PRO 25-07-2012_Layout 1 7/25/2012 1:25 AM Page 1
Wednesday, 25 July, 2012
The Doc steels PSM
…And sounds over optimistic
against fiscal capitulation
Measures taken to remove inequality, alleviate poverty: Hafeez app
ECC approves Rs 8.6b bailout package for Pak Steel Mills g Current Account Deficit at $586 in June, trade deficit $15.6b during 2011-12 g
ISLAMABAD
T
inp
HE meeting of ECC of the cabinet held on Tuesday, under the chairmanship of Minister for Finance and Economic Affairs, Dr. Abdul Hafeez Sheikh approved financial package of Rs.8.6 billion for PSM including mark up for FY 2013. ECC also approved disbursement schedule for PSM formulated by CCOR. The ECC was informed that PSM has been facing loss since 2008 and currently working at a very low capacity of 15%. While keeping in view difficulties faced by PSM and the previous CCOR decision, ECC approved the financial package. While keeping in view the current gas shortage in the country, ECC approved the summary “allocation of gas from new sources Makori field, Tal Block” moved by Ministry of Petroleum and Natural Resources by which 75 MMCFD gas will be included in the system. In the same way the ECC approved gas allocation from OGDCL’s NIM West Field to M/S SSGCL by which 02 MMCFD gas will be included in the system. The ECC also reviewed key economic indicators. CPI stood at 11.0% in 2011-12 while it was 13.7% in 2010-11. WPI remained at 10.4% in 2011-12 while it was 21.3% in 2010-11. SPI remained at 7.15% in 2011-12 while it was 16.6% in 2010-11. Large Scale Manufacturing trend has been improved to 1.3% in May 2012. Exports reached at US$ 24.66 billion and imports were US$ 40.04 billion in 2011-12. Current Account Deficit remained at $ 586 million in June 2012. Foreign Exchange Reserves remained at $ 14.77
Markets panic as eurozone faces turbulent summer
billion on July 20, 2012, the ECC was informed. ECC also discussed the summary “delay in submission of case for disposal of surplus stocks of wheat held by PASSCO” observing that case was not processed at appropriate time resulting in substantial loss to public exchequer. Secretary Cabinet informed ECC that major reasons are due to devolution of Ministry of Food and Agriculture, procedural delays due to lack of requisite data and record during interim arrangements and transfer of PASSCO along with subject from Ministry of Commerce to newly created Ministry of National Food Security and Research. The ECC constituted a committee comprising Ministers for Law, Information and Broadcasting and Adviser to PM on Agriculture and Water Resources to work further on the matter and to formulate a mechanism in order to avoid any future loss to national exchequer. ECC also discussed summary of storage charges of wheat moved by Ministry of Commerce. Secretary Commerce argued that TCP billed the provincial governments of Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit/Baltistan, Government of AJK, USC, PakArmy and Pak-Navy for recovery of storage charges amounting to a total of Rs.3,886.605 million. Secretary Commerce informed ECC that TCP has vigorously been pursuing all agencies for storage payment but have not been paid since 2009. Secretary requested ECC that Finance Division may be asked to recover the storage charges at source from the Provincial Governments. After due deliberations, ECC decided to hold a separate meeting between TCP officials and representatives from all provinces and armed forces to discuss the
issue in detail and to submit their recommendations to Cabinet Division subsequently. ECC also discussed summary moved by FBR on waiver of sales tax at import stage to Swede Bus Pakistan (Pvt) Ltd., mentioning company’s request for exemption from sales tax at import stage to discharge its liabilities to the financial institution which are mainly government owned. Without the settlement of this dispute the company will neither be able to sell the buses nor discharge its liabilities and the buses will turn into scrap, informed in ECC. After much deliberations, the ECC constituted a committee comprising Secretary Industries and Chairman FBR to further investigate into the matter.
A fiscal quake looms BRUSSELS aFp
The world market panic that started the week looked all too familiar: an alarming reminder of last summer’s financial storm brought on by the eurozone debt crisis. And much like last year, European leaders hold few tools to stem the chaos in a swift and convincing fashion. “The problem is about the same as last year, except the situation is much more serious,” a European diplomat told AFP. Almost exactly a year ago, eurozone leaders called an emergency summit where they hastily cobbled together a second bailout for Greece that included new loans and a massive writedown of Greek debt held by private investors.
But lacking in details, instead of offering a reprieve the measures heightened fears of contagion sending borrowing prices for core eurozone countries such as Italy and Spain soaring. A year later, Greece’s survival in the eurozone remains very much in doubt. And now Spain, the eurozone’s fourth biggest economy, is also in danger: mired in recession, its banks are on the brink of collapse after a decade-long real estate bubble popped. The European Union and International Monetary Fund have agreed to put as much as 100 billion euros into rescuing Spain’s troubled banks, but most investors now believe that will not be enough. They fear that Spain now needs a full rescue as handed to Greece, Ireland and Portugal is now needed. It is that fear that is driving the stock markets and the euro itself sharply downward. “Contagion fears have battered European equity markets” as a “perfect storm of fears about an imminent Greek exit, and the solvency of Spanish and Italian regions has seen markets drop sharply,” said Michael Hewson, Senior Market Analyst at CMC Markets UK. But despite the explosive situation, Italian Prime Minister Mario Monti said Monday there was no need to call eurozone leaders together at the height of summer in a repeat of last year.
A not-so-magnificent seven Bank spreads balloon to 7.14pc in June, representing a 7 bps increase
ISLAMABAD
KARACHI staFF repOrt
According to latest figures released by the SBP, the loans/deposits spread for the overall banking sector reached 7.14 percent during Jun-12. This represents an increase of 7 basis points (bps) monthon-month (MoM). “We expect that the full year average spreads of CY12 are likely to remain in the range of 7.0 percent to 7.2 percent as we believe that the upcoming announcement of monetary policy rate is expected to remain at the current level (12 percent),” said InvestCap Research analyst Mazhar A. Sabir. The reasons cited by the analyst for this included macroeconomic imbalances, rising inflation pressure owing to Ramadan factor, fiscal weakness and huge security related
Despite difficulties, the government has been able to take several measures to mitigate inequality and help alleviate poverty in the country, Federal Minister for Finance and Economic Affairs, Dr. Abdul Hafeez Shaikh said on Tuesday. The minister was speaking at a day long seminar on “Poverty and Inequality: Challenges and Policy Choices Facing Pakistan” that was organized by the World Bank (WB). Hafeez Shaikh said that the government has made the agriculture policies more aligned to the international practices that would help bring better distributions in incomes and provide a remedy of the situation. Secondly, he added the government considerably enhanced the expenditure on the social safety nets that would help the poorest of the poor of the country. He said that with the help of much better technology, the focus of these social safety nets could be better targeted to reach the deserving people. The finance minister said that new formula of sharing resources between the federation and the provinces was also a step towards bringing about equality and reduces poverty. He said that the share of the provinces from the divisible pool has been increased from 46 percent to near about 60 percent that would help development growth. In addition, the minister said that deliberate efforts have been made in development programmes to ensure balanced regional development with special focus on the backward areas including FATA, Azad Jammu and Kashmir and Balochistan. He said that additional specific resources were provided to these regions to bring them at par with the other parts of the country.
You’re time (re)starts now… Silkbank gets further extension to meet MCRs, CAR requirements KARACHI staFF repOrt
The Securities and Exchange Commission of Pakistan (SECP) has granted further extension in time to Silk bank to meet the Minimum Capital Requirements (MCRs) and the Capital Adequacy Ratio (CAR) requirement by the end of this calendar year. “Keeping in view the completion date given by the SBP, this Commission has accorded to your request for further extension in time with regard to the allotment and issuance of right shares till Dec 31, 2012,” said the SECP’s director enforcement. The bank had submitted a letter to the SECP on July 12 hence the State Bank of Pakistan extended the time to meet the MCRs and the CAR requirement. The apex regulator said the bank shall issue 2.8 billion shares at Rs 2.50 per share at a discount of Rs 7.50 per share under the light of Section 84 of the Companies Ordinance, 1984. Uzma Naveed Chaudhary, company secretary and head of investor relations and legal affairs of the Silk bank, on Tuesday informed Karachi Stock Exchange about the SECP’s approval. The bank’s unpaid right shares aggregate at 1,028,710,173 shares, she said. expenditures. The average interest rate spread of the banking sector during 6MCY12 (Jan-Jun 2012) stood at 7.24 percent as compared to 7.62 percent in the same period last year, registering a decline of 38bpsYoY. Whereas, spreads compared with the month of June last year, a considerable decline of 72bpsYoY was also witnessed. The weighted average deposit rates on outstanding deposits including zero mark up, declined by 6bpsMoM to 5.82 percent during Jun-12 compared to deposit rate of 5.88 percent last month. Highest deposit rates witnessed in the pubic sector fund, which stood at 6.0 percent (down 10bpsMoM), followed by deposit rate on private sector funds which stood at 5.81 percent (down 3bpsMoM). On CY12TD basis, the rate on outstanding deposit remained average at 5.82 percent, witnessed a decline of 6bps during 6MCY12. The yields on outstanding loans including zero mark up remained stagnant during the month and showed the surge of just 1bpsMoM to reach at 12.96 percent in Jun-12. While during CY12TD, the rate on outstanding loans fell by 50bps compared to the rate of 13.46 percent during Dec-11.
PRO 25-07-2012_Layout 1 7/25/2012 1:25 AM Page 2
Wednesday, 25 July, 2012
BEARS HAMMER
Major Gainers COMPANY Bata (Pak) Limited Clariant Pak Indus Motor Company Burshane LPG EFU Life Assurance
another strike
KSE took a 15-point dive as SC hearing looms KARACHI
P
staFF repOrt
AKISTAN Stocks closed lower as investors remained cautious amid uncertainty over outcome of SC hearing on contempt case. This was viewed by Ahsan Mehanti, Director at Arif Habib Investments Limited. The Karachi Stock Exchange (KSE) 100share index declined 15.18 points or 0.10 percent to close at 14, 512.07 points as compared to 14, 527.25 points of the previous session. The KSE 30-share index shed 25.86 points to close at 12, 578.30 points as compared to 12, 604.16 points. The market turnover remains positive 56.853 million shares after opening at 27.548 million shares. The overall market capitalisation declined 0.02 percent and traded Rs 3.701 trillion as against Rs 3.706 trillion. Losers outnumbered gainers 76 to 128, while 27 stocks were unchanged. Mehanti added that activity remained thin despite strong corporate earnings outlook as global stocks and commodities fall after Moody’s cut the outlook on Germany’s Aaa credit rating from “stable” to “negative”. KMI-30 share decreased by 80.96 points to close at 24,892.39 points as compared to 24,973.35 points at the time of the opening. The KSE all-share index closed with a loss of 13.59 points to end the day at 10,203.29 points as
Euro slips on fresh worries over Europe
TOKYO aFp
The euro’s roller coaster ride continued in Asian trade on Tuesday after it plummeted to a near 12-year-low against the yen a day earlier on wor-
against 10, 216.88 points. Jahangir Siddiqui Growth Fund was the volume leader in the share market with 13.177 million shares as it closed at Rs 7.91 after opening at Rs 8.08. Nishat Chun Power traded 7.864 million shares as it closed at Rs 15.26 after opening Rs 15.35. D.G.K Cement traded 4.263 million shares as it closed at Rs 44.94 from its opening at Rs 44.78. Arif Habib Corporation traded 4.019 million shares and closed at Rs 34.05 as against its opening at Rs 33.82. Jahangir Siddiqui Company traded 3.092 million shares as it closed at Rs 15.17 as compared to its opening at Rs 15.02. He said that security unrest in the city and concerns for rising circular debt in Pakistan Energy sector played a catalyst role in bearish sentiment at KSE. On the future market, the turnover jumped over seven million to 12.958 million against 5.138 million shares of first working day of the week Monday. The Bata Pakistan Limited and Clariant Pakistan, up Rs 31.17 and Rs 2.90, led highest price gainers while, UniLever Food and National Foods down Rs 10.00 and Rs 6.22 respectively, led the losers ries about the troubled eurozone. The single currency bought $1.2123 and 94.86 yen in Tokyo morning trade, down from $1.2137 and 95.13 yen in New York late Monday. However the embattled currency’s trading level was an improvement from Asian trade on Monday when it dropped to 94.24 yen, its lowest level since November 2000. The dollar, meanwhile, traded at 78.23 yen against 78.37 yen, with the Japanese currency seen as a safe-haven unit amid turmoil in Europe and an uncertain US economic recovery. Among the factors driving down the euro was Spanish borrowing costs hitting record highs on speculation that Madrid could soon require a full state bailout. Moody’s also took the first step toward stripping Germany of its coveted AAA credit rating on Monday, cutting the outlook for Europe’s largest economy to “negative”. A similar move was announced for fellow AAA ranked economies, the Netherlands and Luxembourg. In Tokyo on Tuesday, Japan’s Finance Minister Jun Azumi repeated warnings about the yen’s soaring value and hinted at another possible currency market intervention in a bid to tame the unit. “We will not rule out any measures against excessive moves and will take decisive action when that’s deemed necessary,” he told reporters. Bank of Japan governor Masaaki Shirakawa said that he would watch for any fallout from the European crisis.
WASHINGTON aFp
Moody’s took the first step toward stripping Germany of its coveted AAA credit rating on Monday, cutting the outlook for Europe’s largest and most pivotal economy to “negative.” Delivering a stark warning that no one is immune from the eurozone’s rolling crisis, the ratings agency lowered Germany’s credit outlook from “stable” to “negative.” A similar move was announced for fellow AAA ranked economies, the Netherlands and Luxembourg. Moody’s said all three faced risks from Greece leaving the eurozone and from the need to stump up cash for potential bailouts for Spain and Italy. In Germany the finance ministry immediately shot back by saying the country remained the “eurozone’s anchor of stability.”
Oil drowns SINGAPORE aFp
Oil fell in Asian trade Tuesday with investor sentiment still under pressure on concerns over the eurozone’s ability to contain its long-running debt crisis, analysts said. New York’s main contract, light sweet crude for September delivery, shed 27 cents to $87.87 a barrel in morning trade and Brent North Sea crude for delivery in September was six cents lower at $103.20. Gloom continued to pervade financial markets even after Spain denied Monday that it would need a full international bailout. The Bank of Spain said the economy had contracted 0.4 percent in the second quarter, worse than the 0.3 percent of the first, citing the impact of the debt crisis on consumer spending and confidence. Financial markets have turned against Madrid in recent weeks after an initially positive reaction to a massive 65-billion-euro austerity package turned sour.
Gold stays at Rs 48,342 KARACHI app
Gold closed unchanged at Rs 48,342 per 10grams in the local market Tuesday as its international price improved to $ 1,574 an ounce, market sources said. According to Karachi Saraf Association official, tola (11.664 grams) price also remained unchanged at Rs 56,400. Silver closed unchanged at Rs 801.42 per 10 grams.
Shares inch up after China PMI, Spain drags on euro TOKYO app
Asian shares inched higher on Tuesday, helped by improving Chinese manufacturing data, but the euro remained under pressure as surging Spanish borrowing costs stoked fears that the euro zone’s fourth-largest economy will be forced to seek a bailout. The HSBC flash China manufacturing purchasing managers index rose to a five-month high in July, driven up by a jump in the output sub-index and signs of an improvement in new export orders that offered some relief to fragile markets. Asian shares erased earlier losses while oil and copper rose after the Chinese data, pushing the commodity-linked Australian dollar up to $1.0288 from around $1.0265. The euro also received a temporary boost before retreating to stand not far from a twoyear low against the dollar and a near 12-year low against the yen.
The single currency was undermined by Moody’s Investors Service changing its ratings outlook to negative for Aaa-rated Germany, the Netherlands and Luxembourg amid Europe’s ongoing debt crisis. “China’s PMI data beat market expectations and gave shorts a reason to cover today,” said Orient Futures derivatives director Andy Du, referring to buying by short-sellers to re-
Business 02
alise their gains on earlier bets that markets would fall. It was the first significant Chinese data in the third quarter and signalled that pro-growth government policies may be gaining traction in the world’s second-largest economy. MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2 percent, after spending most of the session in negative territory. It tumbled 2.4 percent on Monday for its biggest one-day drop in about two months. Japan’s Nikkei stock average also steadied after earlier slipping to a six-week low. Brent crude rose 0.8 percent to $104.03 a barrel and U.S. crude added 0.8 percent to $88.81, while copper jumped 1.1 percent to $7,485 per tonne on China’s PMI. “The data gave a slight boost to markets, but whether such effects are sustainable are doubtful as Europe struggles with its problems,” said Hiroyuki Kikukawa, general manager at trading company Nihon Unicom.
OPEN 663.82 204.60 264.12 45.24 72.25
HIGH 694.99 208.75 267.95 47.25 75.80
LOW 646.01 204.00 262.50 44.50 71.50
2900.00 203.90 151.50 480.50 75.88
2800.00 195.12 142.00 478.00 75.88
CLOSE 694.99 207.50 266.66 47.25 74.24
CHANGE TURNOVER 31.17 300 2.90 1,500 2.54 47,700 2.01 39,500 1.99 3,500
Major Losers Unilever Food National Foods Philip Morris Pak. Attock Petroleum Hinopak MotorXD
2900.00 204.03 148.15 482.60 79.87
2890.00 197.81 142.15 478.04 75.88
-10.00 160 -6.22 8,400 -6.00 1,300 -4.56 2,500 -3.99 4,000
Volume Leaders JS Growth Fund Nishat Chun Power D.G.K.Cement Arif Habib Corp. Jah.Sidd. Co.
8.08 15.35 44.78 33.82 15.02
8.39 15.50 45.25 34.55 15.35
7.75 15.25 44.42 33.81 14.90
7.91 15.26 44.94 34.05 15.17
-0.17 13,177,500 -0.09 7,864,000 0.16 4,263,500 0.23 4,019,000 0.15 3,092,500
Interbank Rates US Dollar UK Pound Japanese Yen Euro
94.5234 146.5207 1.2083 114.4111
Dollar East BUY US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal Australian Dollar
SELL
94.50 113.71 146.13 1.1978 92.22 12.02 25.67 25.17 96.44
95.30 114.83 147.54 1.2091 93.61 12.20 25.89 25.34 98.82\
CORPORATE CORNER An exhibition by TCF students enrolled in AAP summer program
KARACHI: Over the last two years Academic Achievement Plus (AAP) has been working with students from less privileged areas to improve their command over English, Mathematics and Science. The children have made remarkable progress during this period. Those who could barely speak a word of English are now almost fluent, those afraid of Math can now solve Mathematical problems faster than their privileged counterparts and those children who did not understand basic Science concepts are now constructing impressive projects. press release
Intel Pakistan joins with NexSource Pakistan, eHealth Services Ltd. ISLAMABAD: Intel Pakistan, NexSource Pakistan, eHealth Services Ltd. and ASK Development will jointly provide quality healthcare to rural communities through eHealth, aimed at improving human and institutional development of civil society and public sector organizations through partnership in capacity building initiatives. The outcome of project will enable rural teams to work on kiosks and be instrumental to provide quality healthcare through easily accessible communication. press release
Pacra withdraws negative outlook of bop ratings KARACHI: The negative outlook earlier assigned to BOP’s ratings has been withdrawn by PACRA. Now the assigned stable outlook captures the improvement in the bank’s financial profile that would enable it to build up to fundamentals more commensurate with existing ratings. press release
United Bank in United Kingdom KARACHI: At a grand ceremony hosted by OBE H Bestway Group Pk Chairman Anwar Pervez UBL UK was re-launched by Foreign & Commonwealth Office Minister Alistair Burt, in the presence of Pakistan’s High Commissioner WajidShamsul Hasan,; Bestway Group CEO Zameer Choudrey United Bank Limited, President Atif Bokhari,; and United Bank UK CEO Mansoor Khan, as well as, diplomats, members of parliament, captains of industry and prominent members of the local community. press release