Follow by Email

Sunday, 31 July 2011

DAILY BUSINESS NEWS IN BRIEF: 01.08.2011


Petrol and light diesel prices raised
ISLAMABAD: Prices of petroleum products, except the high speed diesel, have been increased for August by up to 5.2 per cent.
Syed Jawad Nasim, the spokesman for the Oil and Gas Regulatory Authority (Ogra), said here on Sunday that the price of motor spirit (petrol) had been increased by Rs1.09 per litre (1.3 per cent), to Rs84.80 from Rs83.71. The highest increase of 5.2 per cent has been made in the price of high octane blending component. Its per litre price will now go up to Rs107.80 from Rs102.46 per litre.
The price of kerosene has been increased by Rs1.97 per litre (2.33pc), to Rs86.62 from Rs84.65.
Light diesel oil (LDO) price has been increased by Rs2.13 per litre (2.6pc), to Rs83.52 from Rs81.39. The high speed diesel price will remain unchanged at Rs92.10 per litre
Moot planned to attract foreign investment
KARACHI, July 30: The private sector has decided to hold a multilateral conference on the sidelines of Expo-2011 being held on October 19-20 to attract foreign investment.
This was stated by Abdul Kader Jaffer, president, Pakistan-Japan Business Forum and leader of the group which has taken the initiative to attract investment at a press conference here on Saturday.
Chairman, Board of Investment (BoI), Saleem H Mandviwalla, heads of Punjab and Sindh Boards of Investments (BoIs) and Director General of Trade Development Authority of Pakistan (TDAP) and heads of various forums and councils representing European, Korean, Malaysian and other Asian countries were also present.
Mr Jaffer said it would be a public-private sector joint initiative for holding such a conference on investment and trade but would be spearheaded by bilateral forums of 11 countries.
The Expo 2011, he said, would be inaugurated by the Prime Minister Yousuf Raza Gilani and being a mega event where over 10,000 Pakistani manufacturers would be displaying their products it will give an opportunity to prospective foreign investors to have a direct look at the displayed products.
He further said that the conference would be held on Oct 20 and around 100 foreign investors are expected to attend.
Abdul Kader Jaffer, who looked quite confident about the success of the conference, said that an excellent programme has been arranged for foreign visitors and details would be disclosed soon.
He explained that the conference would be different as it was being arranged by the private sector and devolves around five focused working groups rather than lengthy speeches.
He further said that discussion would explore all dimensions and possibilities of investment in the field of engineering, infrastructure, agriculture and dairy, mines and minerals and pharmaceuticals.
This will give potential foreign investors an opportunity, he said to interact simultaneously with experienced Pakistani private sector and receive guidance from senior government officials who would be attending the conference.
Pakistan being the fifth largest populated country in the world with about 180 million people, 60 per cent of whom are under the age of 30, Mr Jaffer said has large untapped natural resources with increasing needs of the growing population.
He explained that this creates ideal situation strong demand for goods and services.
The conference, he said, intends to bring both together and provide a platform for joint venture, technical know-how, diversification, relocation, public private partnership, etc.
The PJBF chairman said that Pakistan is not only a profitable destination for investors but a gateway to Central Asia and will provide an unmitigated opportunity to investors for their investments bright future.

50 basis points cut in key policy rate based
A 50 basis points cut in key policy rate based on inflationary projections showing a declining trajectory is not expected to lower the lending rates unless government reduces its reliance on the banking system. Further, the inflationary expectations are deeply entrenched in our economy and the expected increase in electricity and gas tariffs is yet to work through the Consumer Price Index (CPI).

According to a survey of 1086 companies, firms have been increasing prices every three months on the basis of increase in raw material prices and depreciation of PKR against major global currencies. Various inflation models of SBP indicate that the expected CPI to drop from 13.9 - at the end of June 2010 - to 11 to 12 percent range in FY12. This provides a 190bps headroom for real interest rate reduction. SBP, however, took a cautious approach and opted for a mere 50bps cut as it awaits the impact of energy price hike and supply side shortages on inflation.

Both Karachi Interbank Offer Rate (Kibor) of different tenors and Weighted Average Lending Rate (WALR) have thus far broadly followed changes in Policy Rate. Against 150bps increase in SBP Policy Rate during FY11, six-month Kibor and WALR have increased by 143bps and 103bps, respectively. While the movement in Kibor is a reflection of monetary policy stance and prevailing liquidity conditions, changes in WALR are also greatly influenced by credit demand of the private sector. Muted incremental credit demand of the private sector during FY11 partially explains a lower increase in WALR. Unlike lending ratio, the Weighted Average Deposit Rate (WADR) did not register any significant change in the corresponding period as it increased from 6.8 to 7.2 percent in one year.

This indicates that the assumption that an increase in policy rate will induce banks to offer higher return to attract deposits and also reduce the incidence of currency in circulation did not work. An absence of competition in the banking system and a lack of financial deepening and the positioning of 30.6 percent of deposits at zero rate of return also explain the overall low WADR.

Trimming the discount rate by 50bps may lead to a Rs 4 billion net saving to the government on servicing of rupee debt. Had SBP chosen to keep 'Real' interest rate at minus 100bps the government would have reduced the stock of its debt by one percent a year. This would force banks investing in Treasury Bills to pay a price unless they start redirecting their funds to higher risk borrowers. In case, banks remain 'shy' due to rising incidence of NPLs and continue to lend to government heavily, it will then be the depositors who would be financing government debt indirectly. Not a bad alternative to people who do not pay taxes. The strategy employed by banks has helped them enjoy the option to deposit their surplus cash at 11 percent with SBP, although they offer their depositors much lower rate of return.

Lowering rate does not cause any dent on government's almost omnipresence in private credit markets. The crowding out would continue to persist unless government raises revenue by taxing all kinds of income irrespective of sources and cuts expenditure in a demonstrable way. Last year, subsidies shot up from a budgeted figure of Rs 127 billion to a whopping Rs 380 billion. In addition, the stock of credit to Public Sector Enterprises (PSEs) increased by Rs 36.3 billion in FY11, which was less than half of the amount availed in the entire FY10 (Rs 85 billion). The stock of credit to PSEs stood at Rs 387.6 billion and their ever-deteriorating financial health remains a cause of serious concern and profound frustration.

Reducing rates implies an accommodative monetary stance in response to the original sin, ie, currency note printing. The government did manage to reduce its stock of borrowing from the central bank by Rs 135 billion from mutually agreed limit of Rs 1290 billion on cash basis, to Rs 1155 billion as on June 30, 2010. However, in order to meet this target, the government increased its reliance on scheduled banks and this trend was found in the ascendant in the second half of the fiscal year. Although, the retirement of borrowing from SBP bodes well for inflation expectations, continued dependence and increasing reliance on scheduled banks causes a serious setback to private sector's lending prospects. The stock of government borrowing from SBP represents the monetary overhang which is working its way through the economic system. Unless SBP and Ministry of Finance enforce an institutional arrangement to retire five to 10 percent of the stock of Rs 1290 billion every year the long-term inflationary expectations will not be addressed in an effective and meaningful manner.

The central bank also needs to relax Prudential Regulations for the SMEs and simultaneously curb the availability of export finance at concessional rates to the 'big boys' (top 100 are gobbling up 73 percent of export finance). They can fend for themselves and do not need this facility at all. In addition, SBP and Government need to formally introduce deposit insurance and increase the CDNS rate to reduce the stock of currency in circulation which is now at a very high level of Rs 1.5 trillion, ie, 29 percent of money supply (M2).

Last year, exports were mainly stimulated by a highly significant rise in cotton prices. Increase in inflow of home remittances was due to switch from informal to formal channels. The country's economy witnessed these two positives on its external front despite a stable exchange rate as there had been only a 0.5 percent depreciation of PKR against US dollar in the entire year. This strongly indicates that external position of Pakistan is inelastic to either the exchange parity or interest rate differentials. However, in the event of any sudden fall in the rupee value, the situation could lead to capital flight and dollarisation. Therefore, managing bulky oil payments and debt repayments by keeping volatility in check in forex market is essential. This crucially requires maintaining the official parity and open market rate within a close band of 25 to 50 paisa to a dollar.
BRIEF NEWS:
Business News

Mon, 1 August 2011

- Dollar rises against yen after US debt deal


- Asian markets soar on US debt deal
Tokyo jumped 1.84 percent by the break, Hong Kong rose 1.42 percent and Sydney added 1.93 percent, while Seoul gained 1.77 percent

- Crude surges in Asia as US reaches debt deal
"What we are seeing is a relief rally i

- Obama unfurls 11th-hour deal to avert US default
"I want to announce that the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoi

- POL prices being revised upward
The rate of Kerosene oil is being increase

- SBP cuts policy rate by 50 basis points
police for the next two months here said the energy crisis and bad law and order situation adversely affected the growth a

- Unholy price-hikes before holy month bites consumers
KARACHI: The holy month of Ramazan -- the most important month in the Islamic calendar - is around the corner. The Islamic religious literature speaks volumes about the significance of this month. Each year in this month, Muslims commit themselves to the best practices in Islam, share with one another and endeavour to be closer to God the Almighty.

- KSE recovers 92 points on fresh buying
The market turnover stood

- Euro slides further against dollar
The European common currency was down to $1.4305 in Tokyo morning trade from $1.4324 in New York late Thursday. The euro was almost flat at 111.24

- Asian shares slip as US debt deadline looms
With the clock ticking on the August 2 deadline, when the Treasury says it will run out of cash, global markets are looking to Washington, where the White House, Democrats and Republ

Judiciary-executive tussle likely to dominate NA session today.
Quetta shut to mourn death of 11 Shias
Security forces kill 140 in Syria crakdown
Quetta /shuttered in protest

Mohammed Saleem Mansoori

Tuesday, 26 July 2011

DAILY STOCK MARKET REPORT: 27th JULY,2011


Stock
Karachi Stocks Down 26.90 Points:
KARACHI, July 26: At close of trading, the KSE-100 index was at 12367.59, down 26.90 points.
July 26, 2011
5 TOP SCRIPTS GAINER AND LOOSER
Exide (Pak) Rs 8.19 Uni Lever Pak Rs (102.76)
Colgate Palmol. Rs 6.82 Rafhan Maize Rs (41.36)
Indus Motor Co Rs 3.86 Service Indus Rs (4.65)
BoC Pak Rs 2.92 Millat Tractors Rs (11.56)
Shieled Corp Rs 2.08 Philip Morris Rs (8.30)


KSE 30 – Shares Index Previous 11,815.91,Tuesday’s 11,817.39,plus 1.48 points
KSE 100 – Shares Index Previous 12,394.49,Tuesday’s 12,364.06, minus 30.43 points
MARKET CAPITALIZATION Previous rs.3,271.139bn,Tuesday’s 3,266.072bn,minus 5.067bn
VOLUME LEADERS NIB Bank(right), 18.048m, J.S. Investment 4.154m, Fauji Fertiliser Bin Qasim 2.102m, J.O.V. & Co 2.014m, Azgard Nine 1.576m shares.
TOTAL VOLUME 54.538m shares
TOTAL TONE: easy, total listed 638, actives 368, inactives 270, plus 95, minus 172, unchanged 101

KSE 100-share Index loose 30 points.
KARACHI, July 26: The stock market again lacked normal trading interest as leading investors kept to the sidelines despite reports of higher earnings apparently awaiting some positive developments on the law and order front.
The KSE 100-share index fell further by 30.43 points at 12,364.06 as compared to 12,394.49 a day earlier amid light trading. Barring Engro Corporation, which fell further, other leading shares, notably Fauji Fertiliser, National Bank and some others resisted fresh fall.
Floor brokers said all eyes are now focused on the earnings reports due during the current and the next week but whether or not they could put the market back on the track is anybody`s guess.
In normal trading conditions, interim earning report of the MCB could have evoked a good investor interest but other worries weighed heavily on the investor mind, they added.
Being highly sensitive, the market needs peaceful environment sans worries about the personal security but in the backdrop of spate of target killings and continued violence in the city, investors think twice before putting money in stocks even at the lower levels, most analysts believe.
An after-tax profit of Rs16.162 billion for the half year ended June 30, and an interim cash dividend of 30 per cent and per share earning of Rs12.64 by the Muslim Commercial Bank (MCB), should have boosted the investor confidence but external depressants weighed heavily against the underlying sentiment, analysts said. Its share value surged by Rs2.87 at Rs195.32 on over a million shares.
They said the flight of capital, notably from the oil sector owing to law and order situation also worked against the sentiment and in their absence the market may remain poorer as far as foreign funds are concerned.
Minus signs again dominated the list under the lead of Unilever Pakistan and Rafhan Maize, off Rs102.76 and 41.36, but on the other hand, some shares managed to end with modest gains, notably among them being Exide Pakistan and Colgate Pakistan, up by Rs8.19 and 6.82, respectively.
Traded volume rose to 54.538m shares from the previous 33m shares but losers held a strong lead over the gainers at 172 to 95, with 101 shares holding on to the last levels.
The right shares of NIB Bank led the list of actives, unchanged at 0.01 on 18m shares followed by J.S. Investment, unchanged at 5.11 on 4m shares, Fauji Fertiliser Bin Qasim, lower 20 paisa at Rs47.08 on 2m shares, J.O.V. & Co, steady by 11 paisa at 2.67 on 2m shares, Azgard Nine, firm by four paisa at 6.16 on 1.576m shares, Fauji Fertiliser up 68 paisa at 163.72 on 1.412m shares, and PTCL, lower 14 paisa at 12.58 also on 1.412m shares.
They were followed by Lucky Cement, easy 24 paisa at 73.31 on 1.363m shares, Engro Corporation, lower by 88 paisa at Rs147.63 on 1.160m shares and Lotte Pakistan, steady by one paisa at 12.76 on 1.106m shares.
FUTURE CONTRACTS: National Bank led the list of actives, steady by six paisa at Rs54.41 on 0.342m shares, followed by Engro Corporation, off 65 paisa for the July contract at Rs148.01 and but higher by four paisa for the August delivery at 149.34 on 0.320m and 0.256m shares, respectively, Fauji Fertiliser Bin Qasim, lower by 29 paisa at Rs47.08 on 0.319m shares and Fauji Fertiliser, easy by 25 paisa at Rs164.04 on 0.220m shares.
DEFAULTER COS: Dadabhoy Cement led the list of actives, up 17 paisa at Rs2.19 on 49,002 shares followed by Japan Power, which also came in for modest support, up one paisa at Rs1.16 on 22,508 shares and S.S. Oils, up 17 paisa at 4.66 on 10.500 shares.




Mohammed Saleem Mansoori

Monday, 25 July 2011

DAILY STOCK MARKET REPORT: 26th JULY,2011


Stock July 25, 2011
Karachi Stocks Down 70.20 Points:
KARACHI, July 25: At close of trading, the KSE-100 index was at 12406.57, down 70.20 points.
5 TOP SCRIPTS GAINER AND LOOSER
Nestle Pakistan Rs 12.06 Unilever Pakistan Rs (15.41)
Bhanero Textiles Rs 11.64 Colgate Pakistan Rs (9.14)
Bata Pakistan Rs 7.06 MCB Bank Rs (1.95)
Exide Pakistan Rs1.80 Atles Battery Rs (1.80)
Biafo Ind Rs1.50 Habib Bank Rs (1.47)


KSE 30 – Shares Index Previous 11,917.40, Monday’s 11,815.91, minus 101.49 points
KSE 100 – Shares Index Previous 12,476.77, Monday’s 12,394.49, minus 82.28 points
MARKET CAPITALIZATION Previous Rs.3,289.273bn, Monday’s 3,271.139bn, minus 18.134bn
VOLUME LEADERS Fatima Fertiliser 2.383m, Pak Reinsurance 1.732m, NIB Bank (rifht) 1.641m, Fauji Fertiliser Bin Qasim 1.526m, WorldCall Telecom 1.314m shares.
TOTAL VOLUME 32.820m shares
TOTAL TONE; easy, total listed 638, actives 326, inactives 99, plus 85, minus 142, unchanged 99

Stocks lose 82 points.
KARACHI, July 25: The trading on the stock market on Monday resumed on an easy note as investors liquidated long positions in a bit haste owing to a fresh wave of killings in the city.

“Fears linked to personal security in the backdrop of trend of violence appeared to have dominated the investor mind and weaker links among them stayed on the sidelines, while some bold ones remained undeterred”, analysts said, and added: “The fall of the turnover figure to only 33m shares reflects the investor mind and the panic.
The market performance was reflected in the falling share values, light volumes and fresh erosion in the benchmark, which ended with a net fall of 82.28 points at 12,394.49 as compared to 12,476.77, while it ended the last week with a good gain of 130.25 points.
Most of the leading base shares finished lower under the lead of National Bank, Engro Corporation and other leading fertilizer shares.
Floor brokers said reports of higher earnings both final and interim by some of the leading companies did evoke modest interest on those counters where the earnings reports are due but the overall trend remained bearish.
But the absence of instant morale boosters, which the market terribly needs in the prevailing law and order situation continued to weigh heavily against the underlying sentiment, said a leading stock analyst Ahsan Mehanti.
“Rising outflow of foreign capital from the local market owing to prevailing law and order situation in the city do worry investors”, he said, and added: “If the current flight continued at the current rate the market may be further poorer as far as foreign investment is concerned”.
Another leading analyst Samar Iqbal believes a section of investors hope an improvement in the prevailing law and order situation, which would lure investors back in the arena in due course”.
“The investor perceptions how to behave in adverse situations as the prevailing one differ but one thing is clear that saner elements among them may not get scared and operate orderly”, another analyst Salman Naqvi said.
Prominent gainers were led by Nestle Pakistan and Bhanero Textiles, up by Rs12.06 and 11.64, while top losers included Unilever Pakistan and Colgate Pakistan, off by Rs15.41 and 9.14.
Traded volume fell sharply to 32.820m shares from the previous 126m shares as losers held a strong lead over the gainers at 142 to 85, with 99 shares holding on to the last levels.
The active list was led by Fatima Fertiliser, easy by 21 paisa at Rs16.74 on 2m shares, followed by Pak Reinsurance, steady by 12 paisa at Rs15.58 on 2m shares, NIB Bank (right), unchanged at 0.01 also on 2m shares, Fauji Fertiliser Bin Qasim, lower by 24 paisa at Rs47.28 on 1.526m shares, WorldCall Telecom, unchanged at 1.81 on 1.314m shares, Arif Habib Corporation, easy by 19 paisa at Rs28.32 on 1.223m shares, and Hub-Power, up 56 paisa at Rs39.62 on 1.108m shares.
They were followed by Bank Al-Habib, steady three paisa at Rs29.07 on 1.034m shares, Engro Corporation, off Rs3.08 at Rs146.51 on 0.915m shares and National Bank, lower by 64 paisa at Rs54.18 on 0.899m shares.
FUTURE CONTRACTS: The notable feature was that trading was also resumed in the August settlements side by side the maturing July contract.
The active list was led by Fauji Fertiliser, off Rs1.11 at Rs163.29 on 0.215m shares followed by Engro Corporation, its both settlements fell by Rs3.41 and 3.37 at Rs148.66 and 149.30 on 0.195 and 0.178m shares, respectively. National Bank fell by 63 paisa for the ruling July at Rs54.35 on 0.193m shares, while its August delivery fell by 21 paisa at Rs54.77 on 0.189m shares.


Mohammed Saleem Mansoori