NEWSLETTER

September 2020
ARTICLE ON
 MESSAGE FROM THE CEO UNDERSTANDING ROLE OF DATA ANALYTICS IN FI-
NANCIAL MARKET (MARKET SENTIMENT AP-
PROACH)
 INTRODUCTION TO THE INSTITUTE

 IFMP ACTIVITIES

 TRAINING CALENDAR

 ARTICLE

 TERMS OF THE MONTH

 BUSINESS AND ECONOMIC NEWSFLASH

 URDU GLOSSARY
TERMS OF THE MONTH

 FEEDBACKS
BUSINESS AND ECONOMIC NEWSFLASH

 MARKETS IN REVIEW

URDU GLOSSARY

Your Gateway to Careers in Financial Markets

QUOTES AND JOKES

Institute of Financial
MARKETS Markets of Pakistan
IN REVIEW

Address: Building 9-A, 2nd Floor,

P.E.C.H.S Block No. 6, Shahrah-e-Faisal Karachi.
Tel: +92 (21) 34540843-44
00 CONTENT

Message from the CEO Page: 3

Introduction to the Institute Page: 4

IFMP Activities Page: 5

Training Calendar Page: 6

Article Page: 7

Terms of the Month Page: 10

Business and Economic Newsflash Page: 11

Urdu Glossary Page: 14

Feedbacks Page: 15

Markets in Review Page: 16

www.ifmp.org.pk 92 (21) 34540843-44 info@ifmp.org.pk

01 Message from the Chief Executive Officer

T he last few years have seen a rapid growth in size, quality and sophistication of finan-
cial markets, because of changes in the policy and regulatory environment, the entre-
preneurial initiatives of individuals and institutions, and the availability of trained man-
power. The continuing growth of financial markets is further adding to the demand for
well-trained professionals.
Institute of Financial Markets of Pakistan is dedicated to the professional development of
financial markets and research on financial markets as well as the well being of financial
markets by educating the professionals about the norms and ethics being practiced in the
markets. IFMP has had a pioneering role in meeting the demand for educated manpower.
It is Pakistan's first specialized institution devoted to the education and updating of
knowledge of manpower for financial markets. It will provide high-quality educational
standards for all types of financial market participants; investors, brokers, mutual funds,
investment banks and policy makers.
The Institute's main activities are (1) Licensing the professionals working in the financial
markets by certifications. The institute’s key responsibility is to educate the professionals
working in different financial markets of Pakistan through examining their knowledge in
their relevant field of work; (2) Studying the latest developments in the financial markets
in order to discover whether there is such a thing as an ideal market economy; and (3)
Contributing to the development of financial markets in Pakistan. By means of these three
activities the Institute seeks to communicate its ideas to the audience both at home and
overseas. The Institute's research is intended, first and foremost, to be neutral, profes-
sional and practical. Rooted in practice, it aims to contribute to the healthy development
of Pakistani financial markets as well as to related policies by conducting neutral and pro-
fessional studies of how these markets and the financial system are regulated and orga-
nized and how they perform.
The economy is changing all the time. The Institute hopes that, by responding to these
changes positively, it can contribute to the dynamic development of the country's finan-
cial markets as well as of the economy itself.

◊ September 2020 IFMP Newsletter Page 3 ◊

02 Introduction to the Institute

The Institute of Financial Markets of Pakistan (IFMP), Pakistan’s first

securities market institute, has been established as a permanent platform to de-
velop quality human capital, meet the emerging professional knowledge needs of
financial markets and create standards among market professionals. The Insti-
tute has been envisioned to conduct various licensing examinations leading to
certifications for different segments of the financial markets. IFMP develops a
pool of trained and certified professionals, skilled not only to deal in convention-
al instruments but also to trade in new and complex financial market products.

◊ FEE STRUCTURE ◊ ◊ EXAMINATION SCHEDULE ◊

Candidate Registration Fee Rs.10,000 Wed, September 16, 2020
Examination Registration Fee Rs.7,000 Wed, November 25, 2020
Membership Fee (Annual) Rs.5,000
Wed, January 27, 2021
Study Guide (Hard Copy) Rs.800

PROGRAMMES

LICENSING CERTIFICATIONS INSURANCE CERTIFICATIONS SPECIALIZED CERTIFICA-

Fundamentals of Capital Markets Certification General Takaful Agents Financial Derivative Traders Certification
Certification
Pakistan’s Market Regulations Certification Compliance Officers Certification
Family Takaful Agents
Stock Brokers Certification Clearing and Settlement Operations Certification
Certification
Mutual Funds Distributors Certification Risk Management Certification
Life Insurance Agents
Commodity Brokers Certification Capital Budgeting and Corporate Finance
Certification
Financial Analysts Certification Certification
Non-Life Insurance Agents
Mutual Funds Basic Certification Certification Investment Banking and Analysis Certification

Securities and Futures Advisors’ Certification Bancassurance Certification Islamic Finance Certification
Programme (Basic and Core Modules) Bancatakaful Certification Fixed Income Certification
AML/CFT Certification

◊ September 2020 IFMP Newsletter Page 4 ◊

03 IFMP Activities

IFMP organized free Webinar in Collaboration with PSX on ‘Spotting Market Trends in the
Stock Market’ by Raza Jafri, CFA and Ehtesham Khan, CMT, CFTe held on Tuesday, Septem-
ber 22, 2020

The webinar shed light on below topics during this session:

 Pakistan Stock Market, and the benchmark KSE-100 Index

 Interest rates are a key driver for the stock market. Monetary policies often follow inflation targeting, hence
inflation trajectory can be used to gauge interest rate direction.

 Valuations and corporate profitability

 What really causes the stock markets to move?

 Understanding the Mass Psychology.

 What is Trend and how to identify PSX Trend?

 What is the best way to Predict Market Direction throughout the trading day.?

 What is the best way to identify buying and selling pressure?

 What are the best market indicators for spotting price change confirmations?

 VII. What are the trading rules for buying stocks?

IFMP organized free Webinar on "An Overview of Key Requirements of Various IASs/
IFRSs" by Hasan Marfani, ACA on Saturday, September 26, 2020

Learning objective of this session was:

The significance of international financial reporting standards (IFRS) has been increased due to stringent dis-
closure requirements (especially for listed entities), the non-compliance of which might attract strict penal
provisions. In this regard, the session is being conducted to give a quick refresher of key requirements of the
standards applicable to various sectors.

◊ September 2020 IFMP Newsletter Page 5 ◊

04 Training Calendar

Month Program Fees (per person) Date

OCTOBER Insurance Agent's Foundation Course 5,000 14th October, 2020

OCTOBER Pakistan Markets Regulations Certification 1,500 15th October, 2020

OCTOBER Investment Banking & Analysis Certification 1,500 21st October, 2020

NOVEMBER Financial Analysts Certification Training 1,500 5th November, 2020

NOVEMBER Stock Brokers Certification 1,500 11th November, 2020

NOVEMBER AML Training Certification 19,500 19th November, 2020

NOVEMBER Mutual Fund Basic Certification 1,500 24th November, 2020

DECEMBER Fixed Income Securities Certification 1,500 8th December, 2020

DECEMBER Compliance Officer Certification 1,500 16th December, 2020

DECEMBER Financial Advisor Certification 1,500 22nd December, 2020

◊ September 2020 IFMP Newsletter Page 6 ◊

05 Understanding Role of Data Analytics in Finan-
cial Market (Market Sentiment Approach)

The natural up and down patterns of the daily stock prices is indicative of the stochastic nature of
the financial markets. Despite such price movements investors risk their funds in the stocks with
the expectation of making more future returns. The variation in the stock returns due to daily
price changes is generally termed as volatility that is measured by the standard deviation of the
returns. Investors in stock market are interested in the volatility of stock prices as high volatility
could be interpreted as huge losses or profits at the expense of greater uncertainty.
Volatility is something good but that can only be bad if the stock price swings are unusually very
high and rapid over short time periods as it makes financial planning difficult. This means that
high fluctuations in stock prices can possibly increase both risk and uncertainty about the future
returns. Since prediction of stock is part and parcel of stock trading, if the market performance is
unstable then investors will be clueless as what the future holds for them and hence increased un-
certainty about future price changes. As a result of uncertainty investors can fear to take risk and
continue to fund their investments.

A volatile market inhibits individual retail-

ers and companies to raise funds in the capi-
tal markets. Uncertainty causes loss of inves-
tor confidence that is essential in trading of
stocks particularly in encouraging further
investment and leverage decision. He fur-
ther mentions that uncertainty can aggra-
vate volatility. The knowledge of volatility is
of crucial importance in many areas of fi-
nance in enabling investors to manage risks
and optimize profits. The fluctuations in the
asset prices are widely believed to be the
cause of changes in the economic and geo-political environmental factors such as stocks, bonds,
exchange rates, tradable options and banking instruments among others. The perceived
knowledge of the aforementioned contributing factors along with analysis of data gives a player in
any stock market a strong and reliable tool to trade.

The financial data analysis is focused on the prediction of the future prices of security and as such
they are model-based strategies. These are mainly tailored for the needs of well-informed market
players that include individual investors, financial institutions and mutual fund managers. It is

◊ September 2020 IFMP Newsletter Page 7 ◊

05 Article
widely believed that, security prices exhibit considerable variations from time to time and these
variations can be objectively captured by well-defined market volatility phenomena. The concept
of volatility is imperative in the analysis of financial time series data. Volatility is the unpredictable
change of a variable over time. In the context of finance and economics, volatility refers to the un-
stable states of economic and financial variables; these variables include stock prices, exchange
rates, and inflation rates, volume of trade and currency returns. There are several definitions of
volatility and the common denominator is variability. The different definitions of volatility are dis-
tinct in how they discuss the measurement of this variability. The causes of volatility could be as-
cribed to several factors; such as local and global economic environments, maturity and delivery
date of instruments, changes in trade volume, practices or patterns and new information among
others.
Generally, market sentiments are perceived to be
either absolute or relative. Absolute market senti-
ments can be defined with reference to a base peri-
od greater than a month such as a quarter or bi-
annual or annual. In this case, market sentiments
are constructed based on the entirety of data corre-
sponding to the base period. For example, the
weekly market sentiments can be constructed
based on the daily stock prices of a given year. It
may be pointed out that absolute market senti-
ments are useful to compare the movements in
market sentiments over blocks of years and hence
may be of use to players with long-term interest. In other words, absolute market sentiment cap-
tures the long-term impact on volatility.

Relative market sentiments are defined with reference to shorter base period such a week or
month. In this case, market sentiments are more dynamic in the sense that constructs compare
weekly or monthly data from time to time. Relative market sentiments are seen to be useful to an
active player with short-term interest. A large share of overall movement of an individual stock has
been attributed to market sentiments. Forecasting market sentiments in financial data such as
stock indices, volume of trade is a formidable area of research in financial economics. There are in-
numerable causes, as mentioned earlier, that propel market sentiments in a financial data. Classi-
cally, market sentiment is monitored by a variety of technical and statistical methods such as the
number of advancing vs. declining stocks and new highs vs. new lows comparisons.

◊ September 2020 IFMP Newsletter Page 8 ◊

05 Article

Within the scope of behavioural finance, many studies have gone on to analyse factors relating to
the mentality of investors, chief among others being volatility. A comprehensive review of the pri-
or studies based on the role of market sentiments in the financial markets which examined the be-
haviour of investors in the financial markets; from the psychological point of view, since investors
have acute shortage of information, investor sentiment is a factor for consideration in the formula-
tion of any investment strategy. In other words, when investors lack complete information regard-
ing their investment, they are believed to make their choices based on unreasonable behaviour
and personal considerations.

Evaluating the stock market returns sentiments helps the trader to develop a well-informed and
strong trading strategy. In order to evaluate stock returns perception of volatility is critical. Vola-
tility is observed in the daily/weekly/monthly stock returns. The concept of volatility is not easily
understood by a trader. To circumvent this, we advocate the analysis of stock returns based on the
concept of market sentiments that is very user-friendly and easy to understand by a trader.

The focus should be to analyse daily/weekly stock returns applied to market sentiment measures
to have a better understanding of the movement in stock returns in terms of market sentiments.
In recommendation, the investors in equity markets must be assisted with knowledge about mar-
ket sentiments states of equity indices, for extreme sentiment states could mean huge losses or
gains, resulting in greater uncertainty and thereby impacting on the much needed development of
emerging economies.

We suggest additional listing of domestic companies on PSX as a way of promoting liquidity in the
trading of stocks to allow for provision of a friendly environment conducive from those who want
to profit from stock trading.

Image Source: https://www.oracle.com

*****************

◊ September 2020 IFMP Newsletter Page 9 ◊

06 Terms of the Month
Cost-Volume-Profit (CVP) Analysis at key breakout points, such as major support or re-
sistance levels, or closely watched moving averages
Cost-volume-profit (CVP) analysis is a method of cost
like the 50-day or 200-day simple moving aver-
accounting that looks at the impact that varying levels
age (SMA).
of costs and volume have on operating profit. The cost
-volume-profit analysis, also commonly known as
break-even analysis, looks to determine the break- Forfeited Share
even point for different sales volumes and cost struc-
tures, which can be useful for managers making short- A forfeited share is a share in a publicly-traded com-
term economic decisions. pany that the owner loses (or forfeits) by neglecting
to live up to any number of purchase requirements.
For example, a forfeiture may occur if a shareholder
Dematerialization fails to pay an owed allotment (call money), or if he
sells or transfers his shares during a restricted peri-
Dematerialization (DEMAT) is the move from physical
od.
certificates to electronic bookkeeping. Actual stock
certificates are then removed and retired from circu-
lation in exchange for electronic recording. Mortgage Originator
A mortgage originator is an institution or individual
Head-Fake Trade that works with a borrower to complete a mortgage
transaction. A mortgage originator is the original
A head-fake trade is when a security's price makes a
mortgage lender and can be either a mortgage bro-
move in one direction, but then reverses course and
ker or a mortgage banker. Mortgage originators are
moves in the opposite direction. The head-fake trade
part of the primary mortgage market and must work
gets its name from a tactic commonly used by a bas-
with underwriters and loan processors from the ap-
ketball or football player to throw the opposition off,
plication date until closing to gather the necessary
by leading with their head to pretend that they are
documentation and guide the file through the approv-
moving in one direction but then move in the opposite
al process.
direction. The head-fake trade occurs most frequently

Get Yourself Registered!!

25th November, 2020

Last Date for Registration for 26th October, 2020

Examination

◊ September 2020 IFMP Newsletter Page 10 ◊

07 Business and Economic Newsflash
September 2020 Inflation at 8.20%

Pakistan Bureau of Statistics released September 2020 National CPI which came in at 8.20% on
YoY.

Inflation in Brief

1. CPI inflation General, increased by 9.0% on year-on-year basis in September 2020 as compared
to an increase of 8.2% in the previous month and 11.4% in September 2019. On month-on-month
basis, it increased by 1.5% in September 2020 as compared to an increase of 0.6% in the previous
month and an increase of 0.8% in September 2019.

2. CPI inflation Urban, increased by 7.7% on year-on-year basis in September 2020 as compared to
an increase of 7.1% in the previous month and 11.6% in September 2019. On month-on-month ba-
sis, it increased by 1.3% in September 2020 as compared to an increase of 0.8% in the previous
month and an increase of 0.7% in September 2019.

3. CPI inflation Rural, increased by 11.1 % on year-on-year basis in September 2020 as compared
to an increase of 9.9% in the previous month and 11.1% in September 2019. On month-on-month
basis, it increased by 2.0 % in September 2020 as compared to an increase of 0.4% in the previous
month and an increase of 0.8% in September 2019.

4. SPI inflation on YoY increased by 12.0% in September 2020 as compared to an increase of

11.7% a month earlier and an increase of 14.7% in September 2019. On MoM basis, it increased by
2.1% in September 2020 as compared to an increase of 0.9% a month earlier and an increase of
1.9% in September 2019.

5. WPI inflation on YoY basis increased by 4.3% in September 2020 as compared to an increase of
3.3% a month earlier and an increase of 15.9% in September 2019. WPI inflation on MoM basis in-
creased by 1.0% in September 2020 as compared to a decrease of 1.3% a month earlier and an in-
crease of 0.1% in corresponding month of last year i.e. September 2019.

◊ September 2020 IFMP Newsletter Page 11 ◊

07 Business and Economic Newsflash
6. Table 1.a for Urban and Rural CPI

7. Measured by non-food non-energy Urban CPI increased by 5.5% on (YoY) basis in September
2020 as compared to an increase of 5.6% in the previous month and 8.4% in September 2019.
On (MoM) basis, it increased by 0.3% in September 2020 as compared to increase of 0.7% in pre-
vious month, and an increase of 0.4% in corresponding month of last year i.e. September 2019.

8. Measured by non-food non-energy Rural CPI increased by 7.8% on (YoY) basis in September
2020 as compared to an increase of 7.6% in the previous month and 8.8% in September 2019.
On (MoM) basis, it increased by 0.4% in September 2020 as compared to an increase of 0.8% in
previous month, and an increase of 0.3% in corresponding month of last year i.e. September
2019.

◊ September 2020 IFMP Newsletter Page 12 ◊

07 Business and Economic Newsflash
9. Measured by 20% weighted trimmed mean Urban CPI increased by 7.1% on (YoY) basis in
September 2020 as compared to 7.0% in the previous month and by 9.3% in September 2019.
On (MoM) basis, it increased by 0.4% in September 2020 as compared to an increase of 1.3% in
the previous month and an increase of 0.6% in corresponding month of last year i.e. September
2019.

10.Measured by 20% weighted trimmed mean Rural CPI increased by 10.0% on (YoY) basis in
September 2020 as compared to 9.3% in the previous month and by 9.6% in September 2019.
On (MoM) basis, it increased by 0.9% in September 2020 as compared to an increase of 1.0% in
the previous month and an increase of 0.6% in corresponding month of last year i.e. September
2019.

Policy rate to remain unchanged at 7pc: SBP

The SBP, in a statement, said: "In reaching its decision, the MPC considered key trends and pro-
spects in the real, external and fiscal sectors, and the resulting outlook for monetary conditions
and inflation." The statement by the central bank also noted that "business confidence and the
outlook for growth have improved" in the country since the last meeting of the MPC that was
held in June.

The statement said that the improvement reflected the decrease in coronavirus cases, ease in
lockdowns as well as the "timely stimulus provided by the government and SBP". However, due
to "supply side shocks" to food prices, the inflation forecast has risen slightly and the rate will
now remain within the range of 7-9pc in financial year 2021, the statement added.

It further said that the "targetted measures" taken by the central bank and the federal govern-
ment have injected Rs1.58 trillion, or about 3.8pc of GDP, in the cashflow of both households and
businesses. The MPC noted that the country's manufacturing sector had expanded by 5pc after
the slump in March and April due to lockdowns imposed to curb the pandemic.

◊ September 2020 IFMP Newsletter Page 13 ◊

08 Urdu Glossary

Holding Company ‫محلوک ی‬

‫کمپن‬
Bank Liabilities ‫واجبات بینک‬

Notional Cost ‫تصور یات الگت‬

Stock Holder ‫حےص دار‬

Windfall Profit ‫غیمتوقع منافع‬

‫ر‬

Incentives ‫ترغیبات‬

Notice of Assignment ‫تفویض یک اطالع‬

Terms and Conditions ‫رشائط و ضوابط‬

Penalize ‫کیس پر ی‬
‫شا عائد کرنا‬

Whistleblower ‫مخی‘ اندر یک خی ی‬

‫دین واال‬

Imprudent Lending ‫غی محتاط قرض کاری‬

‫ر‬

Nominal Share Capital ‫ی‬ ‫ے‬

‫کاعرف حصہ‬ ‫شمائ‬

Raw Material ‫خام مال‬

Unpaid Premium ‫غی اداشدہ قسط‬

‫ر‬

Policy Holder ‫بیمہ دار‬

◊ September 2020 IFMP Newsletter Page 14 ◊
10
08
09 Quotes
Quotes and
and Jokes
Jokes
Feedbacks

Feedback on IFMP training

The Trainers had excellent command on the topic.

 Muhammad Nazir — HBL Bank Ltd.

 Attended IFMP Webinar in Collaboration with PSX on ‘Spotting Market Trends in
the Stock Market’ by Raza Jafri, CFA and Ehtesham Khan, CMT, CFTe

Knowledgeable and had grip over the topics he presented. Engaging session!

 Saqlain Abbas — Hardcastle, Waud (Pvt.) Ltd.

 IFMP Webinar on "An Overview of Key Requirements of Various IASs/ IFRSs" by
Hasan Marfani, ACA.

“Excellent Topic and delivery, Excellent command of trainer on the topic.

 Umair Munir — Bank Al Habib Ltd.

 Attended IFMP Webinar on "An Overview of Key Requirements of Various IASs/
IFRSs" by Hasan Marfani, ACA.

◊ September
December
March 20192018
2020 IFMPIFMP
Newsletter
Newsletter Page 16
Page
◊ 15
16 ◊
 Markets in Review
10
◊ Monthly Review ◊
Pakistan
KIBOR
Crude Oil Stock
(6 Months)
Exchange

(WTI)$ Bid % Offer % 100 Index

Beginning 43.05 Beginning 7.00 7.25 Beginning 41,110.93

Ending 40.02 Ending 7.05 7.30 Ending 40,571.48

Change - 3.03 Change 0.05 Change - 539.45

Gold Silver

10 Grams 10 Grams

Beginning Rs. 104,689 Beginning Rs. 1,496

Ending Rs. 100,590 Ending Rs. 1,244

Change - Rs. 4,099 Change - Rs. 252

Foreign Exchange Rates

Interbank Market (buying)

GBP (£) EURO (€) USD ($)

Beginning Rs. 221.16 Rs. 197.57 Rs. 165.48

Ending Rs. 213.00 Rs. 194.00 Rs. 166.00

Change - Rs. 8.16 - Rs. 3.57 Rs. 0.52

Contact Us
www.ifmp.org.pk 92 (21) 34540843-44 info@ifmp.org.pk

◊ September 2020 IFMP Newsletter Page 16 ◊