12-13 Business Pages (02-11-2013)_Layout 1 11/2/2013 3:16 AM Page 1
BUSINESS Saturday, 2 November, 2013
ANALYSTS FORESEE 50-100BPS INCREASE IN POLICY RATE KSE INDEX LOSES 127 POINTS ON UNEXPECTED 9.08PC CPI KARAcHI
HE Karachi stocks market tumbled by 127 points Friday on the back of, what the analysts viewed, dismal data of inflation which stood at a 15-month high of 9.08 percent during the just-concluded month of October. The equity investors played cautiously on last trading day of the week with analysts speculating variously about the central bank's monetary policy stance for the next couple of months. The benchmark 100share index nosedived to 22,649.09 points from Thursday's 22,775.85 points. Ahsen Mehanti of Arif Habib Corporation said the index closed bearish amid thin trade after 'dismal' CPI inflation data. He said profit-taking was witnessed in selected stocks across the board ahead of the SBP pol-
Govt has to repay over Rs 400b loan this year, Senate told ISLAMABAD
The invisible hand of the market always moves faster and better than the heavy hand of government. — Mitt Romney
SToCk maRkeT TumbLeS ON 15-MONTH HIGHER INFLATION NUMBERS viewed Shajar analyst Nauman Khan. Furthermore, he said: "The deviation from our projection is likely to have come from higher food inflation and greater impact of PkR depreciation in the smaller heads." Zeeshan Afzal of Topline Research cited recent hike in electricity tariff and petroleum prices, quarterly revision of house rent index and food prices as major contributable factors for the upsurge in inflation. "For FY14, we expect CPI to range into 9.5-10.5 percent," said the analyst. The economic analysts are divided on whether or not the inflationary pressures would compel the regulator, the State Bank, to revise the monetary policy stance. Khan of Shajar Research believes that since the inflation numbers were likely to clock at "elevated level" the central bank may find a case for making at least a 50 basis points increase in the discount rate to be announced this month. Topline analyst Afzal seconded Khan saying as the CPI was expected to enter into a double digit territory from next month, "We maintain our stance of 50bps hike in discount rate". Abdul Azeem of InvestCap, however, thought otherwise. The economic observer said the monetary policy was predicated to remain unchanged. Azeem, however, expected the CPI numbers to clock in at 8.8 percent that appeared higher than his expectation at 9.08 percent. Coupled with rejection of bids in the latest PIB auction, this
icy rate announcements due later this month. "Renewed foreign interest and government plans for $750m Eurobond issue to manage exchange rate supported the index to close above days low post major earning announcements at KSE," said Mehanti. The trading volume stood at 125 million shares against the previous 119 million. The trading value rose to Rs 7.2 billion from Rs 6.3 billion with market capital accumulating to Rs 5.3 trillion. "Market remained volatile and moved in a wide band of more than 400 points," said Samar Iqbal of Topline Research. The index heavy weight like OGDC and MCB fell by 2 percent that contributes 100 points fall in the index, she said. The analyst said the investors, who were bullish after continuous foreign buying, sold their positions in the second half after the announcement of higher than expectation inflation of October. Mohammad Sohail, chief executive of Topline Securities, said the 9.08 percent inflation rate posted a 15-month high. "Rising inflation and falling rupee may force (the) SBP to raise policy rate by 50 to 100bps," the senior equity analyst told Pakistan Today. This higher inflation number came against 7.39 percent of the preceding month, September. Standing at 1.96 percent monthon-month, the average price hike in the country stood at 8.32 percent in 4MFY14. "The higher inflation is likely to have come from a rise in the electricity tariff, quarterly adjustment of the housing index (HRI) and revision in petroleum product prices,"
factor, he said, would make the equity markets favourable for the investors. "This is foreseen to provide impetus to
Pak equities stand out in region on improved foreign buying
The Senate was informed Friday that the government is following a multi-pronged strategy to improve the resource position and reduce dependency on foreign loans. Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi on behalf of the finance minister told the House during question hour that the strategy envisages increasing tax to GDP ratio‚ bringing tax evaders into the tax net and eliminating tax exemptions. In addition‚ he said the finance division has slashed current expenditures upto 30 percent during the current fiscal year. These expenditures including subsidies will further be rationalized. The Minister said the State Bank of Pakistan is in the process of improving the incentives regime to encourage remittances by Pakistanis working abroad in order to build our foreign exchange reserves. Similarly‚ a comprehensive trade policy has been formulated to boost exports over the medium term.
KARAcHI Staff RepORt
Marked with relatively high volatility while having rebounded at the tale-end of the month, KSE100 extended its ride further with MoM increase of 4 percent during October 2013. The market closed at 22,776 points. "Primary reason for such improved performance from equities has been foreign buying in Oct-13," viewed Abdul Azeem of InvestCap Research. Moreover, the analyst said, better results of different companies also support the market. The average market volume stood 116 million shares during the month under focus, which is relatively lower against the volumes of the previous month, down by 46 percent MoM. KSE100 yielded a decent return
of 8 percent during 4MFY14 and settling YTD return at 35 percent during 10MCY13. On sector wise basis, financial services (up 53 percent MoM), media (up 35 percent MoM), paper and board (up 17.4 percent MoM) and oil and gas (9.5 percent MoM) outperformed KSE100 during Oct-13. "In the regional context, Pakistan equities remained at par when compared with Asia pacific region during the month and posted positive return of mere 5.7 percent as against the Asia pacific average return of 6 percent MoM," said Azeem. KSE100's YTD return in MSCI index is still above that of the regional markets' as well as other world benchmark indices with 19 percent CYTD return compared to average Asia pacific return of 2.6 percent during the same period. Similarly, Pakistan equities re-
ceived foreign funds of USD50.6mn as against inflows in the Asia Pac region of USD9.9bn during Oct-13. However, on CYTD basis, Vietnam and Pakistani equities stood with smallest size of inflows with only USD202mn and US368mn respectively, while regional equities combined stood with a massive inflow of USD28bn during this period. Giving his outlook, Azeem said with an expectation of 8.8 percent inflation in Oct-13 coupled with rejection of bids in latest PIBs auction suggest that the monetary policy is predicated to remain unchanged in Nov-13, making equity markets favourable for the investors. This is foreseen to provide impetus to equities going forward, he said. "We maintain our positive longterm stance on the market," said the analyst.
equities going forward," he said and added that "We maintain our positive long-term stance on the market."
LCCI establishes TFC at its premises LAHORE Staff RepORteR
In a giant leap towards promotion of trade and industry and for the revival of economic activities, the Lahore Chamber of Commerce and Industry on Friday established Trade and Tax Facilitation Centre (TFC) at its premises. The centre was inaugurated by LCCI President Engineer Sohail Lashari in the presence of LCCI Senior Vice President Mian Tariq Misbah, Vice President Kashif Anwar and a large number of executive committee members. Speaking at the inaugural ceremony, the LCCI president threw light on the objective of setting up of trade and tax facilitation centre. He said the need to establish a dedicated centre for guidance and capacity building of LCCI members was felt keeping in view the range of members’ issues and multiplicity of trade information.
CPI increases by 9.1 percent ISLAMABAD Online
SBP LAUNCHES LIVESTOCK INSURANCE SCHEME KARAcHI Staff RepORt
The State Bank of Pakistan (SBP) has developed a framework for livestock insurance for the borrowers. The scheme has been launched in collaboration with the Securities and Exchange Commission of Pakistan, commercial banks, insurance companies and provincial livestock and dairy departments. It is aimed at improving access to finance to the livestock and dairy sector by mitigating risk of loss of livestock due to disease, natural calamities and accidents. The livestock sector contributes 55 percent in agriculture GDP and 11.4 percent to the overall GDP. It is an important tool for poverty alleviation and for raising the living standards of the poor especially in rural areas, said the central bank in a statement on Friday. However, banks’ financing to livestock, dairy and meat is only Rs 56 billion
The livestock insurance scheme will provide an essential risk mitigating tool to encourage the banks to enhance the flow of credit to this highly potential and under-served sector which constitutes 17 percent of total agriculture lending of Rs 336 billion in 201213. One of the major reasons for modest off take of credit to this sector is the limited availability of appropriate insurance products or other risk mitigation tools. The livestock insurance scheme will provide an essential risk mitigating tool to encourage the banks to enhance the flow
of credit to this highly potential and under-served sector. "The scheme will safeguard the interest of farmer borrowers in case of death due to disease, accident, flood, heavy rains and storm of their dairy, milk or fattening animals i.e. buffaloes, cows and bulls," said the SBP. Under the scheme, the banks will ob-
tain insurance of all livestock loans up to Rs 5 million for the purchase of animals. The SBP has advised the banks to implement the scheme as per given parameters and enter into agreements with reputable insurance companies for underwriting livestock insurance for their borrowers.
Consumer Price Index (CPI) increased by 9.1 percent in October as compared to 7.4 percent in the previous month. According to the data released by the Pakistan Bureau of Statistics (PBS), inflation based on Consumer Price Index (CPI) on month on month basis increased by 2.0 percent in Oct 2013 as compared to a decrease of 0.3 percent in the previous month and an increase of 0.4 percent in Oct 2012. Generally it increased by 9.1 percent on year on year basis in Oct 2013 as compared to 7.7 percent in October 2012. According to the PBS figures, price of potatoes has increased by 24.54 per cent in the month of Oct against September, price of onion enhanced by 13.89 per cent, price of fresh vegetable went up by 10.10 per cent, price of tomatoes surged by 7.85 per cent, price of sugar increased by 3.16 per cent, fish price surged by 1.92 per cent, wheat product price increased by 1.20 per cent, fresh fruit enhanced by 1.19 per cent, price of cereal went up by 1.08 per cent and honey price surged by 1.85 per cent, wheat price swelled by 0.97 percent, bakery and confectionary registered increase of 0.82 percent and dry fruit price increased by 0.81 percent in October 2013 as compare to September.
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As a small businessperson, you have no greater leverage than the truth. — John Greenleaf Whittier
aRGenTIna oFFeRS a
RGENTINEAN Ambassador Rodolfo Martin Saravia calls for promoting interaction between the private sectors of the two countries. In an exclusive interview with Radio Pakistan, he said that Argentin had offered cooperation to Pakistan to harness hydroelectricity potential to overcome its energy crisis. He said Pakistan had the potential to generate over 60,000 megawatt of hydroelectricity and his country will supplement the efforts to use this God gifted resource. He said Pakistan and Argentina should seize tremendous potential in different fields at government and private sector level to enhance cooperation for the benefit of the two peoples.
countries of The ambasthe region. sador said there Similarly, is also great with Argenscope of cooperPakistan and argentina should tinean cooperation between the two counseize tremendous potential in a t i o n , Pakistan can tries in other diﬀerent fields at government boost its pharsectors like texmaceutical intile, pharmaceuand private sector level to dustry to t i c a l s , export mediagriculture and enhance cooperation for the cines, espesports, and sky cially for is the limit in bibenefit of peoples hepatitis to lateral relations. countries of He said Pakistan South Amerneeds to focus Rodolfo MaRTin SaRavia ica, he added. on enhancing its relations with ARGENTINEAN AMBASSADOR He said Pakistan has huge Argentina and market for meat exports and his other Latin American countries. The Argentina Ambassador said country can help in meat processing Pakistan can use his country as a for its export and local consumpbase for expansion of its trade and tion. Saravia called for promoting commercial relations with other interaction between the private sec-
PAK-CHINA SIGN ACCORD FOR ESTABLISHING TRUCK ASSEMBLY PLANT RAWALPINDI app
The three giants, National Logistics Cell (NLC), Heavy Industries Taxila (HIT) and China North Industries Corporation Limited (NORINCO China) have joined hands in an impressive joint venture agreement signing ceremony for establishment of truck assembly plant at HIT Taxila, which is likely to start production within a year. The plant will initially assemble 300 units of Euro compliant trucks and prime movers of various categories and will be scalable in production output as per market demand. The Joint Venture Agreement was signed by Quarter Master General who is also Officer Incharge NLC Lieutenant General Sajjad Ghani, Chairman HIT Lieutenant General Syed Wajid Hussain and Senior Vice President NORINCO Wang Lee, said an ISPR press release issued here. Ambassador Peoples Republic of China, Sun Weidong, Director General NLC Major General Asghar Nawaz and other senior officials attended the signing ceremony. The trucks will be assembled by a Joint Private Limited Company PAKNOR with brand name of Power Star. Product quality will be ensured by NORINCO, who will train the HR to manufacture and assemble top quality products. The availability of technicians by NORINCO
will facilitate production programme in Pakistan. The most significant aspect of the Project would be on transfer of technology basis that will not only bring foreign investment but it will also build capacity of local technicians and create employment opportunities in the industry. NORINCO is already engaged in Defense production with HIT since long. The plant will also provide an opportunity to HIT for diversification in many respects and NLC will be the major buyer of the prime movers to modernize its fleet. This can be regarded as a major development to boost the indigenous truck production industry of Pakistan and will go a long way in the revival efforts of national economy.
tors of the two countries to augment efforts for enhanced cooperation in different fields. For this purpose, he said, visits of chambers of commerce and industry and trade delegations are being encouraged to increase imports and exports. He informed that speaker Argentinean Parliament will visit Pakistan in next two months while the Foreign Minister early next year. These visits will further strengthen ties between the two friendly countries. Referring to encouraging people-to-people contacts, he said, Argentine Embassy has introduced free Spanish language classes in evening to overcome barrier of language. The Argentinean envoy said his country has marvelous expertise in the field of sports and it can send its coaches to Pakistan to promote football and other sports in this country.
Honda atlas unveils $7.3m ‘CD Dream’ KARAcHI Staff RepORt
Atlas Honda is committed to Pakistani market and continues to bring foreign investment to enhance its role in bike manufacturing industry in addition to $ 200 million invested to introduce higher CC bikes it recently completed a technology project worth $ 7.3 million. Proving its commitment to Pakistani consumers and living up to its reputation and promise, Atlas Honda unveiled “Honda CD Dream”, a new motorcycle with exciting new shape, improved technology, functionality, and aerodynamic contours Friday. While providing more choice for Honda fans, Atlas employed advance metallurgy technology in CD Dream to make its major body parts lower in terms of maintenance and have improved impact resistance, making it longer lasting. Speaking on the occasion, Takahashi, Chief Guest from Honda Motor Japan, said that the vision of progress that was seen together by Sichiro Honda and Yusuf Shirazi some 50 years ago is blossoming well and today with the launch of Honda CD Dream the vision is transformed into reality in yet another way. ‘The CD Dream offers options for the lovers of the most successful model in Pakistan’s motorcycle history -- the CD 70. We are proud of the confidence and support customers here have given us. Our new product will surely give the discerning customer a choice to have the driving pleasure that this new machine offers as well as that special feel of owning something that is uniquely Honda,’ he added.
Illicit trade: National exchequer lost over Rs80b in last 5 years REPORT SAYS ILLICIT TRADE RAMPANT IN PAKISTAN, MAINLY IN TOBACCO SECTOR ISLAMABAD aGenCieS
Pakistan may have lost more than Rs80 billion to “the black market and the unstoppable transportation of tax evaded products” during the last five years, according to a Euromonitor report. In its latest report on the current economic situation in Pakistan, the global research group said that illicit trade is rampant in Pakistan, mainly in the tobacco sector. The report claimed that one out
of every four cigarettes in Pakistan is being sold illegally, without the payment of due taxes and duties. It is either smuggled or local duties and taxes have not been paid on it. The growth of this sector has been exponential and in the last five years there has been more than 60 per cent increase in the sale of such cigarettes. According to estimates, around 1.5 billion duty-evaded cigarettes are sold each month. This means that more than Rs1.5 billion is being lost in revenue every month. In the last five years the government has lost Rs100 billion in duties and taxes due to illicit trade. In 2011 alone, illicit trade cost the government Rs18.5 billion in lost tax revenues. It is estimated that in the next five years, loss to national tax revenues shall exceed Rs100 billion. While the legal industry is ex-
pected to contribute an estimated Rs87 billion in excise and sales tax in the current fiscal year; contributing almost 3% of the total national revenue base, the illegal industry, on the other hand, is expected to further erode the revenue base, undermining all efforts to increase tax collection. If illicit cigarette trade, which at the moment has one-fourth share of the total market, is eliminated, more than $250 million can be added to the national exchequer every year. Tax experts believe that tactical raids against few large-scale wholesalers and transporters, high visibility outlets and prominent duty evading manufacturers can easily send a message to the small retailers and wholesalers that dealing in duty evaded and smuggled cigarettes is not worth the risk.
BUSINESS B Saturday, 2 November, 2013
COOPERATION IN ENERGY SECTOR ISLAMABAD
The Federal Board of Revenue recently constituted a special commission to assess the quantum of black economy with a special focus on smuggling. According to the commission’s report, the value of smuggled items sold in Pakistan, by conservative estimates, exceeds $5 billion per annum, whereas the total tax evasion in the country is believed to be much more than that and is stated to be above $10 billion per annum. These goods primarily come from a number of countries including Afghanistan, Iran, China, the UAE and India, according to the report. Afghanistan alone, however, acts as a major source of smuggled goods to Pakistan. Over 60 per cent of merchandise imported by Afghanistan is meant for smuggling into Pakistan.
CoMPany Unilever Food Colgate Palmoliv Nestle Pak.SPOT Wyeth Pak Ltd Siemens Pakistan
oPen 5250.00 1445.00 7043.75 4439.60 889.00
HigH 5512.50 1517.25 7100.00 4661.58 933.45
low 5250.00 1510.00 7001.00 4375.00 899.00
CloSe CHange 5512.00 262.00 1517.25 72.25 7100.00 56.25 4491.95 52.35 933.45 44.45
TuRnoveR 180 100 240 2,200 7,650
1735.00 255.42 310.00 491.70 275.00
1735.00 255.42 302.26 461.00 263.62
1735.00 255.42 303.22 461.00 264.33
-47.00 -13.44 -8.48 -7.29 -5.39
20 1,000 7,900 1,000 664,400
8.25 27.20 21.44 10.65 11.85
7.52 26.55 20.40 10.25 11.35
7.85 26.78 20.75 10.43 11.45
0.39 0.11 0.32 0.15 -0.07
11,871,500 8,308,000 7,343,000 6,591,000 6,218,000
Major Losers Bata (Pak)SPOT Khyber TobaccoXD Service Ind.Ltd XD MithchellsFruit Oil & Gas Devel
1782.00 268.86 311.70 468.29 269.72
Volume Leaders Jah.Sidd. Co. P.T.C.L.A Arif Habib Corp.XD B.O.Punjab Fauji CementXD
7.46 26.67 20.43 10.28 11.52
Interbank Rates USD GBP JPY EURO
PKR 106.9039 PKR 171.0463 PKR 1.0873 PKR 144.5769
Forex UK Pound Sterling Euro US Dollar Canadian Dollar Australian Dollar Japanese Yen Saudi Riyal UAE Dirham China Yuan
171.25 144.75 107.1 102 101.25 1.087 28.4 29.5 17.35
171.5 145 107.35 102.25 101.5 1.18 28.65 29.75 17.5
KARACHI: Consul General of Turkey Murat Mustafa Onart hosted a reception on the occasion of the 90th Anniversary of the Proclamation of the Republic of Turkey at his residence. Picture shows Rashid Mansur, CEO JS Investments, TV artist Shazia Akhtar, Syed Turab Shah and Zahid Karani with the host. pR
Five trillion taxpayer oGDCL privatisation plan a conspiracy: khan
ISLAMABAD: The Oil & Gas Development Company Limited (OGDCL), National Oil Company of Pakistan has been deposited approximately five billion rupees to the national exchequer in the form of paying taxes during the last five years. In a General Body Meeting (AGM) of OGDCL Officer Association held here in Islamabad, Jahangaiz Khan President OGDCL Office Association said that in the last financial year OGDCL paid Rs.129 billion rupees in the form of taxes and earned Rs.90 billion profits hence privatization of this national asset on emergent basis was an international conspiracy. He said that after the sale of 26% share of OGDCL the Government of Pakistan is going for the privatization of the company and intends to shift administrative affairs of OGDCL in private sector which was a part of international conspiracy. He said that cause of this plan was to get control on oil and gas reservoir and push the Muslims of the world toward backwardness and degradation. While addressing by the officers Jahangaiz Khan told that present democratic government has prepared a plan of mega institution’s privatization, under this plan nearly 32 govt institutions would be handed over to new liberal capitalism. He enlighten claim of Govt about privatization of institute going in deficit and said that OGDCL is most profitable company in the Pakistan and its privatization decision is taking only on international behest. OGDCL is playing its pivotal role to combat energy crisis in Pakistan, while its privatization announcement by our Government is a sign and depict that our leaders have covet to sold toil hard of the nation in gratis he added. pReSS ReleaSe