This document provides information on developments in capital markets in South Asia from June 2013. It discusses SAFE's (South Asian Federation of Exchanges) ongoing project to develop a harmonized regulatory framework for capital markets in Pakistan and South Asia. SAFE consultants have held meetings with asset management companies, investment banks, and brokerage firms for feedback. SAFE has also drafted a rule book detailing uniform standards for SAARC countries. Separately, it discusses the Abu Dhabi Securities Exchange implementing enhancements to its delivery versus payment model, including a buyer cash compensation component. It also mentions the Lahore Stock Exchange launching a corporate briefing program for listed companies to share financial and project details with market participants.

1. CAPITAL
MARKETS
June | 2013
Members’
Contributions
p1
SOUTH ASIAN
FEDERATION OF EXCHANGES
p2
DevelopingCapitalMarketsThroughRegionalCooperation
SAFE-USAID
Project Update
p11 South Asian Securities
Markets Highlights
AMONTHLYE-PUBLICATIONABOUTTHEDEVELOPMENTSINTHECAPITALMARKETINDUSTRYOFTHEREGION
SOUTH ASIAN
FEDERATION OF EXCHANGES
p14 Major SAFE
Markets

2. PAGE 01
Regional Financial Integration
“Developing a Harmonized Regulatory Framework for the Capital Markets in Pakistan & South Asia”
Visit to MeetAMCs IBs and Brokers
MediaAdvocacy
SAFE Rule Book Draft
The second phase of the international travel by SAFE's consultants was concluded in April 2013. The consultants undertook travel to SAARC nations
(Pakistan, India, Bangladesh, Maldives, Nepal, Bhutan & Sri Lanka) to hold meetings with theAsset Management CompaniesAMC's, Investment Banks IB'S
and Brokerage Firms to appraise them about SAFE's project, its objectives, outcomes and get their valuable feedback for incorporation in SAFE Rule Book,
which shall serve as a guide for all SAARC countries to move towards regional financial integration.
The consultants also held interactive discussions with the leading market participants and discussed key areas for improvement within the Capital Markets
investment landscape. The market participants provided their feedback on the potential challenges in implementing the changes proposed by SAFE and
suggested an optimal path which could be followed taking into account the current maturity and bottlenecks within the Capital Markets.
The findings of the discussions within above areas with AMCs, IBs and Brokerage Firms shall help refine the Capital Market roadmap benefit realization
towards harmonization for each SAARC country. It also provided input for the SAFE Rule book, which shall act as guiding principles for the entire SouthAsian
region.
6thpress briefing was held on Monday, 29thApril 2013 at P.C Hotel Lahore, Pakistan.The event was widely attended by mainstream print and electronic media
of the country. Mr. Aftab Ahmad Ch., MD Lahore Stock Exchange and Secretary General, in his speech, emphasized on the need to increase cross boarder
financial activities within the South Asian region to create strong intraregional links and an integrated economic region. “SAFE's project on developing a
harmonized regulatory framework shall serve as a first step towards building a financially integrated SouthAsian region”, he said. SAFE's prime consultant Mr.
Amir Raza Khan gave an informative presentation on the project progress till date. Main focus of the presentation was to appraise the audience about the
second phase of the international travel, which was undertaken in the mid of April 2013, to hold meetings with the Asset Management Companies (AMCs),
Brokerage Firms and Investment Banks (IBs) in the SAARC region.
7th press briefing was held on Thursday, 6th June 2013, at LSE, Lahore where SAFE announced the completion of the first version of its Rule Book which
details uniform model of regulations for adoption by all SAARC nations to financially integrate the region.
“The proposed regulations are related to market operations, market integrity, enforcement regulations and all SAFE members in Pakistan, India, Sri Lanka,
Bhutan, Maldives, Bangladesh & Nepal shall be encouraged to adopt provisions of this Rule Book, if applicable, in order to promote market integrity, efficiency
and transparency”, said Mr.AftabAhmad Ch., MD Lahore Stock Exchange and Secretary General SAFE during the press briefing.
SAFE has drafted the first version of the Rule Book which details Uniform Model Standards for the SAARC region to financially integrate the capital markets. It
also gives recommendations for the law makers and regulators of each SAARC country related to market operations, market integrity and enforcement
regulations, to make changes in the local legislation for a step towards a financially integrated SouthAsian region. SAFE is in the process of sharing this draft
with all the capital market stakeholders to get their valuable feedback and input about the standardization of regulatory regulations in SouthAsian which shall
help refine SAFE Rule book.

3. ADX Partakes in
Accountability &
Transparency
Symposium
Business and Economics organized financial markets. It also inspires
by the School of Business and closer cooperation on research
Management of the American between ADX and various public and
University of Sharjah. private academic institutions”.
Mr. Rashed Al Baloushi, CEO of ADX, “AtADX we are eager to play an active
partook in a panel discussion on role in the progress and prosperity of
Accountability and Transparency. the UAE; we are committed to
- ADX Press Release ADX CEO addressed ccorporate supporting research activities
transparency in the aftermath of the throughout various educational
recent financial scandals worldwide. sectors. Universities are responsible
He also talked about rules and for remarkable growth in the amount
regulations put in place by ADX to and type of research that contributes
improve corporate transparency and to the advancement of the country.
how ADX is enforcing these rules. We are keen to link our services to the
“ADX requires listed companies with needs of the community, thus creating
securities traded on the exchange to a unique opportunity to form
ensure appropriate transparency partnerships with interested
through a regular flow of information organizations.” Added Mr. Al
to the markets and to the market Baloushi. It is worth mentioning that
participants. This information ADX CEO Mr. Rashed Al Baloushi,
consists of yearly, half-yearly and visited the American University of
quarterly financial information, and Sharjah (AUS) in November of last
on-going information on major year where he delivered a
holdings of voting rights.” ADX CEO presentation for AUS students on the
said during his panel discussion. Of structure of Abu Dhabi Securities
participating in the AUS organized E x c h a n g e a n d t h e l a t e s t
symposium, ADX CEO said “The developments in global financial
Abu Dhabi Securities Exchange event allows ADX to update the markets.
(ADX) took part in the The Fifth academic community in the UAE of
Annual Research Symposium in the recent developments in the
CONTRIBUTIONS
MEMBERS’
PAGE 02
ADX Achieves
100% in
Company
Disclosure
Compliance
Abu Dhabi Securities Exchange (ADX) Investment & Financial Services
announced that it has succeeded in sector, with an increase of 509%,
achieving a 100% compliance rate in followed by the Banks sector with an
financial disclosure statements of its increase of 15%.
listed public joint stock companies
within the deadline of 45 days from the Mr. Saif Sayah Al Mansouri, head of
end of the financial period. Listed Companies and acting head of
All 66 ADX listed companies, local and Media at ADX commented: "The
foreign, disclosed their 1st Quarter collaboration between ADX and its
financial statements for 2013 within listed companies has always proved to
- ADX Press Release the 45 days period given. The be a productive one. We can clearly
combined net profit of all listed see the positive impact of this
companies, as of the first financial cooperation through the companies'
Quarter of 2013, has showed an fulfillment of their obligations on the
increase of 2% in comparison to the disclosure of the 1st Quarter financial
same period in 2012. The highest statements."
recorded increase was in the

4. PAGE 03
decade of the 21st century, from 5.0% incomes in developing/emerging
Emerging pattern in the previous decade. At the same economies has also improved,
time share of investments by directly contributing to higher savings
in savings and developed countries registered a and investments.
decline to roughly 13.0% (from 19.0% Secondly, a sectoral change in the
investments earlier). Similarly, on the savings front, economic composition of developing
- D. R. DOGRA the contribution of emerging Asia, countries, from an agrarian market to
MANAGING DIRECTOR & CEO
particularly India and China has a more capital-intensive regime hasCARE RATINGS
increased significantly, while that of made this shift more pronounced.
major developed economies, Increased manufacturing activities
particularly United States has fallen. have automatically generated greater
For the past two decades savings by investment demand. Moreover,
developing countries accounted for improvements in productivity due to
4.0% of world income. This ratio has integration of developing countries
S a v i n g s a n d
sharply increased to more than 9.0% with global markets coupled with
investments flows
in 2009; while total savings by high- sound macroeconomic policies have
have in recent years,
income countries fell from 18.0% to propelled such dynamics. Also with
witnessed dynamic
12.5% of global income. Indeed, the development of human capital taking
and discernible
World Bank in documenting this trend centre-stage, demands for improved
s h i f t s a c r o s s
in one of its recent reports indicates education, health and other social
c o u n t r i e s a n d
that in ensuing years the developing infrastructure have also increased,
regions; thereby
world will represent a very large boosting savings and investment
l e n d i n g m o r e
share i.e. approximately two-thirds needs.
traction to the
of all global savings by 2030; almost
convergence theory of growth and
double from its 2010 level. Examining T h i r d l y , m a j o r s t r u c t u r a l
development. It is increasingly being
this shift is hence interesting. transformations such as financial
argued that the gradual acceleration
market developments and change in
in growth of developing countries
Why this shift in pattern of savings and institutional design and quality,
since the 1990's has led to increased
investments? wherein developing economies
household incomes (especially of
This shift in the pattern of savings and appear to have moved forward, have
those countries with a higher
investment is, first and foremost, an also led to an increase in the
proportion of young population),
outcome of improved growth investment rate at a deeper level.
which in turn has led to higher savings
prospects of developing countries
and eventually higher investment
over the years. Advanced countries It is important to note that growing
rates in these countries.
contributed nearly 80.0% to world economies require more savings and
GDP a decade ago, the remaining investments to be mobilised and
This is evidentially supported by a
coming from developing/emerging directed to massive physical
much visible structural break in the
economies. This contribution has infrastructure development needs. On
global investments scenario.
steadily declined to 60.7% in 2013, the other hand, advanced economies,
Investments of developing countries
with developing countries accounting having already established a capital-
as a share of world GDP touched
for 39.3%. Commensurate with this intensive production system, have
around 10.0% by the end of the first
increase in growth, per-capita lower needs for incremental capital
ADX
Implements
BCC for DVP
as donned by MSCI. ADX has already briefed its market
participants to explain the many
ADX has already changed its aspects of applying the new
operational procedures for Delivery procedure. With the implementation
versus Payment (DVP) in 2011. The of the BCC, ADX not only seeks to
enhancement permits local reinforce the current DVP model but
- ADX Press Release custodian to reject buy and/or sell also to adhere with international
trades for settlement where it has standards for financial markets
n o t r e c e i v e d s e t t l e m e n t infrastructure.
confirmation from its client or there
is a mismatch in the settlement On the DvP enhancements, Mr.
confirmation. Rashed Al Baloushi, CEO of ADX
said "Abu Dhabi Securities
Abu Dhabi Securities Exchange The new BCC procedure-a part of Exchange applied the mechanism
(ADX) announced that it has the DvP model- which took effect on as part of it plan of an integrated
proceeded with the implementation the 5th of May, means that a buying performance strategy based on the
of the enhancements to its Delivery investor will be paid cash application of best standards of
Versus Payment (DvP) model with compensation in the event of practice applicable in developed
the Buyer Cash Compensation securities being unavailable for markets globally in line with an ideal
(BCC) on Sunday the 5th of May. delivery to the buying investor on investment environment to facilitate
The improvement is a key factor in settlement date. attracting foreign investment".
achieving emerging market status

5. PAGE 04
investments. Moreover, being driven based would also progressively world to control roughly half of the
by consumption demand, their require less fixed capital investments, world's capital, whilst accounting for a
savings rate has also moderated over which could further prompt a decline massive chunk (87% - 93%) of global
the years. These attributes thus make in these rates. growth by 2030. This suggests that
this shift in pattern more perceptible. developing countries would gain
Furthermore, policy interventions in resources to adequately and
What could limit this shift in the emerging economies must also be efficiently finance major investments.
savings and investments pattern? designed to enhance absorptive Hence, a significant escalation in
An underlying assumption and rather capacity, in the absence of which a terms of global investment is foreseen
pre-condition to any such expected savings glut could be an impending from developing countries, with India
shift in savings and investment threat. One of the greatest challenges and China leading this shift. In fact,
pattern truly materializing, is the that for developing/emerging market China alone could account for nearly
of exponential development in economies would be increasing and one-third of global investment with
developing economies, led by a retaining foreign capital inflows. Brazil, India and Russia together
widening, deepening, strengthening, Limited depth in financial markets and constituting 13.0%, an investment
and maturing of financial markets low levels of financial innovation have bloc larger than that of the United
across developing/emerging r e s t r i c t e d t h e c a p a c i t y o f States.
economies. In case of slippages on developing/emerging economies to
these accounts the process could supply investment avenues with To conclude, in the long-run global
slow down and take longer to fully appealing risk-return characteristics, savings and investments, influenced
emerge. which is a pertinent concern. by relative costs of capital, would be
brought to a productive balance
M o r e o v e r , e c o n o m i c a n d Conventionally, government across countries in tandem with their
demographic forces could impact the investments dominate the investment individual absorptive capacities.
dynamics of savings and investments. scene in developing economies. Presently, not only have developing
World Bank estimates for world While it may be argued that countries been growing at a faster
population stand at 8.5 billion in 2030 government investments help shore pace but also their productivity has
from around 7.0 billion in 2010. This up demand and balance the savings- improved significantly causing their
additional growth by 1.5 billion is investment differential; they do often share in global savings and
expected to occur mainly in also crowd-out productive private investments to increase significantly.
developing economies resulting in a capital flows. On the other hand, performance of
significant modification in their age developed countries under strained
structure. If however, employment economic and fiscal conditions hasWay forward…
opportunities and income generation slowed down considerably causing aDespite such possibilities of a decline
d o e s n o t m o v e u p w a r d s shift in investment holdings away fromin the share of developing and
commensurately, the savings rate uncertain advanced economies toemerging market economies in world
would touch a natural cap and emerging markets. With majorsavings and investments, it is
investments at their current pace structural transformations in lineimportant to note that such a transition
would remain inadequate. This ahead, developing/emergingis unlikely in the near future. The next
demographic pattern could likely put a economies would only continue todecade or so would continue to see
downward pressure on both savings accelerate their pace of growth and indeveloping/emerging economies
and investment in the coming years. turn their share in global savings andcontribute more to savings,
Also, sectoral shifts more in favour of investments over the next decade.investments and growth. Indeed, the
services that are network-technology World Bank expects the developing
C o r p o r a t e C o m m u n i c a t i o n s to participate in such programs so that
LSE Leads Department to encourage companies to there is no information asymmetry
come forward and share their financials regarding our listed companies.
Corporate Briefing and non financial projects before the
members, TREC Holders, investors D i r e c t o r F i n a n c e H i g h n o o nProgram For and the media to abridge the Laboratories Mr. Javaid Hussain
communicational gap between the delivered the presentation before theHighnoon listed companies and the market p a r t i c i p a n t s a b o u t f i n a n c i a l
participants through this platform. performance and future plans of theLaboratories Mr. Farid Malik, General Manager -LSE- LSE Press Release company. He stated that the company is
while addressing to the participants in process to add new countries to its
stated that the purpose of the Corporate export as the company is already the
Briefing Program was to provide a first pharmaceutical company to export
platform to our listed companies in France and Saudi Arabia. He also
whereby such companies can stated that the company has a potential
periodically visit the stock exchange to produce beyond its current capacity
The representatives of Highnoon and share the latest corporate provided the trade between the
Laboratories, Company Secretary Mr. information with the stakeholders such neighboring countries are relaxed. He
Khadim Hussain, Director Finance Mr. as the brokers and the investors alike. also shared that the company has
Javaid Hussain visited The Lahore He said that since the market price of invested in building a dedicated
Stock Exchange to participate in the any company is a function of the hormone facility, a sachet facility and a
corporate briefing program, an financial and strategic information consumer facility to expand the
interactive program initiated by the available in the market, therefore, LSE business.
Lahore Stock Exchange under the considers it essential for the companies

6. PAGE 05
While, there is no agreed upon single opportunity. However, these factors
Role of markets in universally recognised definition of rarely persist in the long run. Rather,
the term 'Energy Security', different the long run prices of exhaustiblepromoting energy countries have accorded different resources like fossil fuels are
definition at different times about reflections of the scarcity rents ofsecurity
energy security depending on how such resources, and true reflections
-Nazir Ahmed Moulvi and Niteen M Jain,
much the country is dependent on of market fundamentals. For e.g. theSenior Analysts, Research & Strategy,
Multi Commodity Exchange of India Ltd. foreign energy resource, share of improvement in energy efficiency
politically unstable regions in that followed the oil price shocks in
imports, diversity of primary fuel mix the 1970s and increased thrust on
etc. For decades, energy security research and development to find
was concerned with only physical more energy efficient ways of doing
supply of oil. However, it now things clearly illustrates the long termSouth Asian countries constituted
includes natural gas and electricity effects of price signals on oilaround 5 percent of total crude oil
and extends along the entire supply economy. The only deterrent to thedemand in 2011 compared with little
chain. Notably the concept now also full desired effect to be felt is in themore than just 2 percent in 1991. The
includes the price and not just the economies where price signals in ancountries from the region are import
physical availability of these fuels. economy are not truly reflecting thereliant from 75 percent to 95 percent
Since all economic activity requires underlying fundamentals but maskedof annual consumption. Notably, the
the use of energy resources, the by government measures of variousreserves for known hydrocarbons in
continuing availability of energy at a kinds such as subsidies.the region are less than 2 percent of
price that is not deterrent to broad Some other virtues of markets…the global reserves. With rise of
economic growth is a major aspect of One needs to keep in mind here thateconomic power, the regions energy
energy security. On similar terms, markets have traditionally emergedconsumption is expected to be on an
energy security as defined in paper 'A due to scarcity of resources. This hasupward trajectory in coming years,
Quest for Energy Security in the 21st been an institutional response of theaccording to experts. In such a
Century: Resources and Constraints' human civilization to combat scarcity.situation, energy security naturally
by APERC is 'the ability of an The most important function of suchattains status of paramount
economy to guarantee the availability an institution is not scarcity mitigationimportance for all import dependent
of energy resource supply in a through supply augmentation plansnations, particularly to ascertain
sustainable and timely manner with as such. Rather, it sends across thehealthy economic growth in coming
the energy price being at a level that signals to the demanders about thefuture. Quite appropriately, India has
will not adversely affect the economic existing state of the resource throughbeen on task in ascertaining energy
performance of the economy.' the prices (that reflect on the scarcitysecurity for some time now. In this
Prices and hence markets key to value), and eventually often leads tofront, government is strongly
energy security demand management. At the samepromoting renewable sources of
With real prices of oil hovering at high time, market prices will adjust toenergy like solar and wind power. In
levels (see chart 1), the role of true demonstrate where resources areJuly 2009, India unveiled a US$19
prices and hence the market required, and where they are not. It isbillion plan to produce 20 GW of solar
discovering them cannot be under- the markets that drive innovation inpower by 2020. In October 2010,
estimated from the context of energy various human endeavours, andIndia also drew up "an ambitious plan
security. The important facet in energy sector is no exception. Theto reach a nuclear power capacity of
attaining energy security is traditional human response to63,000 MW in 2032. Such efforts are
reconciling the short term objectives diminish scarcity value of resourcebesides acquisition of overseas
with those in the long run. In this use has spurred up development ofenergy resources largely through
context, price signal provided by competitive alternatives like bio-fuel,ONGC Videsh Ltd. the overseas
markets especially in futures market nonconventional sources of energyinvestment arm of ONGC. Besides,
have its utility in both short term and like wind energy, wave energy, solarIndia has already initiated steps on oil
long term. Over the long term, a energy, and of course, nuclearprice deregulation, as Union Finance
major means by which competitive power. These alternatives addMinister in April 2013 reiterated that
markets provide security is by resilience to the economy against'The government is looking at moving
sending price signals to both energy shocks, thus eventuallyaway from the administratively fixed
consumers and current and potential helping the cause of attaining energyprice model in the oil and gas sector
producers. Additionally, availability of security. Besides this, the healthyto a more 'market-related price'.
efficiently discovered prices in an competition would spur innovationsSimilarly, "Government of Pakistan is
energy economy would clearly unveil as the energy stakeholders wouldalso putting greater emphasis on
the prices risk faced by each energy continuously seek new ways ofRenewable Energy and has set a
stakeholder and hence provide an adding to their financial clout intarget of 10% renewable energy or
opportunity to prepare against the energy economy. Lastly efficient2700 MW in the Country's energy mix
risk rather than being caught markets fosters the development ofby 2015”. The government of
unaware. derivatives markets that are nowBangladesh also has recently set a
having increasing role to play giventarget to increase the country's share
the sustained high level of volatility.of renewable energy to 5.0 per cent Though the short term response to
Though derivatives markets do notby 2015 and 10 per cent by 2020. But change in prices may be difficult to
eliminate any risks from the system,are measures towards ascertaining comprehend, long term implications
but they provide options for marketenergy security aimed just about of price response cannot be
participants to manage the varioussecuring overseas energy assets underestimated. Short-term price
risks in the energy system and henceand/or just building up various viable spike may be due to logistical,
plan and operate in more judicioussources of energy? In this context, it technical, oligopolistic behaviour or
manner.is important to define energy security, because of hoarding with the
though it is not an easy task! intention to capitalise on some

7. PAGE 06
MCX-SX
commences listing
services
- Commences with listing of
3 companies — Dabur India Ltd.
being the first company to list on the
exchange
- Offers various benefits
such as lower cost of issuance to
issuers and zero processing fees
and initial listing fee
- Exchange would soon
a n n o u n c e i n n o v a t i o n s f o r
enhancing issuers' experience
Mumbai, May 2, 2013: MCX-SX
today commenced its listing
services with three companies
listing their securities on the Capital
Market Segment of the Exchange —
Dabur India Limited being the first
company to come on board. With
this, MCX-SX is now geared up to
list shares of companies that are
already listed on other exchanges
and of those companies proposing
to come out with initial public
offerings.
MCX- SX has a simple listing fee
structure, which is attractively
. We are sure that the new stockpriced in comparison with other
exchange, with its wide network, willexchanges. The Exchange offers
reach out to every nook and cornerbenefits such as no processing fee
of the country and help the companyand no initial listing fee, which
as well as country in broad basingmakes MCX-SX the most attractive
the investor base. We wish the teamvenue for listing of securities. The
MCX-SX all the very best in theirExchange charges only annual
effort to create a world class stocklisting fees based on a very
exchange and a preferredsimplified and reasonable structure,
destination for the issuers andwhich is significantly less than the
investors.”existing industry average. This will
translate into reduced cost of
The Capital Market and Futures andissuance and continuous listing for
Options segments of MCX-SX werethe companies listing on MCX-SX.
i n a u g u r a t e d b y S h r i . P
Chidambaram, Hon'ble UnionWelcoming these companies on
Finance Minister, in Mumbai onboard, Mr. Joseph Massey MD &
February 9, 2013. Shri. U K Sinha,CEO, MCX-SX, said: “We remain
C h a i r m a n , S e c u r i t i e s a n dcommitted to offer issuers and
Exchange Board of India (SEBI) andecosystem intermediaries best of
Dr. Arvind Mayaram, Secretary —service standards, which will be way
Dept. of Economic Affairs, Ministryabove the current benchmark. We
of Finance, Govt. of India werew o u l d e n s u r e c o n t i n u o u s
guests of honour on the occasion.innovations for enhancing issuers'
experience.”
Mr. Mohit Burman, Director, Dabur
India Ltd, said, “We are delighted to
list Dabur India Limited on MCX-SX
- MCX-SX Press Release
Companies listed on MCX-SX
S.No Company Name Sector
1 Dabur India Limited Personal Goods
2 Pennar Industries Limited Industrial Metal and Mining
3 D P S C Limited Electricity
Listing Fee Schedule – MCX-SX
Initial Listing Fees - MCX-SX
S. No. Slab (Rs. InCrores) MCX-SX (In Rs.)
1 Initial Listing Fees NIL
Annual ListingFees MCX-SX
S. No. Paid up Capital (Rs. In Crores) MCX-SX (InRs.)
1 Upto Rs. 5 Crore 7,500
2 Above Rs. 5 Crore and upto Rs.10 Crores 15,000
3 Above Rs. 10 Crore and upto Rs.20 Crores 25,000
4 Above Rs. 20 Crores and upto Rs.50 Crores 50,000
5 Above Rs. 50 Crores and upto Rs.100 Crores 75,000
6 Above Rs. 100 Crores and upto Rs.250 Crores 125,000
7 Above Rs. 250 Crores and upto Rs.500 Crores 200,000
8 Above Rs. 500 Crores and upto Rs.750 Crores 325,000
9 Above Rs. 750 Crores and upto Rs.1000 Crores 475,000
10 Above Rs. 1000 Crores and upto Rs.2500 Crores 625,000
11 Above Rs. 2500 Crores 1,250,000

8. PAGE 07
is considered an open border. It can be Free Trade Area (SAFTA), but the trade
Regional Integration considered the second stage of within the region did not flourish. Many
economic integration.A customs union political reasons and tussles are behindin South Asia: High
is a trade coalition composed of a FTA this situation of SAARC. So, are we not
Time for with a common external tariff. The capable of doing anything and putting
partaking countries come up with a our hands on hands? Is this the fete?
Implementation common external trade policy; World Bank says that SAARC region- Chittaranjan Pandey
meanwhile, import quotas are used in has 54.7 percent of its land asAssistant Manager, R&D Department,
Mercantile Exchange Nepal Limited. few cases. Establishing a customs agricultural land and 48 percent of the
union increases economic efficiency total population is rural population in the
and establishes closer political and region (World Bank, 2011). In case of
cultural ties among the member rural population, the dominant
countries.It is the third stage of occupation again is the Agriculture for
economic integration.Acommon market which India is the only country which has
is a type of trade coalition composed of a specific policies and has made its
FTA(for goods) with common guidelines remarkable presence in the agricultural
on product regulation, and freedom of sector in the world. Pakistan follows but
movement of the factors of production still has a long way to go. Nepal also
(capital and labor) and of enterprises made a plan called Agriculture
and services. The physical, technical Perspective Plan (APP) but it was a
and fiscal barriers are best possible tried failure plan as the implementation could
to remove for the higher economic not be done. APP is going to end in
welfare. An economic union is a trade 2017, so the country is busy drafting
coalition composed of a common Agriculture Development Strategy
market with a customs union. The (ADS) which is supposed to be much
participant countries have both common more strategic than the APP and
policies on product regulation, freedom implementable too. In case of Nepal,
of movement of goods, services and the around 65 percent of the people are
factors of production (capital and labor) involved in agriculture but only
and common external trade policy. The contribute around 35 percent to the
countries often share a common GDP. The main reason behind is the
currency. Previously the regional subsistence agriculture. And this is notRegional Integration can be understood
integration was undertaken to maintain the problem of Nepal only; most of theas a process where countries in the
the economic and political stability countries in this region havenearby region opt for a regional
among the countries in the region, but subsistence agriculture whichagreement, of course with the prime
now the concept has totally changed. generates low value in the economy.motive of enhancing the regional
The world is a global village now, people When it is already identified thatcooperation and development guided
or countries do not need to integrate for Agriculture is one of the major weaponsby the regional level institutions and
the safety and security only but also to of the region itself to conquer thelegislation at the regional level. We
enhance the mobility and to learn new objective of economic growth, throughunderstand that whenever we talk about
skills and technology transfers. Getting this write-up, I would like tothe development, even before 1990,
back to where we started, European conceptualize a step that could helpdevelopment was only about the
Union is one of the best examples of agriculture develop its revenue, but witheconomic development. Though the
economic integration which followed the less people and those people not fullylegacy of the regional integration may
basic notion which each of us studied devoted to agriculture could invest theirgo back to many decades, a distinct and
since childhood – “United we stand, time in service sectors or others asdeveloped form of regional integration
Divided we fall”. wanted.was exhibited by the European region
after the Second World War. Second
South Asian Association for Regional First of all, the region needs to have aWorld War proved devastating for
Cooperation (SAARC) is not a new term Common Agricultural Policy (CAP) likeEurope which then decided to integrate
for many of the people around the globe. European Union (EU) used to have initself as a regional unit. Yes, it took long
SAARC was established in 1985 with a earlier days. Agricultural Integrationbut now European Union (EU) is an
similar motive of the regional integration should be one of the major aims of theexample for others to follow in the world.
and political consensus by seven region and steps should be taken to
countries and Afghanistan joined the flourish the concept. The policy needs toA Preferential Trade Area (PTA) is a
group in 2007 only. When the major have objectives of increasingtrading coalition that gives privileged
objectives for the formation of the agricultural production, assuringaccess to definite products among the
SAARC are looked into, they were: effective and efficient food supplies,partaking countries. Usually, the major
promoting the welfare of the people in ensuring a standard quality of life forapproach is by reducing tariffs, not
the region; accelerating the economic farmers, soothing the market turmoil,obliterating them completely. A PTA can
growth, social and cultural progress in and guaranteeing rational prices forbe established through a trade
the region; contribute to mutual trust, consumers. The responsibility for suchagreement. It is the first stage of
understanding and helping to negotiate policy development should be taken byeconomic integration. Then comes the
one another's problems; strengthen the the Agriculture ministries of theFree Trade Area (FTA). A FTA is a trade
cooperation with other developing respective countries and all thecoalition whose member countries sign
countries; to maintain peace in the countries should ensure that the policyan agreement, which eliminates tariffs,
region, etc. But what has happened, gets implemented. Needful andimport quotas, and preferences on most
nothing much. The results would sound necessary modifications can be doneof the goods and services traded
discouraging. We established South time-to-time but it is high time the regionbetween them. If the mobility of the
Asian Preferential Trade Area (SAPTA) starts thinking about the same.people is also made free within the
first, we then upgraded to South Asianpartaking countries, in addition to FTA, it

9. PAGE 08
National Clearing Company of existing title of their Clearing Member
Facilitation of Pakistan Limited (“NCCPL”), is Account in NCSS, with the required
continuously striving for the Designated Branch of Settling BankMultiple Settling prosperous and well developed and NCCPL. Accordingly, CMs can
capital market in line with the best settle their NCSS Money ObligationBank Accounts for practices. A recent service with any of the Designated Branch of
Clearing Members i m p l e m e n t e d b y N C C P L i s Settling Bank. A new “CM Settling
- Muhammad Lukman, “Facilitation of Multiple Settling Bank Bank Screen” has been made
Chief Executive Officer,
Accounts for Clearing Members”. available in NCSS whereby CMs whoNational Clearing Company of Pakistan.
have more than one Settling BankPreviously, Clearing Members (CMs)
Account, will be allowed to identify theare required to designate Only One
required Settling Bank Account onBank Account in the Designated
SD-1 i.e. a day before the SettlementBranch of a Settling Bank. For that
Date as per the Designated Timepurposes, a Tripartite Agreement has
Schedule. Accordingly, all NCSSbeen executed among National
money settlement and collateralClearing Company of Pakistan
requirements shall be processedLimited (“NCCPL”), CM and Settling
through the identified settling accountBank. In order to provide further
for that Settlement Date. Thefacilitation to CMs to manage their
identified/revised Settling BankNCSS money settlement more
Account shall be applicable only for aefficiently and effectively, effective
single Settlement Date. At the end offrom Monday, February 25, 2013,
relevant Settlement Date, NCSS shallCMs have been allowed to designate
automatically revert to the mainmore than one bank account in any of
Settling Bank Account of a CM forthe Designated Branch of a Settling
onward NCSS money settlement.Bank for all NCSS money settlement
and collateral requirements. CMs
who are desirous to avail the facility of
having Multiple Settling Bank
Accounts, will be required to enter
into a Tripartite Agreement with
PMEX and Tameer
Microfinance Bank
sign MoU
Apress release issued after the event TMFB will also offer this product
stated that the PMEX and TMFB have through Easypaisa across the
developed an understanding that country. Easypaisa was launched in
TMFB shall introduce and provide an December 2008, Tameer Micro
E-Gold products through the trading Finance Bank Limited and Telenor
platform of PMEX to its customers. Pakistan joined hands to launch- PMEX Press Release
The investors shall be able to buy/sell Pakistan's first Branchless Banking
gold through TMFB branches/agents Service. As Easypaisa has a vast
and Branchless banking Channels outreach in urban and rural areas of
using their Mobile Accounts (M- Pakistan, a large number of people
Wallet) through the trading platform of would get a unique opportunity to
PMEX. invest in gold with ease and
convenience.
Pakistan Mercantile Exchange The proposed product offered by
Limited and Tameer Microfinance PMEX and TMFB will give an This product will also lead to the
Bank Limited (TMFB) signed a MoU opportunity to the common man to documentation of Gold investment
on introducing a gold-based invest in Gold with trust, security and which is currently beyond the radar of
investment product. The MoU was convenience. The lot size for the national economy. The proposed
signed by Mr. Shazad Dada, investment in gold will also be very small size of investment will also give
Chairman PMEX & CEO Barclays small around 0.001 Tola which will an opportunity to the middle and
Bank PLC, Pakistan and Mr.Tariq make it conducive for a large lower middle class to invest in Gold
Mohar, Deputy CEO, Tameer Bank in population to invest in Gold with their which otherwise has now gone out of
the presence of representatives from o w n c a s h f l o w e a s e a n d their range through the traditional
both organizations at the PMEX convenience. They would be able to means of investment in Gold.
Office in Karachi. keep their gold in the official custody
of PMEX.

10. PAGE 09
Triggers that can
effect a reversal in
the declining trend of
the cash equities
volumes: Using
India's example
Equity volumes traded in the secondary for South Korea's F&O volumes which
markets consist of cash equity (delivery are significantly high). In contrast, India
and intraday) and equity derivatives has lagged these geographies, and the
(futures and options). Cash delivery, proportion of high-yield cash has
typically gaining from long-term declined to a low. While cash investors
appreciation, earns the highest yield. held back, options had the opportunity
Option earns the lowest. Despite intra- of profiting from market movements. As
segment yields holding firm, the lower cash equities volumes has
blended yield has come under pressure impacted the yields earned by
due to a structural shift in the mix – a brokerage firms putting top line
- Sourajit Aiyer move away from cash equities and pressures, it is worth taking a look at theSenior Manager
towards F&O. Historically, cash equities possible triggers that can help effect aMotilal Oswal Financial Services Ltd.
comprised ~40% of overall equity reversal in this current trend away from
Recent structural shift in the mix of volumes in Americas, 30% in Europe cash equities and towards F&O. We
equity volumes and ~40-45% in Asia Pacific (adjusted look at India's case.
Possible triggers that might effect a better projections and induce after accounting for market
reversal in this trend investors to take up long term cash movements. This should help avoid
equities positions. over-aggressive pricing and ensure
post-listing performance to someèSeveral macroeconomic pressures
extent. Apart from domestichave impacted input/interest costs, èRetail participation within cash
companies, Hong Kong Exchange'sdemand, capex plans and overall segment has not picked up lately.
experience with foreign listingscorporate performance and investor Primary market issues are a popular
shows there are quality companiessentiments. Market movements entry point for retail investors, as
globally who are looking to raiseechoed these sentiments of seen during FY08 and FY10 which
money fromAsia. In India, IDRs are auncertainty. The markets have coincided with a growth in retail cash
route to list foreign companies here,largely moved without a sustained volumes. But the lackluster
but this has seen limited success solong-term trend, with few periods of performance of most issues post-
far.positive news-flow boosting listing dampened participation in
sentiments for short bursts. An ease- future issues. This has led to lower
out in the macro climate is essential. subscriptions since FY10, except for
WPI inflation moderating to below a short spurt in cash participation in
~7% since Jan 2013 with the easing FY11 during quality PSU issues like
of global commodity prices is Coal India, Power Grid. A case in
welcome news. Sustenance of point is India's Asian peer – China.
easing in inflation may lead to China has seen a surge in retail
successive interest rate cuts, going participation in cash equities over the
forward. The government has also last decade due to large IPO issues
set the ball rolling on certain reform from government owned companies.
measures, which is encouraging Thus, public issues are critical to kick
though a lot is still left to be done. start investor confidence and
Nevertheless, easing of the macro increase cash participation. Pricing
pressures will help catalyze the of public issues is equally important.
capex and investment cycle of SEBI has recently made the right
companies, boost demand volumes noises regarding companies
and corporate profitability. It should compensating retail investors if the
give the markets a clearer direction, prices decline sharply post-IPO even

11. PAGE 10
This article is meant for informationèThe critical role of institutions in èParticipation in India is currently
purposes only. It does not construe to bemobilizing retail money into equity restricted to the top few scrips.
any investment advice. It is not intendedmarkets is apparent. In USA, the WFE's market concentration data
as an offer or solicitation for theinstitutionalization of retail savings shows that the top 5% companies by
purchase or sale of any financialplayed a major role in equity trading value comprised 62% of
instrument. Any action taken by you onmobilization, led by Defined trading on the NSE in 2010.
the basis of the information containedContribution pension plans, which Expanding research coverage
herein is your responsibility alone. Wehave comprised ~40% of US mutual (especially on quality midcap scrips)
have exercised due diligence infund assets over the last decade. In will enable transparency and
checking the correctness of the2010, ~32-38% of their corpus was information access on a larger
information contained herein, but do notinvested into equities across all age universe of stocks, and help
represent that it is accurate or complete.groups. As per a BCG report, showcase those companies with
The readers should rely on their ownpension funds globally comprised strong business performance and
investigations.the largest share of the institutional corporate governance. This could
asset management AUM (~55% in help retail investors identify value-
2010). South Korea also saw higher picks from amongst the midcap
trading from institutions like universe and participate in these
insurance, AMCs and pensions from companies with much greater
2004 to 2010. India needs a similar conviction.
robust mobilizing mechanism.
Though EPFO is allowed to deploy èDividend policy of companies has
10% into equities and 5% via mutual also come under discussion, given
funds, this is yet to take off properly the market movements which
as yet owing to various concerns impacted capital appreciation.
over this asset class. As market Currently, Indian firms have amongst
depth improves, the volatility in the lowest average dividend payout
stocks should reduce to some extent ratios globally. If minimum annual
and help address some of these dividend payout is implemented,
concerns. If EPFO's allocation is then the stocks which are backed by
deployed fully, say via mutual funds, solid fundamentals, good business
it can mean an incremental performance and robust business
mobilization of over Rs 500bn into models will look attractive enough for
equity funds. investors to hold cash positions in.
Peers like Brazil have implemented
èHigher mobilization by domestic minimum dividend commitment of
institutions will also have a spin-off 50% for new listings. Similar policies
effect in inducing more direct for India will incentivize long-term
participation by investors. As more cash positions.
retail investors enter, the retail
investor penetration will increase India has a demographic advantage,
from its current ~1.5-2% - which is and the ability to service this young,
much lower than global averages income-growing generation via
including Asian markets like China online/mobile trading will be
and South Korea. This indicates the instrumental in facilitating higher
potential headroom for growth. participation. In South Korea, growth in
wireless broadband, buoyed by flat rate
data plans, made online trading theèThe cost of trade, amongst the
dominant mode of share trading.highest in India, also pinches during
Secondly, equity participation is majorlythese volatile times. Taxes are higher
centered in Mumbai, Ahmedabad, Delhiin cash delivery creating an obvious
and Kolkata. There is further opportunitybias towards options. While STT
in towns where large pools of wealth arehave been reduced in various equity
available, but equity participation hassegments in the recent Union
not yet picked up. As and when some ofBudgets, however there may be
these triggers play out, the cash equityscope to make cash equities
volumes in India should increase tocompetitive by addressing the
global averages.overall cost of trade items further.

12. Foreign Secretary Ranjan Mathai arrived here today to hold consultations with senior Bhutanese officials during which status of India-assisted projects and other key
bilateral issues will be discussed. Mathai is scheduled to meet the Chief Adviser of the Interim Government Lyonpo Sonam Tobgay and call on the King of Bhutan Jigme
Khesar Namgyel Wangchuck apart from meeting other senior officials, during his three-day visit.
Earlier this year, External Affairs Minister Salman Khurshid, during his visit to Bhutan, had assured top leadership that India will not let their projects slow down. "The
projects will continue on pace and whatever timeline is to be laid out, we will work on that timeline", he had said. This year, Rs 3614 crore has been earmarked for Bhutan
as compared to Rs 3409.06 crore in the revised budget for 2012-13 for various projects and other activities. Mathai's three-day trip to Thimpu follows the understanding,
reiterated during the visit of the Bhutanese King here as the Chief Guest for the Republic Day celebrations in January 2013, that India and Bhutan should have regular
high level contacts to discuss issues of mutual interest.
Mathai in Bhutan to discuss India-assisted projects business-standard.com
PAGE 11
Sharia-compliant insurance company Amana Takaful (Maldives) PLC has announced a cumulative profit of MVR 4.5 Million (US$292,208) since listing on the Maldives
Stock Exchange back in 2011. Following the company’s second annual general meeting held Sunday (April 28), Amana Takaful said a 10 percent dividend of MVR 2.6
million (US$168,831) would be paid among its Maldives-based shareholder members for the group’s performance during 2012. Growth for the company during last year
was said to be driven in particular by demand for medical and motor insurance following amendments to government regulations that has seen a number of insurers
moving to offer 3rd party coverage in these areas.
Aspokesperson for the company claimed that 3rd party motor cover was anticipated to continue to help drive growth for its Maldives operations in the coming years as a
result of recent legislation imposed on the country’s motorists. During its AGM, Amana Takaful also announced an underwriting result – earnings from premiums after
deducting the costs of operating expenses and insurance claims – of MVR 20.7 million (US$1.3 million). This was said to be a 61 percent increase on the previous year.
As well as Sharia-compliant insurance, a growing number of private groups in the Maldives have moved to offer Islamic financing to their customers. Specialist groups
such as the Maldives Islamic Bank (MIB) are set to be joined in the segment by Bank of Maldives (BML), which this month announced the appointment of a four-member
ShariaAdvisory Committee.
Amana Takaful posts MVR 4.5 million profit since Maldives Stock Exchange float minivannews.com
The Colombo Stock Exchange (CSE) is planning its second road show for the year, this time to Dubai in June, CSE officials said.
“We have sent letters of invitations to all the stockbroking companies last week. This road show is at the initial stages and we hope to invite many other companies as
well,” Surekha Sellahewa, CEO CSE told the Business Times. She said that Dr. Sarath Amunugama, Senior Minister and Deputy Minister of Finance and Planning will
lead the delegation which includes Central Bank GovernorAjith Nivard Cabraal, SEC and CSE officials.The last CSE road show was in Mumbai in February.Analysts said
that after Mumbai, some funds which the road show teams met with have invested in the CSE. “We hope to get a similar response in Dubai as well,” an analyst said. John
Keells Holdings, Carson Cumberbatch, HNB and NDB are slated to participate in the road show along with others, according to him.
CSE plans Dubai road show in June sundaytimes.lk
The Karachi Stock Exchange has asked the federal government to revisit its policy on corporate taxation, proposing that it exempt dividends from 10 percent tax and
reduce corporate tax to 25 percent. This should be especially to those listed at the bourses, or wanted to be listed, to improve listing of the companies aimed at assisting
the operations of the capital market, according to KESC sources. In a report it submitted to the federal government for Budget 2013-14, the Karachi Stock Exchange
suggested that the government encourage listing of state-owned companies such as Pak Arab Refinery Company, various development finance institutions and
Pakistan Steel. This would enable such enterprises to access long term capital from the private sector while investing public will be provided with new ventures for
investment. The KSE argued that tax on dividends is in fact double-taxation. For instance, when a company earns profit it pays tax at 35 percent before distributing
dividends to its shareholders. At the time of distribution of dividends to its shareholders, it further withholds tax at 10 percent on such dividends thereby suffering double
taxation.
Explaining why it opposes the tax on dividends, the KESC said when a company receives such dividends it becomes part of its distributable profit, and hence when this
part of profit is distributed to its shareholders, it again attracts withholding tax at 10 percent. Multiple taxation results whenever a dividend is paid by a company. The
Exchange gave a detailed explanation on reduction of the corporate tax rate to 25 percent in order to encourage companies to list at the bourses. The government often
express its concern that new listings have not picked up despite the stock market boom. For instance, a total of 63,897 companies are registered with the Securities and
Exchange Commission as of January 31, while only 587 companies are listed at the Karachi Stock Exchange. Until June 2002, there was a tax differential of 10 percent
for listed companies. Unlisted companies were subject to an income-tax rate of 45 percent whereas listed companies’ rate is 35 percent. In Budget 2002-03 the
government decided to progressively reduce the tax rates of private limited companies, thereby removing the tax difference of 10 percent between private companies
and public companies, leaving no tax incentive for listed companies. Tax rate on dividend from unlisted companies and listed companies is currently 10 percent which
once again highlights the fact that there is no advantage to listed companies. The KSE proposed the attraction of more companies for listing, and for this the tax rates for
listed companies could be reduced to 25 percent. A reduced tax rate for listed companies will serve as an incentive to the companies for enlistment, and this will help in
improving documentation of the economy and thus have positive impact on the country’s overall economy.
KSE proposes listing of top state-run firms thenews.com.pk

13. Despite being touted as a miracle cure for all ailments troubling financial institutions, mergers have failed to improve the performance of almost a dozen financial
institutions. Among the 12 sets of mergers completed in the domestic financial sector within the last two years, only four have so far succeeded in registering profits.
Likewise, share prices of half of the listed merged entities are also below face value at Nepal Stock Exchange. “A merger does not translate to miraculous profits
immediately. It takes time for the merged entity to become profitable as they have to deal with additional issues such as effectively managing human resources along with
its operations,” said chief executive of Synergy Finance Rajendra Man Shakya.
Synergy Finance that was formed in November 2012 following a merger between Alpic Everest Finance, Butwal Finance and CMB Finance, has recorded a net loss of
Rs 35.65 million in the second quarter of the current fiscal year. “Problems such as low rate of loan recovery and absence of proper projects to finance remain the same
even after a merger as it used to be with the concerned individual institutions before the merger,” said Shakya, who is also president of Nepal Finance Companies’
Association. “We have observed that merged companies need to be given time to recover and become profitable.” However, Narayani National Finance, which was
formed after a merger between Narayani Finance and National Finance in November, 2010, has fared well. It has earned Rs 25.74 million in the second quarter.
Moreover, the company was able to earn 33 per cent more operational profit even before first year of merger was over. But at the other end is H&B Development Bank
that was formed following a merger between Himchuli Bikas Bank and Birgunj Finance in 2011. The class ‘B’ bank that was performing fairly is now in trouble due to the
large scale fraud committed with the involvement of its employees. Investors are also apprehensive about investing in shares of merged entities and their prices have
taken a plunge of late.Among 10 listed merged financial institutions, share prices of only six firms are above Rs 100 — the face value.
“If the merged financial institutions are good then they will perform better and investors will also be willing to bid a higher price,” said acting president of Nepal Investors’
Forum Raj Kumar Timilsina. Global IME Bank that was formed after merger between Global Bank, IME Financial Institution and Lord Buddha Finance, and
Machhapuchchhre Bank following its merger with Standard Finance have been able to increase their profit and subsequently their share prices have also almost
doubled in the past six months. “In most cases, mergers have been taking place just to avoid the regulator’s action when the particular company’s financial health is
deteriorating due to which the merger becomes forced and creates more problems,” pointed out Timilsina, adding that investors look forward to mergers between
promising companies such as the ongoing merger process between NIC Bank and Bank ofAsia Nepal.
According to central bank, 28 financial institutions have already got approval to merge into 13 institutions, and 24 financial institutions have received Letter of Intent (LoI)
to merge into 10 institutions.
Mergers not a cure to all financial ills thehimalayantimes.com
PAGE 12
The Bombay Stock Exchange (BSE) has launched an Islamic equity index based on the wide-measure S&P
BSE 500 index, providing a new benchmark for Islamic investors in one of the world's largest stock exchanges.
The new index comprises the largest 500 companies in the BSE, out of more than 5,000 listed, which fit Islamic
finance principles such as bans on investing in alcohol, tobacco and gambling-related businesses.
The country's first Islamic index was launched in 2010, also by the BSE, tracking the 50 largest and most liquid
stocks.The Mumbai exchange had a total market capitalisation of $1.32 trillion as of January 2013.
India's Islamic banking industry has progressed slowly because banking rules require lenders to declare the
rates of interest they charge customers, putting it at odds with Islamic banks which base their products on profit
rates instead.
In order to cater to an estimated 177 million Muslims in India, the largest Muslim minority population in the world, the industry is hoping to develop investment products
that work around this requirement, but political and legal obstacles mean progress has been slow.
Bombay Stock Exchange launches broad-based Islamic index profit.ndtv.com
The Abu Dhabi World Financial Market will offer companies a variety of incentives to set up offices in Al
Maryah, including the ability to operate without a local business partner, easily ship money out of the
country and work under international laws.
It would be a direct competitor to the nine-year-old Dubai International Financial Centre, a 90-minute drive
away, which successfully developed Dubai as a center for the regional financial community. Among other
advantages, the DIFC established its own court system, which has won praise for bringing Western-style
legal proceedings to disputes within the financial center's jurisdiction.
The Abu Dhabi World Financial Market will officially brand the 114-hectare Al Maryah development as the
capital's financial center. Formerly known as Sowwah Island, the project is home to the new headquarters
for theAbu Dhabi Stock Exchange.
"I can tell you that all the local Emirati investors are talking about [the financial zone]," Fathi Ben Grira, the chief executive at Menacorp, told The National. "All the big
international financial institutions would love to be in Abu Dhabi, because of its stability. There is a general perception that they can seize opportunities in terms of
business."
November_2010_-_Sowwah_Island_-_Artists_Impression.jpgThe competition for international financial companies has intensified in recent years, with Bahrain and
Qatar aggressively pursuing Middle East operations. Abu Dhabi and Dubai both offer several free trade zones, but Dubai has been the leader in attracting the regional
finance and banking industry. "I don't think [the Abu Dhabi World Financial market] necessarily is competition for the DIFC," Kai Schneider, a partner at the law firm
Latham & Watkins in Dubai, told Dow Jones. "If you use Europe as a model, there's room for more than one financial center in a region and each financial center can
focus on a separate sector of financial services. London is asset management, Luxembourg is where funds are domiciled and Ireland is where they're administered."
The specifics of the Abu Dhabi zone still need to be worked out, industry observers note. "For now the first steps have been taken to build a legal and regulatory
framework," Nick Clayson, a partner at the law firm Norton Rose in Abu Dhabi, told Dow Jones. "But it's not clear whether any particular laws, regulations or the judicial
position will be the same as the DIFC."
Abu Dhabi Establishing Financial Free Zone worldpropertychannel.com

14. PAGE 13
The United Arab Emirates already boasts two airlines, two major international airports, three stock markets and
two tourism hubs trying to attract wealthy holidaymakers. Now it seems the Arab Gulf country (population 7.9
million) will soon have two offshore financial centers. A brief decree issued two months ago – but publicized only
recently – officially established theAbu Dhabi World Financial Market as a financial free zone exempt from federal
civil codes. The details so far are scant, but the hub, located on Abu Dhabi’s shiny new Al Maryah Island, is
expected to have its own legal structure, financial regulator and courts.And it appears to be headed toward direct
competition with the Dubai International Financial Centre just an hour and a half’s drive down the road. It’s an oft-
repeated pattern in the U.A.E., a confederation of seven emirates in which oil-rich Abu Dhabi and commercially-
minded Dubai predominate. Abu Dhabi started Etihad Airways in 2003, 18 years after Dubai launched Emirates
Airline. Abu Dhabi began to build out its real estate and transportation infrastructure about a decade ago; Dubai’s
Emaar Properties, which was central to Dubai’s building boom and built the Burj Khalifa, has been around since
1997. Dubai’s ritzy hotels and long coastline made it a tourism destination for Europeans, Russians and Chinese;
Abu Dhabi now wants a piece of that action, too, positioning itself as a cultural hub with branches of the
Guggenheim and Louvre museums.
When it comes to finance and financial hubs, some people question whether the competition will be healthy or damaging in a country this small. “The question is whether
the UAE is a market that has enough scale to support three exchanges and two financial centers,” said one Dubai-based financial executive who didn’t want to be named
because of the political sensitivity of the issue. “It’s a question of whether you’re going to eat yourself.” (Dubai has two stock markets, and Abu Dhabi has one. Talks of a
merger between the exchanges have dragged on for years).
It’s possible that the DIFC and the Abu Dhabi World Financial Market won’t be direct competitors, because they will specialize in different parts of the financial services
industry. Dubai, for example, could be a hub for investment banking, whileAbu Dhabi could focus on asset management. Competition, meanwhile, may force both cities
to make their centers as efficient and cheap as possible for the foreign companies they’re trying to attract.
“If done appropriately I think it’s a great step forward,” said Kai Schneider, a partner at the law firm Latham & Watkins LLP in Dubai. “I don’t think it necessarily is
competition for the DIFC. If you use Europe as a model, there’s room for more than one financial centre in a region and each financial center can focus on a separate
sector of financial services. London is asset management, Luxembourg is where funds are domiciled and Ireland is where they’re administered.” Other people are
skeptical. One executive suggested that while there will be rhetoric about cooperation and establishing complementary instead of competitive cost structures and
regulations, the reality is that Abu Dhabi and Dubai both want fully-fledged financial centers that draw in the full spectrum of financial services companies. Cooperation
would be ideal, but “my guess is they won’t do that,” the executive said.
The establishment of a financial free zone on Al Maryah comes as the island’s central business district, called Sowwah Square, nears completion. The district contains
four glistening new towers and a low-lying central building shaped like an upside-down trapezoid where theAbu Dhabi Securities Exchange is set to move in.Already the
first of the buildings to be completed in Sowwah is almost fully occupied, according to Al Maryah Island’s website, and the second is well on its way. Deloitte, JPMorgan,
General Electric and a slew of other foreign companies are already there. It isn’t clear how the new financial free zone decree will affect existing companies onAl Maryah.
The next step, lawyers say, will likely be a series of decrees issued by the Abu Dhabi government that establish a regulator, judicial bodies and other administrative
entities to oversee the World Financial Market.That, they say, is what happened when the DIFC was established in 2004.
Bankers say Abu Dhabi has been strong-arming companies to move to Al Maryah and Sowwah, hinting that they’ll be better-positioned to get business from the oil-rich
government if they play along with its economic development strategy. Whether those tactics result in a thriving financial hub remains to be seen, of course, and Abu
Dhabi has a lot of catching up to do if it wants to pose a serious challenge to Dubai. According to official statistics this month, Sowwah Square is currently home to 1,500
people and 46 multinationals.After nine years, meanwhile, the DIFC has a working population of more than 14,000 people and 940 companies.
Abu Dhabi’s New Financial Center Seen Competing With Dubai blogs.wsj.com
The Colombo Stock Exchange (CSE) is currently in the process of amending regulations pertaining to the listing of debt securities, according to CSE’sAssistant General
Manager of Regulatory Affairs, Renuke Wijayawardhane. “We are currently in the process of revising some of the Listing Rules. However, nothing has been finalised at
the moment and we are still at the discussion stage,” Wijayawardhane said.
Amendments to the current regulatory framework follows a spate of new listings of corporate debt, mainly debentures, on the CSE by listed and unlisted companies,
seeking to capitalise on generous concessions granted in Budget 2013.
Proposals in question include the exemption of the withholding tax on interest income earned by investing in bonds and debentures listed with the CSE. Speaking to
Mirror Business about potential barriers to the establishment of a vibrant corporate debt market in Sri Lanka, Wealth Lanka Management (Pvt.) Ltd Chairman Mangala
Boyagoda highlighted lack of information and regulation on unlisted companies as a potential challenge.
“Recent steps taken to promote the creation of a corporate debt market are very positive. However, statistics on unlisted companies are lacking. So, it’s very difficult to get
a clear understanding of the depth of the Sri Lankan corporate debt market,” he said. Boyagoda also called for more stringent regulation of unlisted companies, which
expect to list debt securities. “Unlisted companies issuing listed debentures must be regulated, so there is control over who is allowed to list debentures and at what
amount. Investors have had their fingers burned in similar situations before, so proper regulation will be important to establish confidence,” he noted.
Policy consistency with regards to tax concessions was highlighted as a further area of concern. “Removal of the withholding tax and other tax concessions will help grow
the corporate debt market. However, there are concerns about their impact on government revenue.”
“Now that they’ve implemented it, there has to be some consistency to allow the market to adjust but with current revenue levels, I have concerns about the sustainability
of tax concessions,” Boyagoda said. Meanwhile, Heraymila Securities Limited CEO Ravi Abeysuriya called for streamlining of listing procedure and a greater focus on
educating investors about the corporate debt market. “There is a lot of change that will be required if the corporate debt market is to grow. Even now people are only
buying debentures and then holding on to them so they’re not really being traded.” “More will have to be done to educate investors the approvals process, which is geared
only towards equity, needs to be simplified,”Abeysuriya stated.
CSE to revise debt market rules dailymirror.lk

15. PAGE 14
MAJOR
SAFE MARKETS
*Please note that the closing index values for every day have been quoted for all the indices.
May
DHAKA STOCK EXCHANGE
DSI
BOMBAY STOCK EXCHANGE
SENSEX
NATIONAL STOCK EXCHANGE
S&P CNX NIFTY
NEPAL STOCK EXCHANGE
NEPSE
STOCK EXCHANGE OF MAURITIUS
SEMTRI
COLOMBO STOCK EXCHANGE
ASI
KARACHI STOCK EXCHANGE
KSE-30
KARACHI STOCK EXCHANGE
KSE-100

16. The 'cap' confusion
BusinessStandard
Different agencies define large, medium or small cap, according to their own methodology. Understand them better.
We humans find comfort in classification and segmentation. That is why many of us prefer the well-demarcated aisles in supermarkets, rather than popping
into the local grocer's cluttered store. We extend the same desire to investing and consider it especially important when there are over 4,000 listed stocks and
hundreds of mutual fund (MF) schemes.
Acommon method of classification is the market capitalisation (MC)-based method, wherein stocks/funds are divided into large-cap, mid-cap and small-cap.
MC is the product of the market price and the number of equity shares outstanding. It may be computed either on a total or a free-float basis. Many investors
have a clear preference regarding the category they would like to invest. While some stick to large-caps, others gravitate towards mid-cap and small-cap
stocks. However, their definition varies widely. For instance, the Bombay Stock Exchange (BSE) considers stocks falling within the first 80 per cent of the free-
float market capitalisation as large-caps and those within 80-95 per cent as mid-caps while computing their indices. The National Stock Exchange (NSE)
considers stocks falling within 75 per cent and 95 per cent of the free-float market capitalisation as part of the eligible universe, while computing the NSE
MidCap Index.
Even mutual funds differ markedly. For instance, Birla Mid-Cap Fund uses an absolute filter of stocks with a market-cap between Rs 150 crore and Rs 1,500
crore. DSP Micro Cap's universe constitutes of stocks that are not part of the top 300 companies by market capitalisation. What constitutes small-cap for some
may be micro-cap for another.
Here's some solution to the segmentation conundrum:
STRIKE A BALANCE: Rather than obsessing over the the classifications, investors could opt for clear options within each category. For instance, Hindustan
Unilever and Jyothy Laboratories are large and mid-cap stocks, respectively, by most definitions. Owning both will give investors an exposure to two good
companies across the market-cap spectrum. If you prefer mutual funds, choose 'go-anywhere' funds, which operate without any market-cap bias. However,
even in these, the fund's philosophy will lead to a tilt in some direction. Fidelity Equity Fund, for example, is primarily large-cap oriented, while Reliance
Regular Savings is mid-cap oriented, though both profess to be market-cap agnostic. Choose the one whose style you are comfortable with.
CHOOSE INDEX FUNDS/ETFS: These mirror specified large and mid-cap indices and offer a low cost option to gaining exposure to a variety of stocks at one
go. In fact, undertaking monthly SIPs in one Nifty/Sensex-related exchange-traded fund (ETF) (example Benchmark NiftyBeES or Franklin Index Fund –
Sensex) and one mid-cap ETF (say Benchmark Junior BeES or MOST Midcap ETF) could be good enough.Any change in the underlying index's composition
automatically leads to a rebalancing of your holding.There is also no fund manager-related risk.
CHOOSE APPROPRIATE FUNDS: Ensure the large or mid-cap fund you are investing in is true to its mandate. For instance, Franklin Bluechip strictly
ensures over 80 per cent of its corpus is invested in large-cap stocks and, hence, is a good fund for those seeking a large-cap fund. Funds which frequently
modify their mandate end up confusing and disappointing investors.
BE COGNISANT OF BIASES: Often, the preference for one category over the other may be due to 'recency bias'. If stocks or indices belonging to a certain
category outperform for some time, investors gravitate towards that class. For instance, mid-cap indices outperformed large-cap indices for a large part of
2010. This led to heightened interest for mid-cap stocks. Similarly, during the market correction of 2008, large and well-known companies fell less than the
rest, thereby creating an illusion of safety, leading to a penchant for large-caps.
Continuous Listing Requirements
Colombo Stock Exchange (CSE) is currently examining the feasibility of making its continuous listing requirements (CLR) permanent. At present under its
main board listing requirements, there needs to be a 25% minimum free float; and in the case of listing in the Diri Savi secondary board, the requirement is a
minimum 10% free float. However, what more often than not happens, after an initial public offering, where CLR are conformed to, subsequently however the
free float is diluted due to strategic interest in the company, and the requirement of a 25% minimum free float in the case of main board listing and 10% in the
case of Diri Savi, is, therefore, more often than not, observed in the breach. Contentious issues such as which shareholder/shareholders should shed
his/their's “excess” equity stake/stakes in order to conform to CSE's CLR, are among the matters that the CSE is grappling with, before mandating CLR. A
plethora of new listings, some mandatory and some voluntary, are now before the CSE. Among the mandated listings are the need for registered finance
companies to list by end June, banks by end December and insurance companies by next year.
-
12YEARS OLD
Grants McCann Erickson's Public Relations Department celebrated its 12th anniversary.
CREDIT CARDS SHRINK
The number of active credit cards in circulation as at end of last year decreased by 42,769 (5.2%) over that of November, and continued with this decline vis-à-
vis the end December 2009 figure, a shortfall of 62,035 (7.4%) over that figure of 840,509. However, the outstanding credit card balance in the review period
increased by Rs. 853 million (2.8%) to Rs. 31,616 million month on month in December, and marginally increased by Rs. 241 million (0.8%) when compared
with the end December 2009 figure of Rs. 31,375 million.
RICE IMPORTS UP132%
Colombo tea auction prices last November declined by 4.5% year on year (YoY) to US$ 3.38 a kilo, whilst tea production for the year increased by 13.1% YoY
to 329.4 million kilos.However rice import prices in the review period increased by 132.3% YoY to US$ 849.10 per metric ton (pmt) C&F. Similarly white sugar
prices increased by 22.6% YoY to US$ 709.3 pmt C&F and crude oil by 7.2% YoY to US$ 84.80 per barrel C&F.But wheat prices in the review period declined
by 11.8%YoYto US$ 225.50 pmt C&F. (Source: Central Bank of Sri Lanka)
(Source: CBSL)
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