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profit.com.pk
Thursday, 17 May, 2012
USAID CHIEF ECONOMIST ON A ROLL!
A CRUCIAL EPISODE
TAPI SOAP OPERA US wants neighbourly love-in TOW Afghan Senate approves pipeline deal KABUL NNI
eshrano Jirga, or upper house of parliament of afghanistan, approved the agreement on a gas pipeline running from Turkmenistan through afghanistan to Pakistan and India. The senate okayed the accord on the multibillion-dollar project, also known as TaPI pipeline, after it was placed before the house by the Public Welfare Committee. Dr ahmad Bashir samim, the parliamentary panel head, said all the 80 members present during the
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session voted in favor of the agreement that was signed in late 2010. he added the Manila-based asian Development Bank-supported scheme, long delayed by security concerns in the region, would cost around $9 billion (about 450 billion afs). a feasibility study for the gas pipeline, which will deliver 34 billion cubic meters of gas annually and earn afghanistan $430 million a year in transit fee, has already been completed. Minister of Mines Wahidullah shahrani, who visited ashgabat on april 4, held productive talks with Turkmen President Gurbanguly Berdimuhamedov on the project. afghan, Pakistani, Indian and Turkmen ministers, as well as an asian Development Bank representative, are to meet in ashgabat later this month to discuss the fate of the project. The pipeline will stretch from Dauletabad gas field though afghanistan’s helmand and Kandahar provinces, across Pakistan to the northwestern Indian town of Fazilka. Under article 90 of the Constitution, parliament is authorized to endorse or reject afghanistan’s agreements with foreign countries.
My dear nephew, Be nice to your neighbours Yours occasionally, Uncle Sam g
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Increase in trade with India will generate growth in Pakistan: USAID chief economist Tom Morris lauds Pakistan’s economic growth during world recession, touts service sector as economy’s ‘safety valve’ Highlights Pakistan’s vulnerability on trade front, Punjab’s struggles on the energy front LAHORE
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STAFF REPORT
SAID Chief economist for Pakistan tom Morris has said that much-likely increase in trade with India is a positive development and it will generate growth in Pakistan. He said trade always brings benefits to the economy. However, he cautioned in the same breath that energy crisis in Pakistan is needed to be tackled down as an immediate problem. He was responding to the queries during his visit to the Business forum of Punjab along with economic Officer,USAID Sarah Lane on Wednesday. earlier, Mr Ibrahim Qureshi, President Business forum of Punjab, briefed the visiting delegation about the organizational structure, scope and areas of activities of the forum.Mr. Amir Aziz, President District board Gujranwala, Mr. rashid Meher executive member BfP, Mr. Amir Saeed, CeO Pakpur and Dr. rehan member BfP were also present on the occasion. the USAID Chief economist said the province of Punjab was suffering hard due to energy problem. He said the US is trying to help out Pakistan on energy front and will continue to do the
same ahead. tom was quite optimistic about the resilience of Pakistan economy, saying Pakistan has registered economic growth during world recession. He said the oil prices could go down if world recession continues. He said fuel bill major issue for Pakistan but no overnight change is imminent. He said the safety valve of Pakistan economy would be the service sector if industrial sector shrinks further due to energy crisis. According to him the IMf will step in to ensure that Pakistan economy is held together, besides the international community having strategic interests here. He agreed with the fact that both monetary and fiscal policies are less effective as compared with the formal economy mechanism, which is not effective. According to him, the US assistance will continue and expressed the hope that the new government after elections will also realise the importance of the USsponsored projects to overcome energy crisis. He said the fiscal deficit in Pakistan has expanded largely and the trend is going in troublesome direction. the deficit financing is real issue, he stressed. According to him, the net credit to government is 22 percent higher against the corresponding year and the interest payment, subsidies and defence expenditures are the areas where major fiscal expenditure is taking place. He said the electricity tariff subsidies are booming in Pakistan and lack of energy is impacting real economy, as the government cannot control oil prices. the USAID Chief economist said the current account balance in negative zone, but the remittances seem stable, which is very positive development in terms of poverty reduction. According to him, the exchange rate is though stable in Pakistan for last few months but things can change very quickly in a situation when trade account deficit is growing. He said Pakistan is vulnerable on trade front. On inflation, he said, it is likely to continue in double digit, as the IMf projects 12.5 percent next year. However, he said, the Wholesale Price Index is going down. regarding foreign Direct Investment, the USAID Chief economist said it seems returned with relatively low level. Also, he said, the portfolio investment relatively low but it is not a major problem. He said the agriculture sector has shrunk heavily and the service sector is over a half of the GDP now. However, he added, the industrial sector facing challenge due to power problem and the informal economy is the safety valve. At the end of the meeting the dignitaries were presented mementos by MD LSe Aftab Ahmed Chaudhry and Directors of the exchange.
MONEY, MARKET MEASUREMENTS
Conjuring up growth mutually g
Mutual funds industry grows by 14pc to hit Rs377b in April KARACHI
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STAFF REPORT
fter showing nine percent contraction month-on-month in fund size during March (fY12) due to quarter end phenomenon, the industry recovered well in April with solid growth of 14 percent to reach at rs 377 billion (USD4.18 billion). Compared to rs 30 billion redemption witnessed in March, an increase of rs 46 billion was witnessed in mutual fund industry during last month, said a research report of InvestCap. It said major growth was witnessed in income and money market fund categories, registering a growth of 24 percent and 22 percent, MoM, as compared to previous month decline of 16 percent MoM and 13 percent, respectively. Contrary to the high volumes of redemption witnessed last month, fund size of ABL-GSf and ASK-Cf appended by rs15.4 billion and rs 9.3 billion,
respectively, showing huge amount of reinvestment in the funds after quarterend factor. An aerial view of AMC reveals that the major growth was witnessed in the size of the Askari Investment Management Ltd which grew by 70 percent MoM to stand at rs23 billion followed by ABL Assets Management which increased by 43 percent MoM to reach at rs65 billion. On the other hand, major decline was witnessed in the AUM of KASB funds which fell by 19 percent to reach at rs 2.3 billion. “the reason for decline was maturity of KASB Capital Protected Gold fund (managed by KASB funds) which matured on Mar-12 after completing its tenure,” viewed Mazhar A. Sabir, an analyst at InvestCap. Category-wise performance: the size of the open-ended funds increased by 15 percent MoM to reach at rs 354 billion while that of closed ended funds stood at rs24 billion showing an appreciation of 14 percent MoM. Moreover, during fY12tD (Jul-Apr12),
the industry has accumulated a decent growth of 51 percent. the size of the income funds which posted the decline of 16 percent MoM (total size of rs71 billion) in Mar-12, witnessed a solid recovery posting growth of 24 percent MoM to reach at rs87 billion. Major growth was witnessed in the size of ABL-GSf, which was up by 79 percent MoM and contributed 92 percent in the MoM growth of income funds category and 33 percent in overall appreciation of mutual fund industry. While on the accumulated basis, the size of the income funds category appreciated by solid 125 percent during fYtD (Jul-Apr12). As far as returns of the income funds category is concerned, during the month of Apr-12, provisioning of nonperforming investments have shrunk the annualized returns by 670bps to 4.7 percent. “However, if we exclude DIf, which posted negative annualized return of 57.6 percent MoM in income fund category, the category has posted the annualized return of 7.3 percent MoM
during Apr-12 but still under performed the fixed income segment of the capital market,” Sabir said. However, he said, during fY12tD (JulApr12) the income fund category earned annualized return of 9.6 percent. During Apr-12, the money market funds was also manage to perform well on the back of 22 percent MoM appreciation in the fund size of the category which reached at rs147 billion, as compared to 13 percent MoM decline was witnessed during Mar-12. However on fYtD basis (Jul-Apr12), the category appreciated by 90 percent. the major growth was witnessed in the fund sizes of ASK-Cf, PCf and ULPf which appreciated by 86 percent, 81 percent and 23 percent on MoM basis to reach at rs20 billion, rs4.3 billion and rs32 billion respectively. the money market funds’ return remained stable during the month of Apr-12 and posted average return of 10.8 percent on annualized basis, as compared to previous month return of 10.7 percent. During fY12tD (JulApr12) the money market funds category earned annualized return of 11.4 percent
whereas the highest return was posted by ASK-Cf of 11.92 percent outperforming the category by 52bps. During Apr-12, the fund size of equity funds category appreciated by 4 percent MoM to reach at rs51 billion compared to rs49 billion last month, while the size of the equity funds category posted the decline of 2 percent fY12tD (Jul-Apr12). the equity funds category outperformed the stock market posting the return of 2 percent MoM in Apr-12 as compared to KSe-100 and KSe-30 index returns of 1.7 percent and 1.1 percent respectively. Highest return was earned by AKDOPf posting 6.7 percent during Apr-12 while also outperforming the KSe100 index return by heavy margin of 5 percent. As a result of highest returns in equity funds category during last 3 consecutive months, AKDOPf has been ranked No.1 slot return-wise in equity funds category with return of 32.1 percent fY12tD (Jul-Apr12) as compared to category average return of 14.5 percent and KSe100 and KSe30 index return of 12.0 percent and 5.8 percent respectively during the same period.