PRO 25-09-2012_Layout 1 9/24/2012 11:50 PM Page 1
Tuesday, 25 September, 2012
Leap of faith g
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KARACHI
Banks, corporate entities invest over Rs 4.224t in risk-free government papers SBP injects Rs 562b into the cash-scarce banking system
Cement export posts 20.38% growth
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ISMAIL DILAWAR
HE funds-starved federal government whereas has put the risk-free sovereign guarantees on sale the commercial banks are the ones who hold much of the heavily-weighted papers that are adding huge sums to the latter’s profits. Official data reveal that the auctioning of government papers by the cashstrapped government has crossed the Rs 4 trillion mark up to the month of August. Ironically, whereas the banks find huge sums available with them to be invested in the government securities the central bank still fears a possible liquidity crunch in the rupee market and is, therefore, frequently injecting billions in the banking system almost every week. Monday too saw the regulator pumping into the money market Rs 562 billion at 9.71 percent rate of return. On the other hand, the central bank Monday reported that the scheduled banks and non-bank corporate entities lent over Rs 4.224 trillion to the resource-constrained government through buying Market Treasury Bills (MTBs), Pakistan Investment Bonds (PIBs) and Ijara Sukuk up to 31st August (2012). And much of the government papers, 70.5 percent, were
purchased by the risk-averse banks which, however, are meant to extend loans to the private sector which is considered to be the engine of growth world over. To allow it cater its ever-burgeoning budgetary needs, the banks lent the government over Rs 2.978 trillion through purchasing the papers. The share of non-bank and corporate firms in the holding of government papers amounts to Rs 1.245 trillion. The non-bank corporate entities include insurance companies, mutual funds and other bodies from corporate sector. This accounts for 29.5 percent of total borrowings through the sale of bonds. A break up shows that the government, through the central bank’s Open Market Operations, auctioned MTBs, PIBs and Ijara Sukuk (Islamic bonds) worth Rs 2.795 trillion, Rs 1.044 trillion and Rs 383.5 billion, respectively. Of these, Rs 2.94 trillion (74.6 percent) of treasury bills, Rs 548.1 billion (52.5 percent) of PIBs and Rs 343.9 billion (89.7 percent) of Islamic bonds were bought by the banks. While the balance Rs 708.8 billion, Rs 496.8 billion and Rs 39.6 billion worth of t-bills, investment bonds and Ijara Sukuk were acquired by the non-bank entities. This heavy investment in the sovereign guarantees is fetching billions of rupees for the country’s leading banks like Habib Bank, United Bank, MCB Bank and Allied Bank. The above four banks contribute over 50 percent share of the listed private banks’ deposits, contribute 70 percent of the market capitalization and represent, approximately, 60 percent of the total
Linkedin to establish office in Pakistan
On the right track PR pursuing 27 locomotives rehabilitation to improve business operations ISLAMABAD APP
ISLAMABAD APP
The export of cement from the country have posted growth of 20.38 percent during the first two months of the current financial year as compared to that of the same period of last year. According to data of Pakistan Bureau of Statistics (PBS), about 1,154,554 metric ton cement worth US$ 91.356 million was exported during July to August 2012 against 1,457,677 metric ton worth US$ 75.891 million during the same period last year. The cement export i.e., about 609,429 metric ton valuing US$ 45.159 million during August 2012 recorded 11.80 percent increase than 545,125 metric ton worth US$ 46.197 million during the previous month. During July-August 2012, the export of gems and jewellary registered growth of 35.34 percent and 156.45 percent respectively. About two metric ton gems worth US$ 0.540 million were exported against one metric ton valuing US$ 0.339 million during the same period last year, the data revealed. Likewise, jewellary worth US$ 339.76 million was exported during the first two months of current financial year as compared to US$ 132.48 million during same period last year. However, the export of furniture remained on down track and decreased by 29.35 percent during the first two month of current financial year where as handicraft exports remain stagnant. The data further revealed that the export of molasses registered 7.29 percent growth as 1,923 metric tons of molasses costing US$ 0.265 million exported as against 2,025 metric tons of US$ 0.247 million same period last year.
Pakistan Railways (PR) is working on rehabilitation of 27 locomotives to help improve business operation and control deficit and losses. The department would receive spare parts within 13 months from date of effectiveness of the contract, signed in July this year. According to Pakistan Railways, the percentage of success gained by the government to control losses of Pakistan Railw a y s during
TAPI on the table Establishment of TAPI gas pipeline consortium discussed in Ashgabat ASHGABAT ONLINE
Ashgabat hosted a meeting of the steering committee for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project. Plans on the formation of an international consortium were determined, the Turkmen Ministry of Petroleum and Mineral Resources was quoted as saying by Trend News Agency. ‘Plans for the near future related to the accelerated implementation of the transnational pipeline construction project were determined at the meeting of the steering committee which was held in a constructive format’, the information said. Heads of ministries and representatives of all the
the last four years till date cannot be determined at this stage because of fact that the projects at hand and those in the pipeline for controlling the losses are highly capital and time extensive. The projects will take considerable time and as such no measurable answer can be given at this stage. When contacted, an official on Monday said in order to improve business operation for controlling the deficit and losses, a number of agreements have been made for rehabilitation of locomotives and added the project of rehabilitation and procurement of locomotives are highly time consuming and capital extensive. However, he said on completion of this project, Pakistan Railways will be in a position to increase its revenue base and cut its deficit to a considerable level. Highlighting the measures adopted to increase revenue, the official said commercial management of two Mail/Express trains i.e. Business Train and Shalimar have been outsourced to private parties this year while three new Dry Ports are being established in Public Private sector out of which one i.e. Prem Nagar has been inaugurated while the other two at Aza Khel and Multan are in process. He said the initiative of extension of Economic Cooperation Organization (ECO) train will further strengthen the rail business and augment the revenue generation. Steps are underway to outsource the commercial management of Subk Raftar and Subk Kharam Railcars running between Rawalpindi - Lahore, he said, adding that Pakistan Railways was working on commercial management of new train between Lahore - Karachi via Faisalabad.
project’s member states and the Asian Development Bank (ADB) attended a meeting. Participants have also considered and approved the main report of the meeting of the technical working group on TAPI gas pipeline project. Issues related to the technical aspects of promoting the TAPI project were agreed. According to the information, Turkmenistan has assumed specific commitments and is fulfilling them. This is a guarantee of additional dividends to all business entities that are interested in investing funds in this ambitious project. In May 2012 Turkmenistan signed a memorandum of understanding with transit Afghanistan on TAPI. Contracts on the sale of the Turkmen gas were also signed with the State Gas Systems of Pakistan and Indian GAIL ltd. An expert group in Ashgabat has also submitted its report following the business tour conducted in the major financial centres of Asia, America and Europe, Singapore, New York and London in midSeptember to attract leading international oil and gas companies and financial institutions in the consortium. Representatives of U.S. companies Chevron, Exxon Mobil, British BP, BG Group, German RWE, Malaysian Petronas and others were familiarised with the main terms of implementing the TAPI project and expressed their intention to participate. ADB has been acting as the secretariat in the TAPI project. It previously reported that after more than 20 years of complex negotiations, a 1800kilometre gas pipeline which will connect one of the
branch network in Pakistan. The banking analysts attribute the banks’ ever-increasing net interest income to higher returns on advances as well as better yield on the heavilyweighted government securities. As the banks adopt a risk-averse behavior, perceivably due to their rising bad debts or Non-Performing Loans, which have surged beyond Rs 6 billion in the socalled recessionary climate, the economic observers warn of poor growth prospect in the days ahead in the country’s already troubled economy. The economists are concerned that whereas most of the economic indicators were setting in the red zone, sans current account thanks to booming worker remittances, the banks are not playing their due role in extending a helping hand to the economic mangers to revitalize the ailing economy. The analysts as well as the central bank agree that this risk-averse trend in the banks’ loaning approach would continue until the government take serious steps to curtail its ever-widening budget deficit that makes the rulers borrow heavily from the banking system. “This is an unhealthy practice,” viewed an analyst adding that “The government should increase tax revenues, curtail its current expenditures and lessen its reliance on the commercial banks. Otherwise, it would be disastrous for the economy”. Some accomplished bankers like Hussain Lawai, president and CEO of Summit Bank, proposes that the State Bank should limit the banks’ investment in the government securities at 25 percent at maximum.
KARACHI APP
Linkedin, an international professional network, is planning to establish its office in Pakistan. This was stated by Chairman of the Board of Investment (BOI), Saleem H. Mandviwalla, here on Monday. He was of the view that with this the Linkedin would help promote Pakistan on its website.Saleem Mandviwalla hoped that the office of Linkedin would be operational in Pakistan either by the end of this year or the beginning of the next year. This would lead to the setting up of Linkedin’s proper operation in Pakistan. The BOI chief believed that the initially the investment would be to the extent of dollars 10 million. He was of the view that Linkedin is focusing Pakistan as one of its important markets. “This is of great interest to us”, Saleem Mandviwalla further remarked. He said that he was informed that there are 1.2 million. Pakistanis who are connected to this website and that these include the overseas Pakistanis besides those living in this country.
largest energy suppliers of Central Asia - Turkmenistan with a market in South Asia was one step closer to reality. This testifies an unprecedented new chapter in regional relations. The Turkmen Dovlet Habarlary state information service said that that besides economic issues, laying the transnational gas pipeline will enable the participating countries to solve a number of important social and humanitarian issues, including those related to the creation of new jobs, the formation of the transport and communication and social infrastructure and will contribute to the maintenance and consolidation of political and social stability in the region.
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Bears conquer capital, ISE sheds 17.72 points ISLAMABAD
ICCI wants India, Pakistan to bank on each other ISLAMABAD
APP
The Islamabad Stock Exchange (ISE-10) Monday witnessed bearish trend as the index slid by 17.72 points from that of yesterday to close at 3129.27. Talking to APP, stock analyst M.M Hassan said the local stock market had witnessed bearish trend because of the profit taking. Besides, the major players taking the benefit of lower prices took heavy positions in fertilizer and cement sectors that helped the market to resist continued slide, he added. Total volume of shares traded was 22,600, which was down by 64,400 as compared to that of a day earlier. Out of 133 companies’ shares traded, the price of 43 increased while that of 90 decreased. The price of top gainer Abbott Laboratories increased by Rs.6.40 while that of main loser Siemens Pakistan Engineering decreased by Rs.47.74. Engro Corporation, Fauji Cement Company and Arif Habib Corporation remained volume leaders with 10,000, 10,000 and 2,500 shares respectively.
Euro falls against dollar, yen in Asia TOKYO AFP
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The euro fell against the dollar and yen in Asia on Monday as risk appetite was dampened by uncertainty over the progress on Greek budget cuts to qualify for a new tranche of rescue cash, dealers said. The euro bought $1.2945 and 100.92 yen in Tokyo midday trade, down from $1.2985 and 101.42 yen in New York late Friday. The dollar was changing hands at 78.03 yen, down slightly from 78.12 yen. Athens and its international lenders have still not reached agreement on a new round of budget cuts that will see it given more bailout money, Kengo Suzuki, forex strategist at Mizuho Securities, told Dow Jones Newswires. “The risk sentiment-driven rally has begun to lose steam as profit-taking kicks in and uncertainty over Greece and Spain come back into the spotlight,” Suzuki said, referring to Madrid’s ongoing financial woes and need for a possible bailout. Greece must present the “troika” — the European Commission, the European Central Bank (ECB) and the International Monetary Fund — with a multi-billion euro budget-cutting plan by Friday.
Major Gainers oPEn CoMPAny Bata (Pak) Limited 977.75 Colgate PalmolivXDXB1100.00 Mithchells Fruit 331.00 Island Textile 294.00 Abbott Lab.XD 185.04
HiGH 1025.00 1139.00 346.00 308.70 193.00
Low 960.01 1134.00 346.00 308.70 185.00
CLoSE 984.00 1100.00 331.00 308.70 191.44
CHAnGE 6.25 0.00 0.00 14.70 6.40
TUrnoVEr 2,100 100 1,000 100 18,800
1002.73 418.00 261.90 252.00 320.01
907.25 418.00 251.18 243.68 316.51
907.25 418.00 251.18 243.68 316.51
-47.74 -22.00 -13.22 -12.82 -9.14
200 100 43,900 2,500 500
6.62 19.48 4.60 2.72 6.29
6.23 18.80 4.01 2.55 5.86
6.35 18.94 4.08 2.58 5.94
-0.30 -0.08 -0.34 -0.05 -0.10
8,754,000 6,000,500 4,302,000 2,956,500 2,841,000
Major Losers
APP
HE decision of Pakistan and India to allow opening of each other’s bank branches will help facilitate trade and commerce between the two countries. Yassar Sakhi Butt, President Islamabad Chamber of Commerce and Industry (ICCI) made these remarks during a meeting with Munir Alam, Chief Executive and General Manager of Bank of India in Singapore, who is currently on a visit to Pakistan, to discuss the opening of bank branches in Pakistan. The ICCI President stressed that both the countries should expedite the process of opening of branches to facilitate the business community and to increase the trade volume up to the potential. He exchanged views on matters of mutual interest, including enhancement of bilateral trade, promotion of investment and strengthening of cordial relations between the two countries. Yassar Sakhi Butt said that the two countries were rich in natural resources, which should be capitalized effectively to improve infrastructure, increase in power generation and spur trade and industry. He said that the bilateral trade between the two countries could soar to $6 billion from the existing $2.7 by establishing banking channels. The ICCI President said that opening of banks branches in each other’s country would also provide numerous opportunities for busi-
Business 02 Siemens Pakistan Dreamworld Indus Motor CoXD Atlas BatteryXDXB Exide (PAK)
954.99 440.00 264.40 256.50 325.65
Volume Leaders K.E.S.C. 6.65 P.T.C.L.A 19.02 Nimir Ind.Chemicals 4.42 NIB Bank Limited 2.63 Fauji Cement 6.04
Interbank Rates nesses to cater the need of both sides’ traders and exporters in terms of opening letters of credit. Speaking on the occasion, Munir Alam said that Bank of India wanted to explore the possibilities of opening branchs in Pakistan as trade financer. He said that bank had 4000 branches in India spread over all states and union territories, including specialized branches and in business volume, it occupied a premier position among the nationalized banks. Alam said that the bank had been in the forefront of introducing various innovative services and systems. The bank conducts the business with the successful blend of traditional values and ethics and the most modern infrastructure, he added.
US Dollar UK Pound Japanese Yen Euro
94.5485 153.2442 1.2113 122.0716
Dollar East US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal Australian Dollar
BUy
SELL
94.50 121.15 152.05 1.2013 95.52 11.99 25.61 25.11 97.37
95.00 122.20 153.32 1.2113 96.83 12.16 25.80 25.25 99.64
WoRld oil PRiceS doWn
in Asian trade SINGAPORE AFP
Oil prices eased in Asian trade Monday, weighed down by a fall in regional equities and on lingering concerns over the eurozone debt crisis, analysts said. New York’s benchmark contract, West Texas Intermediate crude for November delivery, was down $1.01 to $91.88 a barrel in the morning, while Brent North Sea crude for November dipped 94 cents to $110.48. Victor Shum, an analyst with Purvin and Gertz energy consultancy in Singapore, said the drop in the oil prices “is not surprising given that Asian stock markets are also
coming down”. He said differences between France and Germany on how to deal with the eurozone debt crisis remains a worry for investors. “Concerns over Europe have caused some selling in Asian equities, and in connection to that also in oil futures,” he told AFP. The leaders of Germany and France at a meeting on Saturday clashed over plans to monitor Europe’s crisis-hit banks. Despite affirmations that European unity was the only way out of the debt turmoil, German Chancellor Angela Merkel and French President Francois Hollande differed over a key plank of crisis-fighting: tighter checks on the European banking sector.
CORPORATE CORNER Salim Ghauri elected as TiE Lahore president LAHORE: Renowned businessman and Information Technology (IT) icon Salim Ghauri had been elected as President of The Indus Entrepreneur (TiE) Lahore. Speaking on the occasion, Salim said it was indeed an honor for him to be elected as the President. He also congratulated the new office bearers of the association. PRESS RELEASE
The Designers multi-brand store exhibition at Dubai Ladies Club
KARACHI: The Designers multi-brand store located on 26th Street is holding yet another exclusive and much talked about multi-designer exhibition at the Dubai Ladies Club with no less than the who’s who of Pakistan’s fashion gentry. The exciting lineup of designers for this exhibition includes
renowned brands such as prêt prince Rizwan Beyg, king of couture Umar Sayeed, and top designer Sonya Battla. Other designers bringing forth exclusive collections are high end and renowned designers such as Nomi Ansari, Zainab Sajid, Mohsin Ali and upcoming designers such as SNL, Aisha Alam, Rashk, Teeze and more. PRESS RELEASE
Cathay Pacific unveils new regional business class KARACHI: Cathay Pacific Airways today unveiled its new Regional Business Class product, coinciding with the airline’s 66th anniversary as Hong Kong’s home carrier. Speaking at an unveiling event held at Cathay Pacific City, the airline’s headquarters, Chief Executive John Slosar said: “Our new Regional Business Class seat was developed after listening to our customers’ feedback and it underlines our commitment to excellence in innovation and providing an exceptional travel experience. Our continued investment in products and services is a key element of our ongoing commitment to the development of Hong Kong as one of the world’s leading international aviation hubs.” PRESS RELEASE
Tetra Pak celebrates 60 years of innovation LAHORE: Tetra Pak marks the 60th anniversary of the delivery of its first filling machine with the launch of the ‘Voices of Innovation’ video series. The Voices of Innovation series explores every aspect of
Tetra Pak activity, from products, services and technology, to sustainability and the environment, and food safety and social programmes. PRESS RELEASE
DHL to host Global Volunteer Day KARACHI: As part of Deutsche Post DHL’s global drive to give back to local communities and to inculcate a passion for volunteerism amongst the employees, DHL will be hosting Global Volunteer Day on Sunday, September 23. PRESS RELEASE
KSBL welcomes the inaugural MBA class KARACHI: The Karachi School for Business & Leadership (KSBL) – a research-driven educational institution, welcomed its Inaugural MBA Class at a prestigious Orientation Ceremony or-
ganized at its newly commissioned campus. The event was attended by the incoming MBA students, their parents and the KSBL Board of Trustees. PRESS RELEASE
LSE interacts with University of Lahore students LAHORE: First session of Campus Outreach Program was held today for the students of BBA from University of the Lahore by Lahore Stock Exchange where LSE’s officials interacted with the students. At the event organized at the University of the Lahore, Hifsa Siddiqi, from LSC’s Investor Relations Department explained to the participants the broad features of Pakistan’s economic & financial system, features and characteristics of different financial markets, regulatory framework, market indicators, investment products, financial services & opportunities available to investors in Pakistan and roles & responsibilities being performed by various financial institutions. PRESS RELEASE
Extravaganza at Ensemble Lahore LAHORE: Wedding wears featuring bridals, formals and ready to wear by wear directly from the maestros of design, Nomi Ansari and Sania Maskatiya, will be displayed at Ensemble Lahore on 1st and 2nd of October.
Tuesday, 25 September, 2012