ARIF HABIB COMMODITIES (An Arif Habib Group Company) April, 2013

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1 ARIF HABIB COMMODITIES (An Arif Habib Group Company) April, 2013

2 Arif Habib Group serves over 100,000 local /international clients base Our success factors include continuous investment in Intellectual Capital, strong IT Strategy, capacity building and insistence on Best Practices The Arif Habib Group ranks amongst the largest and oldest financial services in Pakistan today Managing assets in excess of PRs. 37 billion (US$ 617 million), the Group holds interests in the securities & commodities brokerage, investment and financial advisory, investment management, commercial banking, commodities, private equity, cement and fertilizer industries

3 Why Arif Habib Commodities? We are a wholly owned subsidiary of Arif Habib Limited. We are one of the top most and oldest broker registered with Pakistan Mercantile Exchange. We stand amongst the pioneers of the country s commodity brokerage industry. Industry Leaders Professionals Team & Qualified Analysts Round the Clock Superior Service (5am-2am) Research on range of commodities including Agriculture, Precious Metals, Base Metals and Energy Daily Research, SMS Alerts and Regular Trading Calls Online & Offline Trading Lowest commission starting with Rs.25. We offer Account Opening from Rs.25,000/- Minimum margin requirement at 4.25% Customized market watch for PMEX Strong Relationship Management Focused Investor Education

4 Pakistan Mercantile Exchange (PMEX) technology driven, demutualised, on-line commodity futures exchange in Pakistan Trades Regulated by SECP with No Credit risk Pakistan s first and only Commodity and Futures exchange operational since Apr 2007 Active Contracts at PMEX are Gold 1, 10, 100 Troy Ounce, Silver 10, 100, 500 Troy Ounce and Crude Oil 10, 100 Troy Ounce. TOLAGOLD Physical Delivery. Other Contracts include Sugar, Wheat, Rice, Palm Oil 3 Contracts trade at a point of time for futures. E.g. Dec, Jan, Feb First Physical Gold Delivery in Aug Contracts for Spot Mon, Tue, Wed, Thurs, Fri Biggest Exchange of Pakistan in terms of Traded Volumes by Jun Daily Traded Value has crossed Rs.8bn between Guaranteed Settlement on T+0 basis Contract Expires on Last Friday of Preceding Month

5 Financial Institutions Category of Investor in Futures Markets Agricultural - Farmers Industries Individual/Retail Investors Government Suppliers discover information about future prices of commodities Speculators Hedgers to transfer risk to some other party Arbitrageurs to take advantage of price difference in different markets

6 Categories of traders in Futures Markets Hedgers Producers Farmers Consumers Refineries, Food processing companies Speculators Institutional proprietary traders Brokerage Firms Spot Commodity traders Hedge funds Supplier Farmers, miners, oil producers etc Arbitrageurs Brokerage Firms Investors

7 Pakistan Commodity Exchange trade in Spot/Futures A market in which multiple buyers and sellers trade commodity - linked contracts on the basis of rules and procedures laid down by the exchange. This includes: Spot trade for immediate delivery of the commodity (Physical) Forward contracts (Off Market) Futures trading (Through Exchanges) Market takes global perspective in to account to determine prices including Global Financial Crises, EU Stability, World Economic Growth Forecasts, Employment Data, Interest rate environment, US Dollar/Euro Parity, Safe Haven, Ease of Access and Central Bank/Government actions

8 Pakistan Mercantile Exchange (PMEX) provides Overnight Liquidity and Currency Risk Hedge at no cost Biggest Exchange in terms of Membership Investment Portfolio diversification Best Risk Management Practice in the country 100% institutional shareholding Low cost of trading starting with Rs.25 in Gold, Rs. 45 in Silver and Rs35 in Crude Oil Low Margins - High leverage with no cost (In Gold 22 times, Silver and Crude Oil 13 Times) Hedging against Inflation/ Arbitrage with other exchanges Highly liquidity and Idle Balances earn interest

9 Pakistan Mercantile Exchange Products International Commodities Most traded on PMEX Gold 1 ounce contract (5 Year return over 200%, 3Year return over 100%, 5 Year Annual Return over 31% upto 2012 in rupee terms) Crude Oil 10 barrel contract (17% 5 Year Annual Return in Rupee Terms) Silver-10/100 ounces contract (28% 5 Year Annual Return in Rupee Terms) Domestic Commodities IRRI-6 Rice/Wheat/Sugar/Palm Oil Futures Contract Financial Futures KIBOR Futures Contract

10 Pakistan Mercantile Exchange Trading Value traded over Rs.118bn by August 2011(6-fold growth in one year s time) Contracts traded 110,000 on average during (160% YoY increase)

11 Pakistan Mercantile Exchange Benefits of diversification - an illustration Diversifying portfolio Correlation Matrix USD/PKR KSE100 Gold Silver Crude USD/PKR KSE Gold Silver Crude 1 Returns* 0.5% 14.6% 22.2% 71.2% 15.1% Inflation adj.* -12.4% 1.8% 9.3% 58.3% 2.2% *based on relative returns average since Jul-2010 to Dec-2011

12 PMEX Trading Procedures Online Trading Market Timings: 5AM to 2AM Contract Period: Physical Delivery: Upto 7 Days, Cash Settled Contracts: 30, 60, 90 days Order Placement: Investor completes and delivers Account opening form along with check (Online fund transfer facility) to obtain Login ID and Password from Arif Habib Commodities to enter main screen client trade portal of PMEX Single Screen customized market watch along with online account statement, reporting on clearing and settlement

13 Investment in Gold Used as Jewelery major demand in India And alternative asset major demand by China Currency Hedge(Average rupee depreciation stood at Annual 7.5% during 20 year period ending 2009) Inflation Hedge (Average CPI stood 7.5% per annum and gold return over Annual 21% during 10 year ) Taxation(PMEX donot deduct) Leverage at no cost(13:1 for Oil, Silver and 22:1 for Gold) Diversification Exposure to Global Economy No Local Manipulation Safe Haven Long/Short Positions Liquid Investment Lack of reliable alternative assets Hedge against uncertain future Gold can be sold to someone outside Pakistan Locals loosing faith in economic growth

14 Contact Us: Arif Habib Commodities (An Arif Habib Group Company) Karachi Stock Exchange Building Stock Exchange Road Karachi Commodities Help Desk: Phone: Fax: Website: Follow us on Facebook/arifhabibcommodity, Twitter/ahcommodities

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