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Monday, 10 December, 2012
Further rate-cut demanded to make bedwear exports competitive KARACHI
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STAFF REPORT
HE bedwear exporters demanded the federal government to further slash the discount rate as well as a higher input cost to make Pakistani produces more competitive in the international market. The demand came from Pakistan Bedwear Exporters Association (PBEA) Chairman, Zain Bashir during a briefing here at a local hotel. Flanked by other exporters like Shabbier Ahmed and Naqi Bari, Zain said the move would enhance the volume of country’s exports of the bedwear textile. He said India, Sri Lanka, China and Bangladesh were the major competitors of Pakistan on the world market. Zain expressed concern over the contracting bedwear exports that had plummeted to $ 1.7 billion in 2012 from over $ 2 billion in 2005 and 2006. The newly-elected PBEA chief vowed to leave no stone unturned to regain the country’s former textile exports status and compete with the neighboring countries on the world markets. “What is required from the government is cooperation and support,” he demanded. He said utilities tariffs particularly gas were higher in Pakistan for the textile industry than that of key competing nations namely India, Bangladesh, Sri Lanka, and Vietnam. “All have a gas rate which is lower than that of Pakistan,” he added. Besides, he said, the markup rate for textile industries in India, Bangladesh, Sri Lanka, Turkey, and China were lower than what the manufacturers pay in Pakistan. “India and Bangladesh provide direct support to their respective textile exporters in the form of drawbacks,” said Zain. He said costs of gas and of finances to the textile sector in Pakistan are also higher than that of international competitors. He said if the textile exporters were provided with the appropriate support, they would have had a significant growth in the last six years. “It is tragic to see that instead of increasing our share on the world markets and helping the country earn foreign revenue, we have gone backward,” he lamented. The chairman said Pakistan was a rich country
Investors offer about 30 billion euros in Greek debt buyback: source Greece is set to purchase back about half of its debt owned by private investors, broadly succeeding in a bond buyback that is key to the country’s international bailout, a Greek government official said ATHENS AGENCIES
with natural resources in abundance but nothing of it could have been utilised in the past efficiently to bring out the nation of power and financial crisis. “There is plentiful coal in Pakistan,” he said. He said small investments in coal mining could trigger great progress in the energy generation to suffice the much needed power for residential, commercial and manufacturing sectors of the country. “Very little investment is required to mine the coal and process it to bring it to a level that it can be used as fuel,” he viewed. He said the natural gas in the country was being wasted to fuel private vehicles and residences throughout the country whereas such an import input should only be spared for the industrial requirements. “That is because the rest of the world known the significance of the precious natural resource, which needs efficient and careful utilisation in Pakistan as well,” he suggested. Zain said gas loss which the country is facing could be gauged as Unaccounted for Gas (UFG). He said: “It is shocking that a country starved for natural gas is in reality experiencing UFG loss of over 10 per cent in residential and commercial sectors. It is noteworthy that UFG loss is below 2 percent in industrial sector”. Despite the textile manufacturing sector utilization of gas in more efficient, it has been slapped with forced load shedding of the input, he showed regrets. The industrial sector runs on over 60 percent efficiency whereas home geysers run at 18 percent efficiency” he gave a comparison.
Greek and foreign bondholders offered the targeted 30 billion euros ($38.8 billion) in the deal, which is central to efforts by Greece’s euro zone and International Monetary Fund lenders to cut its debt to manageable levels. “The buyback went well in broad terms. The amount offered by investors was within the range expected, about 30 billion euros,” the official told Reuters on condition of anonymity. He did not provide more details. No formal announcement is expected before Monday, another official told Reuters. The buyback accounts for about half of a broader, 40-billion euro EU/IMF debt relief package for Athens agreed in November. The package broadly doubles the average maturity of its rescue loans to almost 30 years and cuts its interest rates by one percentage point to a level far below 1 percent. Under its terms, Athens will spend up to 10 billion euros of borrowed money to buy back bonds with a nominal value of about 30 billion euros. This is nearly half the 63 billion euros of Greek debt held by private investors eligible for the plan. Since the bonds are to be bought far below their nominal value, the country’s net debt burden would fall by about 20 billion euros. A successful buyback will ensure that the IMF, which contributes about a third of Greece’s bailout loans, will stay on board of the rescue. It would also unlock the payment of 34.4 billion euros of aid later this month. Athens badly needs that money to refloat its ailing economy by replenish-
ing the capital of its cash-strapped banks and settle arrears with government suppliers. The EU and the IMF have been withholding rescue payments to Greece for six months because it had fallen short of promises to shore up its finances, privatize and make its economy more competitive. Athens has received 148.6 billion euros in EU/IMF funds since May 2010. It stands to get almost 90 billion euros more by the end of 2014. But the rescue comes at a heavy price. Austerity measures taken in exchange for aid have plunged the country into economic depression. Unemployment hit a record 26 percent in September, the highest in the euro zone. The economy is going through its fifth consecutive year of recession and is expected to have shrunk by 24 percent when recovery begins in 2014. GREEK BANKS ON BOARD: The buyback was expected to go well after Greek banks, which hold about 17 billion euros of bonds, announced shortly before a Friday deadline they would take part. Two Cypriot lenders also said they would offer their bonds. Foreign investors have offered between 15 and 16 billion euros worth of bonds, Greek newspapers reported on Saturday, citing initial estimates without saying how they got them. Athens’ hopes of drawing enough investors to the scheme grew after it announced better-than-expected terms on Monday, with price ranges at a premium over market prices. The price range varied from a minimum of 30.2 to 38.1 percent and a maximum of 32.2 to 40.1 percent of the principal amount, depending on the maturities of the 20 series of outstanding bonds.
Wall Street Week ahead
‘Cliff’ worries may drive tax selling Investors typically sell stocks to cut their losses at year end. But worries about the ‘fiscal cliff’ - and the possibility of higher taxes in 2013 - may act as the greatest incentive to sell both winners and losers by December 31 NEW YORK AGENCIES
The $600 billion of automatic tax increases and spending cuts scheduled for the beginning of next year includes higher rates for capital gains, making tax-loss selling even more appealing than usual. Tax-related selling may be behind the weaker trend in the shares of market leader Apple (AAPL.O), analysts said. The stock is down 20 percent for the quarter, but it’s still up nearly 32 percent for the year. Apple dropped 8.9 percent in this past week alone. For a stock that gained more than 25 percent a year for four consecutive years, the embedded capital gains suddenly look like a selling opportunity if one’s tax bill is going to jump sharply just because the calendar changes. “Tax-loss selling is always a factor (but) tax-gains selling has been a factor this year,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont. “You have a lot of high-net-worth individuals in taxable accounts, and that could be what’s affecting stocks like Apple. If you look at the stocks that people have their largest gains in, they seem to be under a little bit more pressure here than usual.” Of this year’s top 20 performers in the S&P 1500 index, which includes large,
small and mid-cap stocks, all but four have lost ground in the last five trading sessions. The rush to avoid higher taxes on portfolio gains could cause additional weakness. The S&P 500 ended the week up just 0.1 percent after another week of trading largely tied to fiscal cliff negotiation news, which has pushed the market in both directions. A PAIN PILL FROM THE FED?: Next week’s Federal Reserve meeting could offer some relief if policymakers announce further plans to help the lackluster U.S. economy. The Federal Open Market Committee will meet on Tuesday and Wednesday. The policy statement is
expected at about 12:30 p.m. on Wednesday after the conclusion of the meeting the Fed’s last one for the year. Friday’s jobs report showing nonfarm payrolls added 146,000 jobs in November eased worries that Superstorm Sandy had hit the labor market hard. “After the FOMC meeting, I think it’s going to be downhill from there as worries about the fiscal cliff really take center stage and prospects of a deal become less and less likely,” said Mohannad Aama, managing director of Beam Capital Management LLC in New York. “I think we are likely to see an escalation in profit-taking ahead of tax rates
going up next year,” he said. MORE VOLUME AND VOLATILITY: Volume could increase as investors try to shift positions before year end, some analysts said. While most of that would be in stocks, some of the extra trading volume could spill over into options, said J.J. Kinahan, TD Ameritrade’s chief derivatives strategist. Volatility could pick up as well, and some of that is already being seen in Apple’s stock. “The actual volatility in Apple has been very high while the market itself has been calm. I expect Apple’s volatility to carry over into the market volatility,” said
Enis Taner, global macro editor at RiskReversal.com, an options trading firm in New York. Shares of Apple, the largest U.S. company by market value, registered their worst week since May 2010. In another bearish sign, the stock’s 50-day moving average fell to $599.52 - below its 200-day moving average at $601.38. “There’s a lot of tax-related selling happening now, and it will continue to happen. Apple is an example, even (though) there are other factors involved with Apple,” Aama said. While investors may be selling stocks to avoid higher taxes in 2013, companies may continue to announce special and accelerated dividend payments before year end. Among the latest, Expedia (EXPE.O) announced a special dividend of 52 cents a share to be paid on December 28. To be sure, the big sell-off in stocks following the November 6 election was likely related to tax selling, making it hard to judge how much more is to come. Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, said there’s a decent chance that the market could rally before year end. “Even with little or spotty news that one would put in the positive bucket regarding the (cliff) negotiations, the market has basically hung in there, and I think it’s hung in there in anticipation of something coming,” he said.