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PRO 15-02-2012_Layout 1 8/15/2012 11:48 AM Page 1

Wednesday, 15 August, 2012

Open sesame! Dushanbe opens import door… it’s more of a gate actually… and quite big! g To import wheat, rice and corn from Pakistan

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ajikistan will import about 100,000 ton wheat, 5000 ton rice, 5000 ton corn, banola oil and fertilizers to fulfill its domestic requirements. a high level delegation led by nurmahmad akhmedov, Chairman of the agency on state Material Reserves called on Commerce Minister, Makhdoom amin Fahim here tuesday. Both sides appreciated the excellent political, diplomatic relations and assured that they will continue to work together to enhance bilateral trade and economic relations, said a statement. the government and the people of tajikistan are under stress for provision of basic food materials due to unprecedented heavy snowfalls in autumn and winter last year. the Economic Coordination Committee (ECC) of Cabinet Division has already approved export of 30,000 ton of sugar to tajikistan at a price difference of Us $ 20 per ton from international price through trading Corporation of Pak-

Deutsch chronicles Germany skirts recession as investor confidence falls FRANKFURT/BERLIN AGENCIES

Rising exports and consumer demand helped inoculate the German economy, Europe’s biggest, against the recession plaguing many of its neighbors, but investor confidence is fading, data showed tuesday. the national statistics office Destatis calculated that German gross domestic product (GDP) expanded by 0.3 percent in the period from april to june, while the eurozone economy as a whole contracted by 0.2 percent. at the start of this year, Germany had notched up even stronger growth of 0.5 percent, but the economic powerhouse is beginning to feel the effects of the long-running debt crisis that has pushed much of Europe into recession. Destatis attributed Germany’s solid performance to robust household spending and rising exports. TOURISM GIANT TUI SEES SUNNY DAYS AHEAD: German tourism giant tUi said on tuesday it had shrugged off the eurozone debt crisis and was sticking to its forecasts after what it said was a “successful” quarter with net losses declining. the group, which owns Britain’s tUi travel, Europe’s biggest tour operator, said it booked a loss of 3.3 million euros ($4.1 million) in its fiscal third quarter, compared to a loss of 40 million euros in the same period last year. EMERGING MARKETS BOOST PHARMA FIRM MERCK KGaA: German chemicals and pharmaceuticals group Merck kGaa raised tuesday its forecasts for full-year revenues on expected growth in emerging markets after trimming its losses in the second quarter. shares soared by more than four percent after the group said net losses in the second three months of the year came in at 60.5 million euros ($74.9 million) compared to 86.8 million euros in the same period last year. total group revenues were up 11.6 percent to 2.9 billion euros with operating profits, as measured by earnings before interest, tax, depreciation and amortisation (EBitDa), up 13 percent to 747 million euros.

istan (tCP). it was decided that Ministry of Commerce will arrange meeting of the tajik delegation with exporters for forging business contracts. the member of Rice Exporters association of Pakistan (REaP) informed that Pakistan can provide 50,000 to 100,000 ton rice as per the demand of the tajik side. the visiting delegation has shown interest in procuring 5000 tons of irri- 6 and irri-9. tajik side proposed that rice may be delivered at torkham from where onwards transportation cost will be borne by them. a meeting of the delegation is being arranged with the prominent businessmen to finalize the mode of payment, transportation and pricing. Ministry of Commerce will organize meetings of the Pakistani exporters related to wheat, corn, flour, rice with the visiting delegation so that both parties can discuss and decide the quantity and modalities of purchase of these products. Both sides also agreed to hold a technical level meeting soon to explore the potential of bilateral trade. in this regard meeting with prominent members of Rice Exporters association of Pakistan (REaP) was arranged with the visiting delegation at tDaP, islamabad office.

SBP Governor goes all patriotic and hyper Calls for transforming Pakistan into a developed state and endeavors to follow Quaid’s vision to overcome the country’s fiscal predicament…

ISLAMABAD APP

the government plans to import 0.547 million tons of Urea and Diammonium Phosphate (DaP) to meet fertilizer demand during kharif crop season. Of the total, 0.190 million tons of Urea and 0.407 million ton of DaP is being imported. Giving break up, an official source on tuesday said Urea demand of the country for kharif 2012 as determined in consultation with all stakeholders has been 3 million tons and supply position includes opening inventory 0.800 million tons, domestic production 2.29 million tons and the remaining needs would be met through import of 0.407 million tons. the total target is 3.497 million tons. He said this will result in an expected ending inventory of Urea equal to 0.497 million tons which shows that Urea availability situation in the country is satisfactory for kharif 2012. the imports of 0.3 million tons had been approved by ECC to cater for unforeseen gas cuts and consequent shortages. Regarding DaP requirement, the official said it is estimated to be 0.536 million tons for kharif 2012 which is to be met as: opening inventory 0.177 million tons, domestic production 0.357 million tons and imports 0.19 million tons. the total DaP target is 0.724 million tons for this year. He said DaP imports are undertaken by private sector which are being conducted smoothly according to the requirements of the country. it is expected that there would be a surplus of 0.187 million tons at the end of kharif 2012 season.

Ta ta! MUMBAI AGENCIES

APP

cial inclusion is a core component of sBP’s financial sector development strategy. it envisages transforming the financial market into an equitable system with efficient market based financial services to the otherwise excluded poor and marginalized population including women and young people, anwar added. the sBP Governor said the state Bank will keep on working with all stakeholders to ensure that the financial system is well positioned to meet the growing needs of the economy and for achieving “our shared goals of economic growth and prosperity.” anwar said the state Bank has been striving to fulfill the twin objectives of monetary policy i.e. maximizing production/employment while ensuring price stability.

ISLAMABAD APP

Rice yield up by 28%

0.547m ton fertilizer being imported for Kharif 2012

India’s Tata Steel quarterly profit slumps 89 pct

KARACHI state Bank of Pakistan, Governor, Yaseen anwar has said they can easily overcome main challenges by following the guidance of our founding fathers. it is now our duty to transform this country into a truly developed state as envisioned by our Quaid-eazam, he said. He was speaking at the national flag hoisting ceremony held at sBP, karachi on tuesday. the Governor sBP paid glowing tribute to Quaid-e-azam Muhammad ali jinnah under whose inspiring leadership, statesmanship, wisdom and vision, the first ideological state of the world came into being on august 14, 1947. He said the sBP has been working to increase the welfare of all communities in line with the Quaid’s vision for Pakistan and added that finan-

Nitrogenous compounds high on govt agenda

the overall produce of rice has been estimated to reach 6.16 million tons during the current year, showing an increase of 28 percent over that of last year, official sources told aPP. “Following the remarkable increase in the yield, the rice export is expected to grow considerably during the current fiscal (2012-13),” said sources in the Ministry of national Food security and Research. they opined that it was

india’s tata steel, the world’s seventh-largest steelmaker, said Monday quarterly net profit slumped a worse-than-expected 89 percent from a year earlier due to falling demand in its key European market. steelmakers around the world have been suffering from a slowdown in demand as industrial growth loses pace in emerging economies such as india and China and expansion remains sluggish in advanced western economies. tata steel reported a consolidated net profit of 5.97 billion rupees ($108 million) for the financial first-quarter to the end of june, down from 53.47 billion rupees a year earlier. turnover edged up two percent to 335 billion rupees. analysts had expected the firm to post a profit of close to seven billion rupees. Europe accounts for around two-thirds of sales and production for the steelmaker, which has an annual capacity of some 28 million tonnes. tata steel, part of the sprawling tata Group conglomerate, became one of the world’s biggest steelmakers after purchasing anglo-Dutch company Corus for $13.7 billion in 2007.

due to prudent and pro-farmer policies of the government that rice export from Pakistan remained over Us $ 2 billion for the last four years consecutively. Giving break-up, the sources said that the rice export fetched Us $ 1.836 billion 2007-08, $ 1.983 billion in 2008-09, $2.160 billion in 2009-10, $.2.160 billion in 2010-11 and $ 2.061 billion in in 2011-12. the sources said that in the year 200910 rice was cultivated at an area of 2.88 million hectares with produce of 6.88 million tons, in 200-11 rice was cultivated at an area of 2.37 million hectare with produce of 4.82 million tons and similarly in 2011-12 rice was cultivated at an area of 2.57 hectares with 6.16 million tons produce. they said that the rice was a major cash and important food crop of the country after wheat and its produce comprised 40% basmati (fine) and 60 percent coarse types. the government, they added during 200809 and 2009-10 intervened in order to support farmers as the rice price hit the rock bottom due to bumper crop and plummeting international price.

Highlighting the major issues, the sources said that in view of good returns of the rice crop, there is a spread of basmati varieties in non-basmati zone. “it may affect basmati rice exports in the long run as the basmati produced in non-basmati zone lacks aroma”, they observed. the sources added that due to higher yield of hybrid rice, farmers are also shifting the irri-6 to hybrid rice and the hybrid rice quality is low compared to irri types. they further said that rice crop is low in productivity and production is affected by water shortage and there are enormous post harvest losses and issue of afflatoxin which affect crop value and quality especially in case of rice export. they stressed the need for more investments in general research and development in rice for further increasing its production. the sources said that Pakistani basmati rice was one of the top rice commodities all over the world, but the exports of this rich rice commodity witnessed sharp decline of 14.87 percent during the last fiscal year 2011-12 as compared to the previous year.


PRO 15-02-2012_Layout 1 8/15/2012 11:48 AM Page 2

02 Business

Oil price inflates as speculators bet on stimulus LONDON

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iL is up almost a third in six weeks at a time when the world economy, and hence fuel demand, are extremely weak. today’s oil price assumes the U.s. Federal Reserve will soon launch a new round of quantitative easing to stimulate the economy, or that bellicose rhetoric between israel and will lead to conflict, or that north sea production problems will be long-lasting. But none of these factors is a safe bet and if they were removed, the price of oil could fall quite sharply. “the market is decoupling from fundamentals,” said Carsten Fritsch, an analyst at Germany’s Commerzbank in Frankfurt. “Much of the strength is based on factors - such as more U.s. economic stimulus - that are far from guaranteed.” oil hit $115 per barrel on Monday, its highest for three months and up 30 percent since the end of june. Oil hit an all-time high of $147 in mid-2008 just before the onset of the credit crisis, which sent prices down to $36 just six month later. Oil prices are now well above the $50-$80 per barrel cost of production from most of the world’s newest oilfields, a level believed to be a natural floor for oil prices. HOSTILE RHETORIC: the oil market has also been strengthened by hostile rhetoric from iran and israel. israeli Prime Minister Benjamin netanyahu has promised never to allow iran to get nuclear weapons and said on sunday most threats to his country’s security were “dwarfed” by the prospect of an iranian atomic bomb. Washington has tightened sanctions on iran and sought to increase international diplomatic pressure to curb tehran’s nuclear ambitions. iranian leaders have talked of closing the strait of Hormuz at the head of the Gulf, through which around a fifth of global sea-borne oil exports flow, if they are ever attacked.

India July inflation falls unexpectedly to 6.87% NEW DELHI

Oil prices are racing higher as investors bet that central bank cash will soon boost a market afraid of Middle East war and worried about North Sea supplies, but the rally looks increasingly inflated by speculative guesswork However, with U.s. aircraft carriers within striking distance, Hormuz could not be closed for long, and it almost certainly would not suit iran to try to close the strait, through which its oil and other exports also pass. “iran is not about to close Hormuz,” said samuel Ciszuk, Middle East analyst for kBC Energy Economics. “Fear of war between iran and israel has been greatly overstated.” But while Middle East tensions may be providing largely psychological support for oil, action by the U.s. central bank could have a dramatic impact on oil’s supply and demand balance. since late 2008, the Federal Reserve has bought $2.3 trillion in long-term securities in a drive to spur growth and revive the economy, indirectly pumping billions into assets markets and injecting huge liquidity into oil and commodities. “SIGNIFICANT RISK”: However it is far from certain the Fed will announce QE3. jim O’neill, chairman of Goldman sachs asset Management, said in a note on Monday he could not see why the Fed would be in a hurry to launch more quantitative easing: “U.s. financial conditions have eased quite a bit. While the United states is not growing at a pace, the case for further QE right now seems quite debatable.”

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india’s inflation slowed unexpectedly in july to 6.87 percent from a year earlier, data showed on tuesday, giving the central bank more room to cut interest rates to spur a slowing economy. the july headline reading was significantly below the median forecast of 7.4 percent in a poll of 17 economists by Dow jones newswires and also below the reading for june of 7.25 percent. india’s central bank has been under political and business pressure to cut rates to help boost the economy, but inflation has been seen by analysts as too high to sharply reduce the cost of borrowing.

By a whisker… France dodges recession with zero growth in second quarter PARIS AGENCIES

France’s economy recorded flat growth in the second quarter of 2012, data showed tuesday, beating expectations it would begin a slide into recession. in its first flash estimate for the second quarter, the national statistics institute insEE said that French gross domestic product (GDP) was unchanged. that confounded expectations by many economists including the Bank of France that the slowdown plaguing much of the eurozone would push France towards recession. However France once again did less well than its principal partner, Germany, which posted 0.3 percent growth in the second quarter, according to official data also published on tuesday.

advanc e retail s s after ales da ta NEW YORK AGENCIES

the data showed retail sales rose 0.8 percent in july, the first rise in four months and biggest since February. Economists polled by Reuters had expected a 0.3 percent increase. the s&P retail index .RLX gained 0.9 percent. “the retail sales is good, and it just continues the trend right now for the s&P to go higher,” said Frank Lesh, a futures analyst and broker at FuturePath trading LLC in Chicago. “it keeps us going for now. i didn’t see anything here that said sell your longs or get out; if anything, it said buy.” Home Depot inc (HD.n) gained 2.3 percent to $54.04 as the top boost to the Dow after the world’s largest home improvement chain reported a higher-than-expected quarterly profit and kept a tight lid on costs to offset weakness in sales. separately, producer prices rose in july at the fastest pace in five months on higher costs for light trucks, pharmaceutical drugs and cigarettes, although falling energy prices pointed to muted inflation pressures. the Dow jones industrial average .Dji gained 25.17 points, or 0.19 percent, to 13,194.60. the standard & Poor’s 500 index .sPX added 3.49 points, or 0.25 percent, to 1,407.60. the nasdaq Composite index .iXiC rose 7.15 points, or 0.24 percent, to 3,029.67. Economic data later in the session will include business inventories for june at 10 a.m. (1400 GMt). Economists in a Reuters survey expect a rise of 0.2 percent versus a 0.3 percent rise in the prior month. Michael kors Holdings Ltd (kORs.n) surged 13.5 percent to $48.07 after the apparel company reported higher-than-expected quarterly profit

Wall Street advanced on Tuesday after stronger-thanexpected retail sales data suggested a return of consumer spending and further gains by stocks and raised its full-year profit forecast. Estee Lauder Cos inc (EL.n) jumped 8.5 percent to $59.68 after the cosmetics and fragrance maker reported a higherthan-expected quarterly profit and forecast more sales growth this year. saks inc (sks.n) reported a narrower than expected second quarter loss on tuesday, as sales gains defied what the luxury retailer said was a tough economy, and the retailer stuck to its sales forecast for the second half of the fiscal year. shares climbed 4.1 percent to $11.30. Groupon inc (GRPn.O) tumbled 22.6 percent to $5.84 after the world’s largest online daily deals provider missed quarterly revenue expectations and gave a cautious profit outlook. Discount retailer tjX Cos inc (tjX.n), owner of the Marshalls and t.j. Maxx chains, raised its full-year profit forecast on a rise in its second-quarter sales, and shares edged up 0.4 percent to $44.42.

Euro zone economy shrinks despite German growth The euro zone’s debt-ravaged economy shrank in the second quarter, having flatlined in the first, despite continued German growth which economists said could soon be snuffed out

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HE 17-nation currency bloc contracted by 0.2 percent on the quarter, data showed on tuesday. Germany eked out growth of 0.3 percent, marginally beating forecasts, but its forward-looking ZEW sentiment index slid for a fourth month running, undercutting even the lowest estimate in a Reuters poll. Economists said worse is likely to come and even Europe’s largest economy is unlikely to defy gravity for long unless decisive action is taken to tackle the bloc’s debt crisis. “Growth turned out to be pretty solid. But this could be the last positive piece of news out of Germany for some time,” said joerg kraemer at Commerzbank. “the German economy could contract in the summer. it is fundamentally in good structural shape, but can’t decouple from the recession in the euro zone, plus the global economy has also shifted down a gear.” aside from a downward blip in the last three months

of 2011, the euro zone has posted pretty consistent, albeit anaemic, growth over the past three years although some of its debt-laden members have been in recession for some time. “Overall it confirms the idea that the euro zone is in a recession phase,” aline schuiling, economist at aBn aMRO, said. “What we see is a vicious circle of budget cuts, high interest rates in the periphery and sovereign debt rising,” she said. “Policymakers are moving very slowly ... We expect another contraction in Q3.” For France, it was the third consecutive quarter of zero growth. the central bank has already said it expects a mild contraction in the third quarter. “these figures are not excellent, but at the same time France is not in recession while the majority of its European partners are,” Finance Minister Pierre Moscovici told Europe 1 radio. safe-haven German Bund futures fell and European stocks rose after the slightly stronger than expected German and French GDP reports. the euro also rose though its climb was thwarted after the ZEW survey came in worse than expected. the think tank’s monthly poll of economic sentiment slid to -25.5 from -19.6 in july. ZEW economist Christian Dick said the German economy would slow due to weak growth in its main export markets, but would not deteriorate sharply. austria and the netherlands almost matched Germany’s performance, each posting growth of 0.2 percent. But Finland, one of Germany’s northern European allies in pushing for austerity, suffered a 0.7 percent year-on-year fall in GDP. EU Economic and Monetary affairs Commissioner Olli Rehn said the European Union and European Central Bank were ready to act if needed to shore up the currency bloc. “to my mind it is clear that both the European Union and ... ECB are ready to take action once certain conditions are met and if there is a request by some member state,” he said in an interview. spanish and italian bond yields have steadied since ECB President Mario Draghi promised to do whatever it takes to save the euro zone although a government would first have to ask for help from the bloc’s rescue funds. SOUTHERN PAIN: For the countries at the sharp end of the debt crisis, the picture is bleaker still and as economies shrink, so do tax revenues, making deficit-cut-

ting even harder to achieve. that has fostered a growing debate inside and outside Europe about the sense of austerity drives. Bailed-out Portugal’s recession deepened with GDP diving by 1.2 percent on the quarter and Cyprus contracted by 0.8 percent. Figures released on Monday showed deficit-cutting measures helped to shrink Greece’s economy 6.2 percent year-on-year in the second quarter. Economists say the slump will persist as the government scrambles to secure billions in additional cuts to keep bailout funds flowing. italy’s second quarter data last week showed the economy contracted 0.7 percent quarter-on-quarter, compounding the difficulties for Mario Monti’s technocrat government as it tries to avoid a bailout. spain’s economy shrank 0.4 percent over the same period, pushing it deeper into recession. the big unanswered question is whether a weakening economy will make Germany, the EU’s paymasters, less likely to support government rescue efforts for the broader euro zone. German Chancellor angela Merkel has said repeatedly over the past year that she will do everything to save the euro, most recently after the ECB signalled it would intervene in the bond market to lower spanish and italian borrowing costs. not all Germans support that course and the chancellor’s room for manomaneuvereuvre appears to be shrinking at a time when both Greece and spain may soon require new rescues. However, if ordinary Germans start to feel real economic pain, their response could be to demand their leaders sort out the crisis that is now finally knocking at their door. “i have full trust in the German people and political leaders that they are fully committed to the euro,” Rehn said. it is quite possible that Madrid and Rome will seek help from the euro zone’s rescue funds and the ECB before the year is out. if so, most economists expect the German economy at least to rebound after a grueling third quarter as confidence revives. Christian schulz, an economist at Berenberg Bank in London, said it was vital to get a grip on the euro zone crisis. “We expect that the ECB has initiated a turning point with its signal of bond purchases,” he said. “after a weaker summer the German economy will be able to grow faster again from the fourth quarter.”

Wednesday, 15 August, 2012


Profit epaper 15th August, 2012