PRO 03-08-2012_Layout 1 8/2/2012 11:18 PM Page 1
Friday, 3 August, 2012
Monsoon to pour water over agri targets Inflationary pressures ahead as monsoon rainfall may hit agriculture produce KARACHI
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ISMAIL DILAWAR
HE economic observers foresee more backbreaking inflationary pressures in the coming months as poor rainfall during this monsoon season is expected to adversely impact the agricultural produces that might lead to the widening of gap between the supply and demand for food items. With official data showing the headline inflation in the country sliding down to a single digit, 9.6 percent year-on-year (YoY), during the month of July against 11.3 percent of the same period last year, the analysts predict tough days ahead for the consumers, who have been braving a backbreaking double-digit inflation for years, on the back of lower than expectation rainfall during the rainy monsoon season, a bad omen for water-intensive agriculture sector. Agriculture output contributes over 21 percent in Pakistan’s Gross Domestic Product.
LCCI’s lovin’ the neighbourly love-in
“Rainfall during this monsoon season has not stood as per expectations,” viewed InvestCap Reserach’s Abdul Azeem. The analyst warned that the less water availability situation due to low rainfall in the country could hurt the supply side situation in agriculture segment that may induce more inflation in the months coming ahead. “Therefore, for the next year we estimate the CPI inflation will stand in double digit,” Azeem said. The figures released by the Pakistan Bureau of Statistics, however, show that the headline inflation in July had decreased by 0.25 percent month-on-month (MoM) to 9.6 percent against 0.04 percent during June. The analysts attribute this downward move in price hike mainly to decline in the group of housing, water, electricity, gas and other by 3.54 percent, which holds 29.4 percent weight in overall CPI basket. In the same group, the analysts said a massive decline of 49.2 percent MoM
and 3.84 percent MoM in gas and kerosene prices respectively were the major reasons behind the significant decline in CPI contributed by this group. Similarly, they said, transport group prices also witnessed decline of 2.4 percent MoM as motor fuel prices posted a decline of 8.82 percent MoM. Communication group sector prices also fell by 0.05 percent MoM, which was mainly contributed by communication and apparatus items during Jul-12. On yearly basis, the highly weighted items (21.8 percent) House rent in the country increased by 6.52 percent YoY, while gas and prices down by 34.25 percent YoY during Jul-12. During the month in review, core inflation remained in double digits at 11.3 percent YoY compared to 9.5 percent YoY witnessed in Jul-11. The increase in nonfood items that posted double digit growth in their prices on yearly basis, includes text books, household servant, motor vehicle tax, doctor (MBBS) clinic
ISLAMIC BANKING growth in Pakistan impressive: Attock Chamber ISLAMABAD ONLINE
Welcomes India’s decision of allowing FDI from Pakistan LAHORE ONLINE
The Lahore Chamber of Commerce and Industry Thursday welcomed the Indian government decision to lift ban on investments from Pakistan and called for liberalising the visa regime to make the move more meaningful and resultoriented. In a statement issued here, the LCCI President Irfan Qaiser Sheikh urged the Indian Authorities to grant multiple visas to bona fide and legitimate businessmen so that they could be able to travel freely and without any hitches and hurdles. Irfan Qaiser Sheikh said that the move would further build the good will between the two neighbouring countries besides promoting joint ventures and paving the way for the transfer of technology as the two countries have their own strengths in different sectors and various areas. The LCCI President said that the Indian decision makes the point that the trade diplomacy is working well and would soon be resulting in more such good decisions that would help bring the people of two countries further close. Irfan Qaiser Sheikh hoped that the Indian authorities would also consider lifting ban on Indian investors who want to invest in Pakistan. He said that the trust level between the two sides will also go up further and help tackle other issues being faced by the two sides since decades. “We hope this decision will be fruitful for the business community and the people of the two countries.” “For a better economic future in South Asia, it will be a huge step when businessmen from both the countries can freely invest in each other’s country.” “Allowing our country to invest in India is a great confidence booster and will pave the way for more cordial bilateral relations.”
fee, utensils, firewood whole and marriage hall which increased by 40.60 percent, 35.04 percent, 28.73 percent, 25.53 percent, 23.85 percent, 23.81 percent and 20.50 percent respectively. About the future outlook, the analysts said the decline in international oil prices inducing a cushion effect to local oil POL price during the last couple of months, however, the upward reversal in international oil prices remain the question
Attock Chamber of Commerce and Industry (ACCI) said on Thursday that growth rate of Islamic banking in Pakistan is very impressive. A decade back Pakistan had only one Islamic bank while now we have five Islamic banks and Islamic banking branches representing all the top ten conventional banks, it said. 75 countries have recognised Islamic banking; major banks including HSBC, Citigroup, Deutsche Bank and Standard Chartered have Islamic banking branches or windows which prove success of Ribafree banking, said Attock Chamber of Commerce President Tariq Mehmood. Over nine hundred Islamic banking branches in Pakistan speak of the confidence of the masses in the Islamic banking and the successful handling of regulator, he added. He said that the share of Islamic banks in the assets of all the banks can exceed ten per cent in the current
fiscal year if introduction of new products is focused. Tariq Mehmood asked the Islamic banks to exploit the full potential of interest-free banking, expand network, and offer new products to reach to underserved sectors and un-banked population. Tariq Mehmood, who is also Pak-UK Business Council Director and FPCCI Committee on Health Chairman, said that Islamic banks should maintain the image of better risk managers which is necessary for depositor’s confidence. The deposit base of Islamic banking has been expanding faster than general banking due to speedy and better returns which is a very healthy development, he maintained. Tariq asked Islamic banks to keep an eye on global strategies, remain Shariah compliant and find ways to improve rates of return to match inflation which will boost confidence of masses in Islamic banking. Islamic banks have remained unharmed during the global financial collapse which has also saved investments of masses, the business leader observed.
mark for the increase in inflation going forward. However, they said, as per the pattern of treasury bills seen during last two auctions, there was a strong expectation of discount rate reversal existed in the market. However, considering the impact of Ramadan factor and variability of POL prices yet to be seen, we expect SBP to maintain the discount rate at current level, they added.
SECP to support Islamic finance summit ISLAMABAD ONLINE
The commitment of the Securities and Exchange Commission of Pakistan (SECP) to Islamic finance is cemented by its support for the second World Islamic Finance Summit (WIFS), which is scheduled for September 12-13, 2012, in Karachi. The industry leaders at the summit will learn the perspectives of the regulator, as the SECP talks about the expanding footprints of Islamic funds and investment and its aspiration to promote and develop a financially strong and transparent Islamic financial market in Pakistan. The SECP is striving to strengthen the capital market and attract national and international pool of resources, through a focus on Islamic finance. In its 3year strategic plan, the SECP visualises the consolidation and growth of innovative Shariah-compliant institutions, products and services. The summit will be held under the theme ‘Islamic Finance: Exploring Shariah Advantage’ and will have keynote addresses, panel discussions, a CEO power table and a 60-minute Shariah dialogue session.
Tobacco issues ‘smoked’ amicably ISLAMABAD ONLINE
The long outstanding problem regarding the tobacco crop prices has finally been resolved. Pakistan Tobacco Board (PTB) has fixed the price of tobacco at Rs 121 per kilogram Senate Standing Committee on Commerce recommended that the tax on tobacco export should be reduced from Rs10 to rs.5/kg. Meanwhile Commerce Federal Secretary, Munir Qureshi, said in the meeting that the price of fixation was made to protect the interests of growers. Ministry of Commerce State Minister, Abbas Khan Afridi said that the consultative meeting was held with all stakeholders regarding the price fixation in the Khyber Pukhtunkhwa (KPK) on rate of Rs.117/ per Kg as fixed by the Board. This decision was finalized following detailed briefing in the National Assembly and Committees on Ministry of
Commerce during the last few days. Experts closely aware of the issue observed that the senate was being blackmailed by elements completely unrelated to the affairs. They said that the main contention was being caused by individuals who were new to the tobacco board and were from areas where tobacco growing doesn’t even take place. The key issues discussed during the last few days in the National Assembly and later Senate Standing Committee on Commerce were related to the damaging impact on export sector incase of drastic revision in tobacco crop prices. Tobacco crop is one of the few crops in which exports increased by more than
300% in last two years. The current price of tobacco crop in Bangladesh is Rs.106/kilogram and if Pakistan increased its price beyond international market standards, it would hurt tobacco farmers instead of protecting them. Many members who took part in these meetings pointed out that sectors like PIA, Railways etc. had already gone under and were a drain on national resources, whereas cigarette manufacturers were contributing near Rs.75 billion (US$800 Million) annually in tax for national revenue. If proper policies were not put in place, this sector and government revenue would be undermined. Actually one of the recommendations put forward was to use these billions of Rupees in tax contribution to subsidise and support tobacco farmers instead of
killing the goose that lays golden eggs. The decision of one of the multi-national cigarette manufacturers to close one of the factories was also discussed as a tip of the iceberg if the proper policies were not put in place. If foreign investors were “blackmailed” or continue to face difficult operating environment, it would not only hurt investments in one sector of the economy but would signal red light to all potential foreign investment. It was also pointed out that the same multinational had last year declared losses due to the market conditions and if the current economic and investment environment was not improved others could also go in losses. In such scenario there would actually be no one to buy tobacco crop from farmers who would suffer more as domestic demand would also end and export potential would anyway be undermined due to drastic prices beyond international market conditions.
PRO 03-08-2012_Layout 1 8/2/2012 11:19 PM Page 2
Business 02 Bulls redouble their momentum
Major Gainers ComPany UniLever Pak Colgate Palmolive Siemens Pakistan Shezan Inter. Mithchells Fruit
oPEn 8000.00 1251.65 758.52 262.00 337.95
HIgH 8350.00 1310.00 796.44 273.00 354.84
Low 8300.00 1309.00 796.44 249.00 330.00
CLoSE CHangE 8300.00 300.00 1309.00 57.35 796.44 37.92 272.74 10.74 347.76 9.81
TURnovER 40 300 500 69,800 39,400
194.00 175.30 144.99 235.00 102.80
194.00 168.10 137.70 226.01 97.99
194.00 169.68 138.33 229.50 98.12
-10.00 -5.69 -5.22 -4.50 -4.39
200 259,300 8,400 29,300 68,600
48.10 7.47 15.88 6.37 5.19
46.61 6.70 15.37 6.07 4.90
46.76 6.82 15.45 6.10 4.91
-0.67 -0.51 0.09 -0.16 5, -0.15
14,600,000 8,130,500 5,300,000 116,000 4,875,000
Major Losers
Index took a 14-point hike courtesy interest in blue chip stocks KARACHI
million shares against 104.815 million shares of the previous day. The trading value increased to Rs 3.973 billion compared to Rs 3.442 billion of the previous session. The intraday high and low, respectively, stood at 14, 795.43 and 14, 714.94 points. He added that the Pak-US accord signing on Nato supplies, fall in CPI for Jul’12 to 9.6pc, strong earnings outlook and hopes for release of $1.12bn payment from US against services to coalition forces played a catalyst role in bullish sentiments despite concerns for circular debt in Pakistan energy sector and power outrages for industrial sector. The market capitalization grew modestly and increased to Rs 3.760 trillion from Rs 3.759 trillion a day earlier. Of the total 307 traded scrips, 112 gained, 165 lost and 30 finished as unchanged.
STAFF REPORT
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HE bulls kept dominating Karachi stocks market on Thursday with benchmark, KSE 100-share index gained 13.81 points. The day saw the index closing up by 0.09 percent at 14, 730.67 points against 14, 716.86 points of Wednesday. Pakistan Stocks closed higher amid institutional interest in blue chip stocks ahead of major earning announcements amid hopes for cut in SBP policy stance due to be announced on August 10; this was viewed by Ahsan Mehanti, Director at Arif Habib Investments Limited. On second last working day of the week Thursday, the trading volumes at the ready-counter were recorded lower at 102.963
WAPDA’s got the power… and cheap! WAPDA generates 28.2 billion units low-cost hydel power in FY 2011-12 ISLAMABAD ONLINE
The Pakistan Water and Power Development Authority (WAPDA) contributed 28,206 million units of low-cost hydel electricity to the National Grid in fiscal year 2011-12. The share of hydel generation in the overall system during the year ending June 30, 2012 registered 31 percent, while the rest of 69 percent electricity was generated mainly through gas, residual furnace oil (RFO) and high sulphur diesel (HSD)-based thermal power plants. How instrumental had been the hydel share in lowering the electricity tariff for the end consumers during 2011-12 can be assessed from the fact that the average purchase rate of the Central Power Purchasing Agency (CPPA) for hydel electricity was merely Rs.1.41 per unit, if compared with the average purchase rate of Rs.5 to 8 per unit for gas-based, Rs.13 to 18 per unit for RFO-based and Rs.18 to 22 per unit for HSDbased electricity during the corresponding period. Had this hydel share not been there, the average basket rate (consumers’ rate) would
have been about Rs.13.50 per unit instead of Rs.9.50 per unit. The total installed capacity of the WAPDA hydel power stations stands at 6516 mega watt (MW). Most importantly, this installed capacity, unlike thermal power plants, is not deteriorated by a single MW because of the efficient maintenance of the hydel power stations. On availability of the required water, as much as 6516 MW electricity can be produced through hydel power stations. According to the details of hydel electricity generated during fiscal year 2011-12, the 3478 MW Tarbela Power Station contributed 14,057 million units, the 1410 MW Ghazi Barotha 6,979 million units, the 1000 MW Mangla 4,666 million units, the 243 MW Warsak 991 million units, the 184 MW Chashma 1,067 million units, the 72 MW Khan Khwar 176 million units, and other small hydel power stations produced 270 million units of low-cost and environmentfriendly electricity. In order to increase the share of hydel electricity in the National Grid, and to stabilise the power tariff, WAPDA is implementing a number of large projects in water and hydropower sectors. Oncompletion, these projects will help generate about 20,000 MW of electricity and store around 12 million acre feet of water.
The free-float KSE-30 index adds 7.71 points to close at 12, 719.86 points against the previous 12, 712.15 points. D.G.K Cement was the day’s volume leader counting its traded shares at 14.600 million with the opening and closing rates standing at Rs 47.43 and Rs 46.76, followed by, Maple Leaf Cement, Jahangir Siddiqui Company Limited, Fauji Cement, and Lafarge Pakistan with turnover of 8.130 million, 5.300 million, 5.116 million and 4.875 million shares respectively. On the future market, the turnover decreased by over 4 million shares to 7.503 million against 11.307 million shares of Wednesday. The UniLever Pakistan and Colgate Palmolive, up Rs 300.00 and Rs 57.35, led highest price gainers while, Island Textile and ICI Pakistan, down Rs 10.00 and Rs 5.69 respectively, led the losers.
SECP under SHC’s hammer SHC restrains SECP from implementing Takaful rules 2012 KARACHI STAFF REPORT
The Sindh High Court Thursday restrained the Securities and Exchange Commission of Pakistan (SECP) from implementing the Takaful Rules, 2012 issued by it while hearing a constitutional petition filed by five Takaful companies challenging the Takaful Rules, 2012. Represented by advocates Arshad M. Tayebaly and Taimur Ali Mirza, the five Takaful petitioners include Takaful Pakistan, Dawood Family Takaful, Pak-Qatar Family Takaful, PakQatar General Takaful and Pak-Kuwait Takaful Company. The apex regulators from the SECP had notified the Takaful Rules, 2012 on July 16, 2012 under which conventional insurance companies had been allowed to carry on takaful business through window operations. The takaful companies had raised serious objections that the new rules would result in the distortion of the Takaful business in Pakistan and would allow conventional insurance companies to do takaful business in a manner which would be against the principles of Shariah.
Island Textile ICI Pakistan Philip Morris Pak. National Foods Akzo Nobel Pak.
204.00 175.37 143.55 234.00 102.51
Volume Leaders D.G.K.Cement Maple Leaf Cement Jah.Sidd. Co. Fauji Cement Lafarge Pakistan
47.43 7.33 15.36 6.26 5.06
Interbank Rates US Dollar UK Pound Japanese Yen Euro
94.4193 146.7465 1.2057 115.9280
Dollar East US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal Australian Dollar
BUy
SELL
94.20 115.41 146.26 1.1973 93.36 12.00 25.63 25.13 98.39
95.00 116.29 147.33 1.2059 94.54 12.16 25.79 25.24 100.55
CORPORATE CORNER EFU Life and TCF collaboration to educate Pakistan LAHORE: As an initiative of Corporate Social Responsibility, EFU Life has joined hands with The Citizens Foundation (TCF) for the noble cause of educating underprivileged children. EFU Life will donate a certain amount to TCF for every education plan sold through its distribution channels. PRESS RELEASE
Ramadan: a month of blessings and tape ball cricket
profit up 9pc to $3.95b in Jan-June CY12 KARACHI STAFF REPORT
Standard Chartered PLC Tuesday announced a 9 percent rise in both income and profits to $9.51 billion and $3.95 billion, respectively, for the first half of 2012. This represents a 10th consecutive record first half of profit growth, said the group in a statement issued here on Tuesday. The Group’s balance sheet is in excellent shape and we continue to be well diversified, strongly capitalised and primarily deposit funded. We have already met Basel III capital requirements with a Core Tier 1 of 11.6 per cent and we have very strong advances to deposits ratio of 77.6 per cent. We continue to benefit from being the only major international bank to be upgraded by all three rating agencies since the onset of the financial crisis. Asset quality is good, although we remain watchful given the strongly challenged macroeconomic environment. We have limited refinancing requirements over the next few years. LOAN IMPAIRMENT: Group level loan impairment remains at very low levels albeit up by 42 per cent on the first half and 18 per cent on the second half of 2011. We have seen some increase in loan impairments in both businesses, but from
very low levels, and we remain very comfortable with the shape and quality of our loan book. We remain disciplined and proactive in our approach to risk management. In the Consumer Bank, 82 per cent of the lending book is either fully or partially secured. We are comfortable with the maturity profile on our Wholesale Banking loan book with over 63 per cent under one year. CONSUMER BANKING: The Consumer Banking transformation programme continues to make good progress and we are investing in the business in order to grow both our customer base and customer service capabilities. Income grew 5 per cent year on year to US$3.5 billion. Deposit income is up strongly, 14 per cent year on year, with income on credit cards and personal loans showing excellent momentum up 13 per cent year on year as we continue to grow balances, up 7 per cent since the year end. SME continues to perform well with 7 per cent income growth year on year driven by Lending, Trade and Cash Management. Within Consumer Banking, a 3 per cent slowdown in Wealth Management income, the one-off expense recoveries of US$86 million last year and the increase in loan impairment of 42 percent has resulted in an operating profit reduction of 11 per cent on the first half
of 2011, as previously guided. WHOLESALE BANKING: Wholesale Banking has delivered another strong performance, reflecting the resilience of the business model, the continued business activity of our client base and underlying growth within our footprint. Income is up 10 per cent on the first half of 2011, with client income contributing 80 per cent of total Wholesale Banking income. Transaction Banking, the heart of the Wholesale bank, has had an excellent first half, with 19 per cent income growth: Trade, income was up 25 per cent and Cash Management income saw strong growth of 13 per cent year on year underpinned both by growth in average balances and an improvement in margins. Corporate Finance income of US$991 million was up 9 per cent in the first half of 2011. Wholesale Banking continues the year well with very strong transaction pipelines excellent momentum across many of its businesses. Standard Chartered Group Chief Executive Peter Sands, said: ”These results represent a very positive start to the year. Our record of consistent delivery is testament to the resilience of the Bank’s business model, and underscores the sheer diversity of the income engines we have. These results are simply our tenth consecutive first half of record profits.”
KARACHI: In Pakistan, the holy month of Ramadan is synonymous with fasting, prayer, and tape ball cricket. Continuing with the tradition of hosting the most popular tape ball cricket tournaments in the country, Warid Telecom once again brings an occasion to enjoy the most Pakistani of sports: Tape Ball Cricket!. PRESS RELEASE
Reckitt Benckiser Pakistan striving towards a healthier and happy world KARACHI: In the year 2000, RB set itself the milestone to reduce carbon emissions by 20% by the year 2020. Remarkably, the company managed to accomplish this goal by 2011 eight years ahead of time. PRESS RELEASE
NBP Information Security Manager Mr. Javed Jabbar receiving award from ISC Executive Director Mr. W. Hord Tipton.
Friday, 3 August, 2012