profitepaper pakistantoday 24th september, 2012

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Monday, 24 September, 2012

ECB may not supervise all banks: Merkel ally A senior conservative ally of German Chancellor Angela Merkel has suggested the European Central Bank may not get new powers to supervise all of the Euro Zone’s banks g Existing European Banking Authority could be enhanced instead g

BERLIN

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AGENCIES

HE European Commission has proposed making the ECB the main supervisor for euro zone banks to prevent problems at lenders struggling with bad debts from sucking weak euro zone countries deeper into the debt crisis as they borrow to finance bailouts.

Michael Grosse-Broemer, chief whip of Merkel’s conservatives, told Reuters it was unclear whether the ECB would take over the role of overseeing the euro zone’s banks and said it had not yet been decided which institution would become the bank supervisor.

“I would not exclude the possibility that the existing European Banking Authority (EBA) will be enhanced and reorganized,” he added.

Grosse-Broemer said this would save having to reform the ECB, where responsibilities for monetary stability and banking supervision are otherwise strictly separated.

But the EBA would need to resolve its “structural defects” which have until now prevented it from being an effective supervisor, he added.

Merkel’s government wants the ECB’s new powers to apply only to systemically relevant or cross-border institutions - a position that got clear backing from lawmakers in her centre-right coalition this week.

She and French President Francois Hollande are due to discuss banking supervision on Saturday.

Merkel has warned against rushing to create a new pan-European bank supervisor under the roof of the ECB, but France has called for quick action.

Grosse-Broemer said there was no need to complete the reform of banking supervision by the end of the year.

Michael Barnier, the EU Commissioner in charge of regulation, has said the Commission’s proposal for euro zone wide banking supervision can and should be introduced by a January 2013 target date.

In the latest sign of German skepticism about these plans to move quickly to hand the power to oversee euro zone banks to the ECB, Grosse-Broemer said Germany’s current deposit guarantees would not become part of any EU-wide deposit guarantee scheme. “We need a clear-cut separation of national and European deposit guarantees,” he said.

Barnier said earlier this week he did not want a new EU-wide deposit guarantee fund but rather for EU states to set up their own deposit guarantee funds, which could then borrow money if necessary.

Successful roadshows held for TAPI pipeline project in Singapore, New York & London

Stocks face earnings and data hurdles Stocks could struggle to stay close to nearly five-year highs next week as worries mount about third-quarter earnings and the market appears primed for a pullback from recent stimulus-driven gains NEW YORK AGENCIES

ISLAMABAD INP

With the aim to meet the potential project sponsor for participating in the TAPI Pipeline Project, three (3) roadshows were organized between 11thand 20thSeptember 2012 in Singapore, New York City and London.

The first and second parts of the roadshows were held in Singapore on 11th September 2012,and in New York on 13th and 14th September 2012,respectively, while the third in London that started on 17th September 2012 and concluded on 20th September 2012.

The road shows are coordinated by Asian Development Bank (ADB) and attended by representatives from Turkmenistan, Afghanistan, Pakistan and India.

Pakistan delegation was represented by Mr. Mobin Saulat, Managing Director Inter State Gas System (ISGS) and a team comprising technical, commercial and legal experts from ISGS. The Singapore roadshow was very well received by the market and renowned companies and Financial Institutions such as PETRONAS, TEMASEK and State Bank of India attended the roadshow. The invitees were given comprehensive presentation by ADB and TAPI members on overall structure of the project, supply source, the market demand in Afghanistan, Pakistan and India. The invitees were also updated on the current status and way forward.

Pakistan side during the interaction with the roadshow invitees updated them that Pakistan has recently launched new Petroleum Policy2012 and copies of the Policy were given. The salient features of Petroleum Policy such as improved and more incentivized pricing mechanism were described. The companies expressed interest in the policy.

The New York roadshows were attended by world leading IOCs such as Chevron and Exxon Mobile and leading financial institutions CITI Group and US EXIM. All the participants expressed keen interest in the project. The London Road Show continued from 17th to 20th September 2012. TAPI Parties have met with British Petroleum, Shell, British Gas and Morgan Stanley. The notable invitees for upcoming shows are Mubadala Group, Macquarie, RWE and Deutsche Bank.

The Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline Project aims to export up to 33 billion cubic meters (bcm) of natural gas per year through a proposed approximately 1,800-kilometer (km) pipeline from Turkmenistan to Afghanistan, Pakistan and India. The estimated cost of the project is US$7.6 billion based on prefeasibility study done

by PENSPEN. The signing of the Gas Pipeline Framework Agreement (GPFA), Inter-Government Agreement (IGA), and Heads of Agreement (HoA) relating to Gas Sales and Purchase Agreement (GSPA) of the project was achieved in December 2010.

A major milestone was achieved in May 2012 when Pakistan-Turkmenistan and India Turkmenistan bilateral GSPAs were inked on 23rd May 2012. Turkmenistan-Afghanistan bilateral GSPA is in process of finalization.

In view of the project’s size and complexities, the Parties agreed that it is necessary to attract and select a consortium lead which can (i) attract financing, (ii) manage construction, and (iii) reliably operate the pipeline. This need is enshrined in the GPFA which was signed in December 2010 by Heads of State in Ashgabat, Turkmenistan.

A bevy of economic reports, including durable goods orders, will grab attention, particularly after the Federal Reserve unveiled its plan on September 13 for a third round of aggressive stimulus to help revive the flagging U.S. economy.

While the action ignited a rally in stocks, analysts have worried that it may suggest the U.S. economy is in worse shape than many had feared.

To be sure, stocks are at lofty levels and are likely to attract investors hoping the market will ride out the year on a positive note. The Dow Jones industrial average .DJI and the benchmark Standard & Poor’s 500 index.SPX.INX remain close to highs not seen since December 2007. The S&P 500 is up 16.1 percent since the end of 2011.

“I think the market certainly is ripe for a pullback. But whatever the pullback, it’s going to be rather shallow,” said Peter Cardillo, chief market economist at Rockwell Global Capital, in New York. “Any disappointment in key economic data that would reverse the market’s feeling the economy has stabilized, I think could trigger a 2 to 4 percent pullback,” he added. Some of that move was seen this week in stocks, which posted slight losses for the week. The S&P 500 slipped 0.4 percent for the week. The Dow industrials and the Nasdaq each finished the week down 0.1 percent.

Besides August durable goods orders, data on personal income and spending is due next week, as well as new home sales and the final read on U.S. Gross Domestic Product for the second quarter.

Housing data has been surprisingly strong in recent months and homebuilder shares have experienced massive gains. The PHLX housing sector index .HGX is up 62.3 percent since December 31. But that strength has been offset by worrisome data on U.S. manufacturing, which had been among the economy’s strongest sectors.

THIRD-QUARTER GLOOM AND DOOM: Profit warnings from such high-profile U.S. companies as FedEx (FDX.N) helped cement the view this week that third-quarter results could be a drag on the market.

“We’ve had some pretty negative pre-announcements, and those announcements for this time frame have been a little more than we’ve had in the past,” Cardillo said.

Estimates for S&P 500 companies’ third-quarter profits have fallen sharply in recent months, and earnings now are expected to drop 2.2 percent from

a year ago, according to Thomson Reuters data. It would be the first such decline in three years. Outlooks for the third quarter are at the most negative since the third quarter of 2001, the data also showed. The negative-to-positive ratio for the upcoming earnings period stands at 4.3 to 1.

Third-quarter earnings aren’t expected to start in earnest until after the second week of October, when Alcoa (AA.N) is expected to kick off the reporting period. “What I’m worried about is what I don’t know,” said Doug Cote, chief market strategist at ING Investment Management, in New York. That includes negative surprises on earnings, he said, as well as the chance that China’s economy may be slowing faster than economists previously thought.

FLOOR FOR THE MARKET: The Fed’s recent action followed a decision by the European Central Bank to support debt-ridden euro-zone nations by purchasing their debt.

Speculation on Friday that Spain was moving toward a bailout request gave investors some relief. The debt-laden country, which is likely to stay in focus next week, said it was considering freezing pensions and speeding up a planned rise in the retirement age as it raced to cut spending and meet conditions of an expected international sovereign aid package. Both central bank moves are expected to provide a floor for the market, possibly through year end, analysts said. “Financial markets will benefit more than the economy,” said Fred Dickson, chief market strategist at D.A. Davidson & Co., in Lake Oswego, Oregon. With the Fed’s decision out of the way, investors are also likely to turn their attention to other issues, including November’s U.S. presidential election, he said, and looming decisions about U.S. fiscal policy.

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Business 02 Foot and mouth disease, a threat to dairy industry DR FARHAT NAZIR AWAN, DR KHUSHI MUHAMMAD, DR AKRAM MUNIR AND DR ATHAR KHAN

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N Pakistan, livestock is regarded as an important segment of daily life as it is a main source of highly nutritive food in the form of milk and meat. It is also a source of draught power especially in the rural family and agriculture set up. Animal skins and hides are used in the local leather and garment industry.

Moreover, living animals and their byproducts including skins and hides are also exported to earn foreign exchange. The overall livestock contribution to National Gross Domestic Product is 11.6% and its share in the agriculture sector is over 55.1% (Economic Survey of Pakistan, 2011-12).

The province of Punjab in Pakistan is the most populous area in terms of animal and human populations. At present, population of cattle and buffaloes in Punjab is 18.1 and 21.2 million, respectively. Over 71% of the buffalo population in Punjab is kept in irrigated areas, which contributes around 70 per cent of total milk production of Pakistan. Majority of buffalo is reared by the small dairy farmers who generally own five to eight buffalo heads for supplying milk in the urban market. However, the above narrated benefits from the livestock are hampered by many factors such as good supply of feed and fodder, poor husbandry practices and occurrence of infectious diseases such as foot and mouth disease.

Foot-and-mouth disease, commonly known as moun khur in villages of Punjab is a viral problem which affects cloven footed animals including cattle, buffalo, sheep and goats. There are seven different types of foot and mouth disease virus but only three (O, Asia-1 and A) are prevailing in districts of Punjab. Virus is excreted in milk, urine, dung, semen and saliva of the infected animals and spread to other susceptible animal population through contaminated clothing, shoes, vehicles, veterinary instruments; introduction of infected cattle and buffalo; transferring of cattle and buffalo stock from an infected neighboring village, shared drinking and grazing localities, wildlife and migrating birds.

All breeds of the animal are quite vulnerable to clinical form of disease. The disease severity, however, is lesser in indigenous breeds than those of imported ones. The signs of disease appear in 2-3 days post exposure and last for 7 to 10 days. The most common symptoms are; dramatic drop in milk yield (50-100%), high fever (104-1060F) which sustained for longer periods in the infected buffaloes than the cattle, excessive salivation nasal discharge, smacking of lips, formation of vesicles on dental pad, tongue, and in the clefts or on coronet of the feet . Frequency of tongue lesions is higher in the cattle than the buffaloes. Healing of mouth lesions is quicker than the foot lesions. Further, healing of lesions is quiet prompt and faster among buffaloes than that of cattle. Delayed healing of foot lesions may lead to lameness in the infected animals. In some cases, the foot and mouth disease may end up into an incurable

condition commonly known as “panting” which results from hormonal disturbance, particularly the thyroxin. Secondary bacterial mastitis and abortion commonly follows FMD signs. Young calves die due to destruction of cells of the developing heart muscles by the foot and mouth disease virus Geographical map showing incidence of FMD in various districts of the Punjab

The disease is prevailing in all the districts of Punjab Province which might be due to the movement of infected livestock from other provinces and neighbouring countries, non-availability or non-accessibility of veterinary health services and veterinary inputs by the livestock keepers of remote areas.

Punjab has a relatively large animal health infrastructure in the public sector. The existing public service for animal health and livestock extension are weak and are constrained by poor mobility, lack of operational funding and training. The Veterinary Services have neither the power to enforce movement standstills when outbreaks take place, nor sufficient manpower or vaccine for routine use.

Moreover, common village ponds and entry of new animals to the herd without adopting any precautionary measures to check the introduction of infection are the other plausible factors enhancing incidence of the disease in animal population. The incidence of disease was comparatively higher in the canal irrigated areas such as Lahore, Multan, Gujranwala and Faisalabad divisions. These areas constitute an important milk production zone with a relatively higher population of elite dairy animals.

Moreover, much of the area in the above mentioned districts is well-connected to milk collecting centers.

The higher density of susceptible animal popula-

tion/Km2, low coverage of FMD vaccination, occurrence of flood stress and movement of animal herds might be the major factors contributing to the higher incidence of disease in this milk producing zone of Punjab. In addition, infected animals excrete the virus in urine, dung, semen, or saliva that may contaminate its skin. Bathing, dung and urine of the affected domestic and wild animals may contaminate the water of rivers and canals and the virus may be carried to other areas.

The adult buffaloes and cattle were at higher risk of contracting the disease as compared to their young stock and the reasons of increased susceptibility include the stress factors such as estrous, pregnancy, milk production, malnutrition and low immunity level, etc. Male animals of both the species were more susceptible to the disease than the female animals.

The possible reason for a comparative higher incidence in males might be that the farmers do not consider them as profitable as female animals and further they do not provide them the required attention ever since from the time of their birth. Moreover, males are used as work animals and kept in the field where they have more chances of contracting the disease from the grazing animals as compared to female animals which are mostly stall-fed in urban areas.

The incidences of the outbreaks increased gradually following the post-monsoon period. The greatest number of outbreaks was observed during the winter season, from December to February. Dry weather and dry wind with low temperature and moderate relative humidity during winter months might be cause of rapid propagation of FMD virus among the susceptible animals.

Experimental data show that animals reared on grazing have increased risk of getting FMD infection as compared to the animals kept on manger feeding.

Grazing in communal areas presumably share drinking localities that is incriminated to be the cause of the disease transmission. Moreover, in common grazing facilitates, there are mixing of healthy and sick animals from neighboring villages which contributes to the FMD spread to the nearby villages.

Apple seeks US Samsung sales ban, $707m more in damages Apple Inc has asked for a court order for a permanent US sales ban on Samsung Electronics products alleged to have violated its patents along with additional damages of $707 million on top of the billion-dollar verdict won by the iPhone maker last month SEOUL AGENCIES

Samsung has responded by asking for a new trial. The world’s top two smartphone makers are locked in patent battles in 10 countries as they vie for top spot in the lucrative, fast-growing market.

Apple scored a legal victory over Samsung in late August when a U.S. jury found that the Korean firm had copied critical features of the iPhone and awarded the U.S. firm $1.05 billion in damages.

In a motion filed late Friday U.S. time, Apple sought a further $400 million damage award for design infringement by Samsung; $135 million for willful infringement of its utility patents; $121 million in supplemental damages based on Samsung’s

product sales not covered in the jury’s deliberation; and $50 million of prejudgment interest on damages through December 31. The requests together come to $707 million.

Apple wants the injunction to cover “any of the infringing products or any other product with a feature or features not more than colorably different from any of the infringing feature or features in any of the Infringing Products.” Such a wide-ranging sales ban could result in the extension of the injunction to cover Samsung’s brand-new Galaxy S III smartphone.

‘RECTANGLES WITH ROUNDED CORNERS’: Samsung, in a filing to the U.S. court, asked for a new trial to be held.

“The Court’s constraints on trial time, witnesses and exhibits were unprecedented for a patent case of this complexity and magnitude, and prevented Samsung from presenting a full and fair case in response to Apple’s many claims,” Samsung said.

“Samsung therefore respectfully requests that the Court grant a new trial enabling adequate time and even-handed treatment of the parties.” In a separate statement, Samsung lamented the fact that patent rulings should cover issues such as the shape of the product in addition to technological points.

“It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies,” it said.

The Korean firm earlier this week said it plans to add Apple’s new iPhone 5 to the existing U.S. patent lawsuits, stepping up its legal challenge as the two companies seek to assert rights to key technologies.

Apple said it wanted the court to award it damages that reflect “a rational and fair effort to address Samsung’s willful misconduct that has and will impose lasting harm on Apple.”

The Korean firm was the world’s top smartphone maker in the second quarter of this year, shipping more than 50 million phones, nearly double Apple’s 26 million iPhone shipments.

Both companies are raising their marketing spending to promote their latest products ahead of the year-end shopping season.

Similarly, common water drinking and animal bathing places also enhance the possibility of FMD transmission within the animal populations.

Foot and mouth disease generates significant economic losses by sharply reducing milk and meat production on infected farms. Most affected animals fail to return to normal productivity even when cured. It also deprives infected countries of valuable export opportunities for many of the animal products that could potentially be sold in lucrative markets. Recent study conducted in Punjab showed that foot and mouth disease cause a loss of Rs. 4615 /buffalo and with 10 % incidence the total buffalo affected with this disease are numbered as 2.12 million and the total loss is estimated as Rs.9784 million.

Vaccination as a control tool has been gaining favor as a potentially more cost effective approach for controlling the virus, reducing the economic loss to animal husbandry, and contributing to improved food security. Pakistan has capacity to produce maximum 2.0 million doses of the FMD vaccine at private and public biological production units. There is dire need to improve the quality and its production potential in the country to meet total requirements that is nearly 70 million doses per year. It is observed that introduction of new animals is the cause of FMD outbreak in the dairy animals. It is therefore recommended to vaccinate newly purchased animals using multivalent FMD vaccine and keep them in quarantine for at least one month before mixing into existing herd. At least 80% dairy animals including cattle, buffalo, sheep and goat may be vaccinated with adjuvant containing multivalent FMD-vaccine twice a year. Samples from at least 10% vaccinated animal population may be collected using probang be processed in the laboratory for the characterization of FMD virus types using RT-PCR. Spray of either of the disinfectants particularly sodium carbonate (4%) or halogens (payodine) at 0.5% is recommended to inactivate FMD virus in the environment of dairy farms having infected animals. This will minimize the chances of dissemination of the virus to the nearby susceptible population.

CORPORATE CORNER WAPDA to start construction of four more dams LAHORE: The construction work on Naulong, Nai Gaj, Ghabir and Kurram Tangi dams – one each in Balochistan, Sindh, Punjab and Khyber Pakhtunkhwa/FATA respectively was being started on fast track basis, as the consultants and the contractors are being mobilized to the sites for the purpose. This was stated by the WAPDA Chairman Syed Raghib Abbas Shah in a meeting with WAPDA senior officers here at WAPDA House.

SONY aims to be number one in optical media LAHORE: Sony celebrated launching its new worldwide packaging for optical media at Hafeez Centre. Beginning with a recitation of the Quran, the event’s main focus was updating the retailers at this well reputed centre for all of consumers’ technological needs. Addressing them,Sony Pakistan, Head, Javed Khan, remarked that Sony aimed to be the number one brand in optical media. He also assured all retailers and relevant stakeholders that the new packaging will be available in all SKUs and regular stock volumes will be maintained for an accessible relationship with Sony’s brand.

BOK increase assets NATHIAGALI: The Bank of Khyber (BOK)’s assets reached by Rs 73 Billion in August 2012. This was stated by BOK, Managing Director, Bilal Mustafa while addressing the inaugural session of Half Yearly BOK Conventional Branches Conference at Nathiagali on Saturday morning. The conference was also attended by BOK Executive Director Mir Javed Hashmat, Group Heads Credits Mr. Imran Samad, Raast Islamic Banking Mr. Kamran Masood Khan HRD Muhammad Tariq Nasim, Divisional Head from Head Office and Chief Managers and Managers from across the country.

Monday, 24 September, 2012