PRO 02-08-2012_Layout 1 8/1/2012 11:21 PM Page 1
Thursday, 2 August, 2012
Raja gears up to turn PIA’s fortunes around PM asks Finance Ministry to release $4.5m for PIAC’s uplift
ISLAMABAD
P
APP
rime minister raja Pervez Ashraf on Wednesday instructed the Finance ministry to provide 4.5 million dollars to Pakistan international Airlines Corporation (PiAC) on priority, after fulfilling necessary formalities. The Prime minister while chairing a meeting to review the performance of PiAC, assured its management that he would favourably consider conversion of rs 8 billion loan by the federal government into equity. The Prime minister directed the ministry of Finance to workout a plan for rescheduling of loans of rs 147 billion owed to different banks by PAiC, to ease their financial situation. He lauded the business plan worked out by PiAC and observed that he saw a ray of hope for PiAC’s turnaround and improvement in its services. The Prime minister said the government would extend all possible assistance to the PiAC management to regain its status worthy of a national carrier.
PM likely to announce package for PSM ISLAMABAD ONLINE
Prime minster raja Parvez Ashraf is likely to visit Pakistan Steel mills (PSm) within two weeks where he will formally announce a bail out package and relief for its employees. According to media reports, government sources said Prime minster raja Parvez Ashraf has assured the CeO Steel mills, major General (retd.) mohammed Javed and Chairman CBA, Shamshad Qureshi about his expected visit to Steel mills. Last week, a delegation of Pakistan Steel mills had invited him to visit the Steel mills. Consequently, it is expected that Prime minister raja Pervez Ashraf will visit Pakistan Steel mills before or immediately after August 14. it merits mentioning here that the federal government has already allotted rs 14.6 billions on account of bail out package to the steel mills. About 17000 people are employees of Pakistan Steel mills while it is bearing a monthly deficit of rs 1.5 billion.
KARACHI Despite negatives like the ongoing political turmoil and ratings downgrade by moody’s Pakistan remained the best performing market of Asia during the month of July, shows the mSCi indices. During the month in review, the benchmark KSe 100-share index marked an appreciation of 5.6 percent month-onmonth (mom) after resuming its rally that was suspended since march this year. This was unlike the historical pattern depicted in the past 10 years’ July monthly returns that averaged at 2.2 percent. The market average value, however, have been lower in the last decade with only $ 43 million, down 80 percent from decade’s average at $ 119 million. “if we segregate the monthly return in two halves, we find that during the first half of the month, the market remained in upward trajectory and touched the highest level of 14,568 on closing basis,” viewed mazhar A. Sabir, an analyst at in-
US imposes new sanctions on Iran oil sector
He expressed the hope that the PiAC management under its new leadership would bring about marked changes in the organization in shortest possible time, so that the people could feel the difference. The Prime minister appreciated the initiative of PiAC to carry Hajjis from iraq, myanmar, Sri Lanka and Bangladesh, enabling them to perform Hajj. However, he observed that these operations should in no way create any cause of complaints for Hajjis travelling from Pakistan. Chairman PiAC Air Chief marshal (retd) rao Qamar Suleman in his presentation briefed the Prime minister on the salient features of the business plan worked out by the new management in line with directions and policy guidelines given by the President and the Prime minister of Pakistan. On the current financial and operational problems faced by PiAC, he said that fuel cost and cost of financing were eating away a substantial part of the annual revenue of rs 117 billion. He proposed short term, medium term and long term plans to resolve the problems being faced by PiAC. The Chairman said the business plan had been prepared with a view to rationalize expenditure on one hand while endeavouring to optimize revenues on the other. He requested the Prime minister to convert the federal loan of rs 8 billion loan into equity and allow roll over of rs 147 billion loans due to various banks. He also requested for an immediate assistance of 4.5 million dollars for acquiring aircraft on dry lease.
InflatIon clIngs
onto a downward spiral KARACHI STAFF REPORT
The month of July augured well for the consumers in Pakistan who must have heaved in relief as the backbreaking price hike during the review month not only plunged to a single-digit but also hit the lowest level since December 2009. According to available figures, the Consumer Price index (CPi) inflation during July stood at 9.6 percent as against 11.26 percent of last month in June. “The reported CPi is the lowest since December 2009,” said the analysts at Topeline research. On monthly basis, the inflation stood at -0.3 percent compared to 0.04 percent of the previous month. This monthly inflation numbers, the analysts said, came in negative after six months. “Though still awaiting the detail break-up, we believe the subdued number in the month of June is a reflection of decline in average petroleum prices and 18 percent decrease in consumer gas tariff effective from July 2012,” said Topeline analyst Nauman Khan.
KSE bulls rule over Asia ISMAIL DILAWAR
Iranian sanctions soap opera recommences
vestCap research. Sabir cited improvement in the PakUS strained ties after the resumption of Nato supplies as a major attributable factor for the stocks market’ rally saying, however, in the later part of the month the market remained stagnant and the index showed range bound behavior with low activities highlighting the investors’ mood during this holy month of ramadan. The analysts at Topline research, however, opine that better foreign inflows and easing inflation, along with improving Pak-US relations, helped Pakistani equities to outperform Asian emerging and frontier markets. According to Farhan mahmood, a Topline analyst, with continued headwinds in the euro zone and uncertain global economic growth, all leading mSCi indices remained almost flat during the month. The mSCi World posted 1.2 percent return while mSCi emerging and mSCi frontier markets posted a return of 1.6 percent and 0.9 percent, respectively. On the other hand, Pakistan market
Analysts foresee ease in monetary policy as inflation slides to single-digit Further, he said the ramadan factor had not been incorporated in these inflation numbers. “These soft numbers attach a lower side bias to our average FY13 inflation forecast range of 10-11 percent,” he added. The analyst said he was firm that the soft inflation numbers coupled with $ 1.2 billion disbursement by the United States under the long-withheld Coalition Support Fund would help the State Bank to reduce the discount rate by 50 basis points in the upcoming monetary policy decision. Governor State Bank of Pakistan Yasin Anwar, however, had once, in an exclusive interview, told Pakistan Today that inflation numbers for a single month could never be a yardstick for making changes in the discount rate which is determined keeping in view the overall economic conditions.
outperformed all regional markets. Amongst 12 Asian countries tracked by the mSCi, Pakistan posted highest US dollar return of 5.6 percent beating all other regional markets that posted a return ranging from negative nine percent to four percent. Compared to KSe 100-share index’s 5.6 percent growth, india and China, the two leading markets, posted negative returns of 1.1 percent and 4.4 percent, respectively. moreover, Pakistan’s performance relative to other Asian frontier market, like Sri Lanka, Vietnam and Bangladesh, was far better with all posting negative return of 0.4 percent, 2.0 percent and 8.9 percent, respectively. “So far in 2012 Pakistan is second best performing market in Asia while it is top performing in Asian Frontier markets,” mahmood said. During the year, he said, the benchmark index posted a gain of 22 percent in dollar terms only to be beaten by Philippines that posted a return of 27 percent. Compared to foreign net selling of $ 109 million ($40 million excluding Hubco deal) in June, the foreigners in Pakistan turned net buyers of $30 million (gross buying $64 million, gross selling $33 million) during July.
WASHINGTON AGENCIES
US President Barack Obama on Tuesday imposed new economic sanctions on iran’s oil export sector and on a pair of Chinese and iraqi banks accused of doing business with Tehran. in a statement released by the White House, Obama said the new measures underlined the United States’ determination to force Tehran “to meet its international obligations” in nuclear negotiations. The sanctions came on the same day as the US State Department branded iran “an active state sponsor of terrorism” in its 2011 annual terrorism report, and as US lawmakers prepared to vote legislation demanding more action. Obama is keen to show his iranian sanctions regime is tough, amid fears israel may launch unilateral strikes against iran if it believes the islamic regime is on the point of achieving the capability to build a nuclear bomb. “This action is designed to deter iran from establishing payment mechanisms for the purchase of iranian oil to circumvent existing sanctions,” Obama said, warning that US sanctions will be apply to any entity buying iranian oil. Obama said measures would be taken against firms that have dealings with the National iranian Oil Company, the Naftiran intertrade Company or the Central Bank of iran or that help iran buy US dollars or precious metals. “Today’s action makes it clear that we will expose any financial institution ... that allows the increasingly desperate iranian regime to retain access to the international financial system,” he said.
Garment sector exports decline by $139m ISLAMABAD ONLINE
Chronic power and gas shortages severely hit the domestic garment sector of the country as it exports fell by $139 million during financial year 2011-12. The country’s garment exports declined by $139 million, from $1.773 billion in fiscal year 2010-2011 to $1.634 billion in fiscal year 2011-2012. According to exporters they had suffered eight percent decline in exports of readymade garments in the last fiscal year. According to former chairman of Pakistan readymade Garments manufacturers and exporters Association (Prgmea), ijaz A Khokhar garment exports had declined by at least 15 percent. He said that the production of garments had declined between 35 percent and 40 percent because of persistent shortages of electricity and gas. He said that labourers had become 30 percent more expensive; adding to the overall cost of production, making domestic products uncompetitive in global markets. He said that despite the presence of lucrative opportunities, local investment had completely stopped.
So far in 2012, foreigners have bought $540 million worth of shares while sold $541 million value of shares, thus resulting in net selling of $1 million. However, if we exclude Hubco deal, then foreigners are net buyers of $68 million in 2012YTD. The future outlook of the local equities, the analysts believe, is positive. A sector-wise performance shows that July saw the cement sector outperforming the KSe 100 index returns and posting a return of 16 percent based on market capital followed by financial services and software and computer service sectors, which posted returns of 13 percent and 12 percent mom, respectively, compared to 6 percent return of the index during the month. “The corporate result season is getting in its full swing, this holy month of ramadan may see slightly better returns compared to last a couple of years,” said Sabir. in addition, the analyst said, the central b a n k ’ s
monetary policy decision for the next two months, due in August, had also turned favorable for the stocks investors as no change in (12 percent discount rate, which may continue provided the State Bank borrowing of the government together with inflation stays within targeted limits for FY13.
Pakistan conjures up 10-year high equity return, beats rest of the Asian markets hands down