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Tuesday, 18 December, 2012
Developed economies to grow by 1.6% in 2013: Lagarde SANTIAGO: IMF chief Christine Lagarde upwardly revised the Fund’s estimate of economic growth among developed nations, which she said would increase by 1.6 percent next year, up from an earlier estimated 1.5 percent. She told Chile’s La Tercera newspaper that developing countries should grow by 5.6 percent, while the global economy is expected to expand by 3.6 percent. “So 2013 will be a little better than 2012,” the Chilean daily quotes her as saying. Lagarde was in Chile Thursday and Friday for a visit that included a meeting with Chile’s President Sebastian Pinera. She also took part in a meeting of the Community of Latin American and Caribbean States. AGENCIES
Bears leave their mark on the capital ISLAMABAD: The Islamabad Stock Exchange witnessed a bearish trend on Monday as the ISE-10 index was down by 18.81 points to close at 3220.56. A total of 270,000 shares were traded, which were up by 266,500 shares as compared to previous day’s trading of 3,500 shares. Out of 144 companies, share prices of 64 companies recorded increase and those of 80 registered decrease. No company remained stable. The share price of Unilever Pakistan increased by Rs 80.00, while that of Murree Brewery decreased by Rs 7.75. K.E.S.C, NIB Bank and Fauji Cement remained the top trading companies with 125,000, 125,000 and 10,000 shares respectively. APP
Crude up in Asia on China demand hopes SINGAPORE: Oil was up in Asia Monday on trader expectations of a hike in Chinese crude demand after a key survey showed its manufacturing activity hitting a 14-month high in December, analysts said. New York’s main contract, light sweet crude for delivery in January rose 23 cents to $86.98 a barrel and Brent North Sea crude for February delivery advanced five cents to $108.23. “Oil prices rose... on expectations for improved demand in China after data showed the manufacturing sector in the world number two oil consumer expanded in December at its fastest pace in more than a year,” Phillip Futures said in a report. Banking giant HSBC in its preliminary purchasing managers’ index (PMI) released Friday recorded China’s manufacturing activity at 50.9 in December, the highest the index has reached in 14 months. AGENCIES
RUPEE-DOLLAR PARITY
Smugglers, forward bookers to feel the heat as govt wakes up to falling dollar Millions of dollars being smuggled to UAE unchecked g SBP mulling to ban forward booking of dollar at zero margins g Finance minister says ‘few serious measures’ due to stop dollar’s slide g UAE govt to be contacted on dollar smuggling g State Bank to issue travelers permission letter for carrying $10,000 g
KARACHI
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ISMAIL DILAWAR
AvING long been indifferent to a record depreciation of the rupee against the dollar, the federal government has finally decided to take remedial measures to what State Minister for Finance and Investment Saleem H Mandviwalla said reverse the upward spiral of the greenback. Monday saw the rupee trading at 99.25 against the greenback in the open market, the highest ever devaluation the Pakistani currency had ever seen in the country’s decades-old history. Whereas the regulators tend to assign the foreign exchange reserves-related attributable factors to the historic rupee-dollar imparity, the market sources point at irregularities like the smuggling as well as forward booking of the US currency by the importers at a zero margin. The sources said ongoing appreciation in the value of dollar was due to the gap in the supply and demand of the dollar created on the local currency market by huge sums illegally being smuggled to foreign countries, particularly the United Arab Emirates (UAE). Sensing gravity of the situation, State Minister for Finance Mandviwalla called and chaired a meeting of the stakeholders here at the State Bank of Pakistan (SBP) Monday afternoon. “The meeting would discuss the one-point agenda of looking ways to reverse this process,” the minister told Pakistan Today at a launch ceremony of two British brands here at a city shopping mall. Mandviwalla confirmed as sources privy to the meeting told Pakistan Today that the federal government, represented in the meeting by the State Minister for Finance and the central bank officials, decided to take “few serious measures” to control depreciation of the rupee. The sources said the money exchangers in the meeting told the government side that inter-bank was the market which needed to be regulated by the central bank. The currency dealers proposed that the regulator must prevent the banks from forward booking the greenback at a zero rate. Also the exchangers drew the government towards millions of dollars draining out of the country as a result of smuggling to the UAE countries like Dubai. When contacted Malik Bostan, chairman Forex Association of Pakistan (FAP), confirmed that the government side had decided to look into the money exchangers’ suggestions. “The forward booking should not be free, instead should be at 100 percent margins,” he said adding the State Bank should ban the opening of LCs at a zero rate for the advance booking of the dollar, as the practice leaves the market short of the greenback. About the smuggling, Bostan said the State Minis-
ter vowed to contact the UAE government asking it not to allow the travelers from Pakistan carry dollars in access of $ 10,000 if they failed to produce a permission letter issued by the SBP. “The State Bank would issue permission letters to those want to carry dollars,” he said. Bostan said the volume of dollar in the country’s currency market was fast reducing due to smuggling. “A couple of months ago we used to have a $ 10-15 million daily turnover which now has reduced to $ 5-7 million,” the dealer said. The SBP would develop an online mechanism to regulate the movement of the dollar, Bostan quoted Mandviwalla as telling the meeting. “Well, few serious measures will be taken to stop dollar slide,” the state minister for finance told Pakistan Today.
Rupee falls to yet another historic low, crosses 98 to a dollar mark KARACHI: The beleaguered rupee fell to yet another record low on Monday amid consistent demand for the US dollar both in the interbank and kerb currency markets. Dealers said that in the interbank market the rupee eased by 30 paisas to 98.10 to a dollar during the intra-day trading. Moreover, in the open or kerb market the rupee declined by 40 paisas to 99.20 to a dollar. The rupee has been under consistent pressure amid declining foreign exchange reserves after Islamabad began repayments of loans earlier this year obtained from the International Monetary Fund under the Stanby Arrangement. NNI Mandviwala said “yes” when asked if his side had decided to focus on curbing the smuggling and forward booking of the US currency to check its shortage on local market.
PIAF urges commerce minister to finalise Trade Policy document LAHORE NNI
Pakistan Industrial and Traders Associations Front (PIAF) has urged the Federal Commerce Minister to finalise Trade Policy document in the light of business community suggestions and proposals to make it more meaningful and acceptable to the stakeholders. In a statement issued here Monday, the PIAF Chairman Engineer Sohail Lashari said that the new policy should be framed in a way that it is not only acceptable to all the stakeholders but it has certain achievable targets and realistic objectives as well. As all the times policies are made and announced without the due consultation of stakeholders and thus hardly any targets are achieved. The PIAF Chairman said that the industrial production would remain sluggish and all the targets of Trade Policy would remain unfulfilled unless and until measures are not taken to expedite the industrial wheel by availability of cheaper electricity and continuous supply of gas to the industry. He said that the government should concentrate on electricity production through hydel means as thermal electricity is not only very costly but also
adding up to the import bill. He said that thermal power units could be a stop-gap arrangement and their adoption for a longer term would hit the economy hard. While stressing the need for construction of Kalabagh Dam, he said that a lot of money had already been spent on the project and it is quite feasible but for unknown reasons, the present government is reluctant to start work on it. He said that the upcoming trade policy must focus on promoting exports of non-traditional items as concentration on a few items and on few countries is also hitting the country’s economy hard. Sohail Lashari said that auto-parts, handicrafts, precious stones, herbal medicines and fruits have huge potential in South East Asia, Far East and African region. He said that textile sector makes more than 65 percent of total export earnings despite the fact that Pakistan produces excellent quality fruit & vegetables, Halal meat, auto-parts, confectionary items, sports goods and medical equipment etc. He said that the business community was ready to supplement all government efforts aimed at enhancing the exports but without due consultation of real stakeholders even the easiest targets become harder to achieve.
CY2012 saw Pakistan equities gain 48% KARACHI STAFF REPORT
In spite of economic issues, power shortages and security related concerns, the country’s equity market remained one of the best performing in Asia during the calendar year 2012. The benchmark KSE-100 Index gained 48% in local currency and 37% in US$ terms in the outgoing 2012 with only 9 trading sessions remaining, observed analysts at Topline Research in a report issued Monday. “Major boost to Pakistan equities was provided by declining interest rates that sharply came down by 450bps in last 18 months (250bps in 2012). Resolution of Capital Gain Tax related issues, improved foreign flows in equities, rising consumerism, better corporate earnings and relative calmness on political scenario also supported the share
prices,” they said. The market worth of Karachi bourse is now Rs4.2tn, up 43% in calendar year 2012. However in US dollar terms the market cap is still down 42% from its peak of US$75bn seen in April 18, 2012. Sharp decline in Pak Rupee since 2008, absence of large listings and decent dividend payouts have restricted the growth in the overall market valuation. As a result, Pakistan’s market cap to GDP ratio of 20% of Pakistan is one of the lowest in the region. Average daily traded value remained Rs4.7bn in 2012 compared to Rs3.5bn in 2011, an improvement of 35%. In terms of shares, volumes have jumped substantially by 121% in 2012 to 175mn shares a day mainly due to investors’ interest in low price shares. In the absence of vibrant derivatives market and lack of new listings, in spite of bull run the volumes are still lower than average daily of
Rs30bn witnessed in the period 2005-07 Though Pakistan stock market has posted a handsome gain in 2012, the trend of equity public offerings at Karachi bourse remained depressed. Pakistan equity market saw only 3 IPO’s in the outgoing calendar year 2012 compared to 4 in 2011.
This low level of listing is seen after a gap of 6 years while it also compares unfavorably with last 10-years average of 11 offerings a year. During outgoing 2012, a total of Rs500mn (US$5mn) was offered to general public, HNWI (High-Net-worth Individual) and local & foreign institutions, which is substantially lower than
Rs4.8bn (U$$56mn) offered in 2011. The rally in 2012 was led by mid caps as traditional sectors like Exploration and Banks did not outperformed. Cement stocks were among the top performers as investor re-rated the sector by 152% in 2012, on account of improved earnings. Growing demand and firm prices, kept cement makers’ margin improving. Further, reducing cost pressures due to decline in coal prices and interest rates also helped. Similarly, improving earnings of listed textile firms on account of stable cotton prices, increased regional demand and declining interest rates helped this sector to perform despite lower share in the overall market capitalization. Further, recently approved EU trade package and strong textile export numbers provided further triggers to the performance. Resultantly, textile sector gained 99% in 2012.