normally need to deliver the certificate to the broker in time for the transaction to be completed.
Today you can choose to hold your shares as an electronic record, receiving a statement from time to time. This is similar to your bank statement, which shows your cash balance as held by the bank.
If you choose to hold your shares electronically they are placed in a nominee account with the Central Depository Company (CDC). These accounts are often run by stockbrokers who administer the shareholding on your behalf. You do not have a certificate to keep safe or deliver to your broker in time for the transaction to be completed. You remain the real owner of the shares and you shall receive the dividends, even though the shares are registered in the name of the nominee.
Your company also provides you with copies of the company reports and with the right to vote at general meetings.
When you have bought or sold the shares, your transaction is completed (or settled) electronically through a service known as National Clearing & Settlement System (NCSS). This system links banks, stockbrokers and Central Depository Company (CDC).
HOW MUCH DOES IT COST TO BUY SHARES?
Costs of trading in stocks vary according to the level of service you get from your broker. You should select the service that meets your needs. Execution-only will generally be the cheapest service. You will pay more for research base advice. The most important figure to ask your broker is about the minimum commission you will be charged. You should also ask whether there are any other charges for their services. Ask if there are any ongoing costs, other than dealing commission, each time you buy or sell.
You should note that you will pay a tax, known as CVT, when you buy shares but not when you sell. This is currently 0.002% percent of the price of the shares.
The way you choose to hold your shares will also vary in cost. If you decide to hold a certificate, there may be an additional charge as it will be necessary to transfer it to you or the new owner.
HOW CAN I KEEP TRACK OF MY SHARES?
Once you have bought shares, you can put them away for a long term or short term, you can keep an eye on how the price is moving. Details of share prices are published in most national newspapers every day. The daily price is also available on our website www.kse.com.pk.
The newspapers' financial pages will comment on companies that are in the news - perhaps because they have published their profit figures, or they are subject to a takeover bid, or they have opened a new factory.
Every piece of information about your company helps you build a clear picture of how it is doing and is expected to do. In addition, there are several specialist magazines to assist private investors. As a shareholder, and therefore part owner, of a business, you can contact the company if you want further information. Alternatively, your stockbroker might keep you informed through a regular newsletter.
HOW ARE SETTLEMENT AND CLEARING DONE?
Clearing and settlement of all stock exchange transactions are provided by National Clearing Company (NCCPL), which acts as go between for KSE and Central Depository Company (CDC) which is the share depository company. Shares move between share-accounts held by the different participant-brokers of the Central Depository Company (CDC).
Stock market transactions are settled on the second day after the trade. Transfers are based on trades done at KSE. Shares are transferred on settlement date (T+2) to the buyer, and the buyer pays the seller through the clearing banks within the same settlement period. This means that transactions done on Monday must be settled by Wednesday. Settlements of accounts are done in the clearing house through National Clearing & Settlement System (NCSS), which is a fully automated electronic settlement system. Visit NCCPL website for further details regarding clearing and settlement, www.nccpl.com.pk.
WHAT IS THE CENTRAL DEPOSITORY COMPANY (CDC)/CENTRAL DEPOSITORY SYSTEM (CDS)?
The CDC is a company that operates an electronic share register called the Central Depositary System (CDS). The CDS eliminates the need for physical movement of share certificates. CDC electronically manages book entry system for custody and transfer of securities. CDS was introduced to replace the manual system of physical handling and settlement of shares at the stock exchange and is managed by the Central Depository Company (CDC), which is incorporated under the Central Depositories Act 1997. Investors can open their accounts directly with CDC called Investor Accounts or open sub accounts with a brokerage firm. It has also solved investor problems related to stock handling on the settlement date, registration of shares, and exercise of corporate action benefits. Visit CDC website for further details regarding shares safe keeping. (www.cdcpakistan.com).
Foreign Investment in Pakistan
Foreign
direct investment (FDI) refers to long term participation by a country A
into country B (in this case Pakistan) . It usually involves
participation in management, joint-venture, transfer of technology and
expertise. There are two types of FDI: inward foreign direct investment
and outward foreign direct investment, resulting in a net FDI inflow
(positive or negative).
Foreign
direct investment (FDI) is a measure of foreign ownership of productive
assets, such as factories, mines and land. Increasing foreign investment
can be used as one measure of growing economic globalization.
WHO CAN BE A FOREIGN INVESTOR?
A foreign direct investor may be classified in any sector of the economy and could be any one of the following:
- An individual;
- A group of related individuals;
- An incorporated or unincorporated entity;
- A public company or private company;
- A group of related enterprises;
- A government body;
- An estate (law), trust or other societal organisation; or
- Any combination of the above.
HOW CAN A FOREIGN INVESTOR INVEST HIS FUNDS?
The foreign direct investor may invest in by any of the following methods in Pakistan:
- by incorporating a wholly owned subsidiary or company, by acquiring shares in an associated enterprise
- through a merger or an acquisition of an unrelated enterprise
- participating in an equity joint venture with another investor or enterprise
WHAT ARE THE FOREIGN DIRECT INVESTMENT INCENTIVES IN PAKISTAN?
The simple answer is that making a direct foreign investment allows companies to accomplish several tasks:
- Avoiding foreign government pressure for local production.
- Circumventing trade barriers, hidden and otherwise.
- Making the move from domestic export sales to a locally-based national sales office.
- Capability to increase total production capacity.
- Opportunities for co-production, joint ventures with local partners, joint marketing arrangements, licensing, etc;
- low corporate tax and income tax rates in Pakistan
- tax concessions/exemptions to particular businesses
- special economic zones developed by the government of pakistan
- cheap labour in Pakistan
- Job training & employment subsidies
- Infrastructure subsidies
- Research and Development support
- Early Entry Advantage.
Pakistan
has a very liberal policy on repatriation for foreign direct investors,
therefore, investing in Pakistan may give a foreign direct investors the
following added advantages.
- Remittance of royalty, technology and franchise fee is allowed to projects in social, service, infrastructure, agriculture and international chains food franchise.
- Minimum share of the local (Pakistani) partner in a joint venture will be 60:40 for the service sector. However, 100% foreign equity can be owned for first 5 years.
- The FBR (Federal Board of Revenue) will not question as to the source of investment; however, the FBR will only want to know whether the investor has paid requisite Income Tax on that specific investment. The FBR will not inquire into the source of the funds.
- Foreign investors are allowed to invest in industrial project on 100% equity basis without any permission from the government.
- There is no requirement for a No Objection Certificate from the Provincial Government.
- In addition to manufacturing sector foreign investment on a repatriate-able basis is allowed in services, infrastructure and social sectors.
- Full repatriation of capital gains, dividends and profits.
- The facility for contracting foreign private loans is available to all those foreign investors who make investment in the approved sectors.
- Foreign controlled manufacturing concerns are allowed to borrow on the domestic market according to their requirements.
- Foreign controlled semi-manufacturing and non-manufacturing concerns can access loans equal to @ 75% & 50%, respectively, of their paid up capital including reserves.
- BOI’s (Board of Investment) approval is not required for foreign companies to open a bank account.
CORPORATE STRUCTURES
Various
Corporate structures are available for setting up a place of business in
Pakistan for which Masood and Masood, Corporate and Legal Consultants
can give you the optimum advice putting into prospective the current
Pakistan Legislation and the individual person/companies position.
In terms
of the Investment Policy of the Government of Pakistan, there are three
(03) ways, whereby, a foreign company may have its presence in Pakistan.
- Liaison Office;
- Branch Office; and
- Locally incorporated subsidiary
HOW WILL MY FUNDS GET INTO PAKISTAN AND WHAT WILL BE THE EXIT STRATEGY.
State Bank
of Pakistan (SBP) regulates remittances in and out of Pakistan under
legislature. There is no restriction on inward remittances by State Bank
of Pakistan (SBP) but any outward remittances whether be royalty,
technical fee and dividend have to have a prior approval from SBP, which
the authorising bank/agent would do on the company’s behalf. Similarly
any contract for any such remittance needs prior approval of SBP. In
case you require any assistance with the approval from State Bank of
Pakistan do let Masood and Masood know and we will happily complete all
the legal paper work and technical formalities.
WILL A FOREIGN INVESTOR BE TREATED LESS FAVOURABLY ON INVESTMENT IN PAKISTAN?
Foreign
Private Investment (Promotion and Protection) Act, 1976 and the
Furtherance and Protection of Economic Reforms Act, 1992 provide legal
cover for protection of foreign investors/investment in Pakistan.
Furthermore,
since Pakistan has entered into Bilateral Agreements on Promotion and
Protection of Investment with more than 46 countries. These Agreements
provide the following:
- The Contracting Parties shall encourage investments in their respective territories by investors of the other Contracting Parties
- Non-discrimination between local investors and foreign investors
- Equal/non-discriminatory treatment in case of compensation for losses owing to war, other armed conflicts or a state of national emergency
- Free transfer of investments, and income deriving therefrom including profits, dividends, interest income, proceeds of sales or liquidation, repayments of loans, salaries, wages and other compensation, etc.
- A dispute settlement mechanism to settle any dispute between the countries with respect to the interpretation of the respective agreement and a dispute settlement procedure to settle any dispute between a host country and an investor of the other country
No comments:
Post a Comment