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Monday, 19 November, 2012
Indian fair to open new vistas for Pakistani businessmen: Bashir ISLAMABAD
T
APP
HE participation in the International Trade Fair 2012 will open new vistas of opportunities for Pakistan's business community in India, said Pakistan High Commissioner in India Salman Bashir. Inaugurating Pakistani Pavilion at 32nd Indian Internal Trade Fair (IITF) 2012 in New Delhi, Salman Bashir said that there was gradual and significant improvement in the economic and trade relations between Pakistan and India although latter's view and stance on certain political issues were quite clear. According to a message received here
from New Delhi, the High Commissioner said that more than 176 Pakistani stalls had been established in the fair and appreciated the FPCCI efforts for its cooperation in this respect. He said that the fair had provided an opportunity to the Pakistani entrepreneurs to explore joint venture opportunities with their Indian counterparts. He said that Pakistan wanted to keep cordial and peaceful relations with all the countries, particularly its neighbours. Sheikh Shakeel Ahmed Dhingra, Vice President FPCCI, appreciated the Indian government for extending full support and cooperation to the Pakistani delegates. Haji Fazal Kadir Khan Sherani, President of FPCCI said Pakistani's cottage industry was small, but its home textile
products were in big demand throughout the world, including India. He expressed his gratitude and thanked to the Indian Trade Promotion Department issuing visas expeditiously to the Pakistani participants and delegates. He called for establishing bank branches in both the countries and simplifying/liberalizing visa issuance policy to facilitate exchange of business delegations and promotion of trade and industry. Sheikh Shakeel Ahmed Dhingra; Iqbal Dawood Pakwala; Azhar Majeed Sheikh, Begum Salma Ahmed Vice Presidents FPCCI; Nasiruddin Sheikh, Chairman FPCCI Standing Committee on Exhibition; Naeem Ahmed, Pakistan's Trade Commissioner in India were also present on the Occasion. The fair will continue till November 27.
Santander plans to invest in Spain's bad bank Spain's Santander (SAN.MC) plans to invest in the country's so-called bad bank in a sign that healthy domestic lenders are willing to support the entity created to clean up the aftermath of a 2008 property crash g
MADRID AGENCIES
"The bank plans on investing in the bad bank," a spokesman for Santander, Spain's biggest bank, told Reuters on Saturday. Spain has set up the bad bank to siphon off toxic real estate assets from bank balance sheets that date from the property crash. The bad bank's creation is a condition of receiving up to 100 billion euros ($127 billion) of aid in a European bail-out of the country's financial sector. Spain's second biggest bank, BBVA (BBVA.MC), is considering investing in the vehicle, but has yet to make a decision, a BBVA spokesman told Reuters on Saturday. Sabadell (SABE.MC) is also considering investing but has not yet made a decision, a Sabadell spokesman said.
The bad bank's managers are currently in talks with BBVA, Sabadell and Barcelona-based Caixabank (CABK.MC) about them investing in the vehicle, a banking source said. Caixabank was not immediately available for comment. An Economy Ministry source said on Friday the bad bank could go ahead just with backing from domestic investors but foreign investors would give it credibility. The bad bank will initially have equity of 3.9 billion euros. But the government needs private investors to stump up 2.2 billion euros, or 55 percent of this, in December, the Economy Ministry source said on Friday. Private sector support is key because the government wants to keep its stake in the bad bank below 50 percent to reduce the burden on state finances. The bad bank, known as Sareb, will ini-
tially receive assets - such as soured loans to housebuilders and foreclosed property from four state-rescued banks, including Bankia (BKIA.MC), worth 45 billion euros. It will have a maximum asset value of 90 billion euros. The equity in the bad bank could rise to 5 billion euros after including assets from a further group of banks, aside from those taken from the state-rescued banks, the source said.
The government hopes eventually to capture 500 million euros of investment from foreign investors, or 10 percent of the final equity tranche. The rest of the bad bank will be financed by senior state-backed bonds. Government sources said on Friday that Spain's bank restructuring fund, the FROB, could use part of the European aid to invest in the bad bank, and as such, would not need to tap markets.
Quelle catastrophe!
France bank chief says end of euro would be 'disaster'
MADRID AGENCIES
Bank of France governor Christian Noyer said Friday the euro is here to stay and warned that its disappearance would be an "absolute disaster". The central bank chief defended the currency as the recession-hit eurozone tried to contain a growing debt crisis, with Greece battling to avert default and Spain pondering a sovereign bailout. "The future of the euro is absolutely clear cut," Noyer said in a speech to the annual assembly of Spain's Association of Financial Markets in the Spanish capital. "I have absolutely no doubt that the euro will stay in the long term future," he added. "It is the natural continuation of the European Union, it was in the spirit of the founding fathers." Noyer said the benefits of the single currency were "perfectly clear". "People don't realise that if the euro disappears it will be an absolute disaster," he warned. The French banking chief pressed European powers to set up a banking union as an urgent response to the region's financial crisis. European leaders agreed in October to establish a regional banking supervisor in 2013, the first step towards a banking union that would allow the European Union to directly help troubled banks.
Wall Street week ahead: Going off ‘cliff’ with a bungee cord g
The 1987 crash. The Y2K bug. The debt ceiling debacle of 2011 NEW YORK AGENCIES
All these events, in the end, turned out to be buying opportunities for stocks. So will the "fiscal cliff," some investors say as they watch favorite stocks tumble during the political give-and-take happening in Washington. The first round of talks aimed at avoiding the "fiscal cliff" caused a temporary rise in equities on Friday, signaling Wall Street's recent declines could be a buying opportunity. The gains were small and sentiment remains weak, but it suggests hope for market bulls. Though shares ended moderately higher on Friday, it was not enough to offset losses for the week. The S&P was down 1.5 percent, while both the Dow and the Nasdaq fell 1.8 percent. The S&P 500 is down more than 5 percent in the seven sessions that followed President Barack Obama's re-election. Uncertainty arose as attention turned to Washington's task of dealing with mandated tax hikes and spending cuts that could take the U.S. economy back into recession. Some see the market's move as an overreaction to hyperbolic headlines about policy gridlock in Washington, believing stocks may start to rebound in what should be a quiet few days ahead of the Thanksgiving holiday next Thursday. "It just doesn't seem to make any sense that you suddenly wake up the day after the election and realize we've got a fiscal cliff," said
Krishna Kumar, partner at New York hedge fund Goose Hollow Alpha Advisors. Not long ago the S&P was on target for its second-best year in the last 10, riding a 17 percent advance in 2012. That's been halved to about 8 percent, which isn't bad but disappointing compared with just a month ago. Investors have been selling the year's winners. Apple (AAPL.O) is down 25 percent from its peak above $700. General Electric (GE.N) is down 14 percent; Google (GOOG.O) has lost 16 percent. Overall, the stocks that make up the top 10 percent of performers in the month prior to Election Day have been the worst performers since, according to Bespoke Investment Group of Harrison, New York. "I think it's a good opportunity to be long stocks at these levels," said Kumar. Hikes on capital gains and dividend taxes are on the line, and Obama has dug in his heels on what he sees as a mandate to make the tax code more progressive. He seems to have the upper hand in dealings with Congress because Republican lawmakers don't want to see tax rates increase, which is what will happen if no solution is found by the beginning of 2013. Republicans don't want to take the blame for driving the economy over the cliff. The current crisis is similar to last year's fight to raise the U.S. debt ceiling, which led to the downgrade of the United States' top credit rating in early August 2011.
During the dealings, the S&P 500 lost 18.8 percent between its peak in July 2011 and its bottom in August. As the market slid, the political standoff badly hurt investors' confidence in Washington, setting off a spike in volatility. In the end a deal was announced that raised the ceiling and put off longer-term fiscal decisions until January 1, 2013, setting the stage for today's "fiscal cliff" crisis. After staying flat through September 2011, the S&P 500 jumped 31 percent between its October low and the end of March. BUY THE DIP? Gridlock in Washington and all that could possibly go wrong with the economy if a deal is not reached have grabbed the headlines, but the negotiations leave room for stock market gains. Congressional leaders said Friday they will work through the Thanksgiving holiday recess to find a solution. "The debate over how to solve (the fiscal cliff) may be more productive than is commonly recognized," said Brad Lipsig, senior portfolio manager at UBS Financial Services in New York. "The U.S. is facing a major debt overhang, and serious steps toward addressing it might ultimately be viewed as a positive for future growth," he said. "The market may recognize this and, after a time of hand wringing, recover from the concerns with a renewed sense of optimism." The recent selling took the S&P 500's relative strength index - a technical measure of internal strength - below 30 this week, indicating the benchmark is over-
sold and due for a rebound. The RSI in four of the 10 S&P sectors utilities, telecoms, consumer staples and technology - is below 30 and the highest RSI reading, for the consumer discretionary sector, is below 40, suggesting a bounce is in store. "What I want to do is what we did during the decline following the budget negotiations in the summer of 2011: The lower the stock market goes, the more I want to own stock," said Brian Reynolds, chief market strategist at New York-based Rosenblatt Securities. "If we go off the cliff it will be with a bungee cord attached," he said. KEEP CALM AND HEDGE: Volatility is expected to rise through the end of November and to spike in late December if no agreement on the fiscal cliff is reached in Congress. Along-
side comes opportunity for those with high risk tolerance. "Recently, volatility has increased in the market overall. You can't really pick it up in the VIX yet, but I think as we get through November, I think you're likely to see the VIX be at a relatively higher level," said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston. In 2011, the VIX averaged 19.2 in July and 35 in August. So far this month the average is 17.8 and it is expected to spike if negotiations on the cliff drag into late next month. "Looking at the range of possibilities, I would say any of them would be better than sitting here waiting. I would even put going off the fiscal cliff in that category," said Jill Cuniff, president of Seattlebased Edge Asset Management Inc, which manages about $20 billion.