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PRO 03-07-2012_Layout 1 7/3/2012 12:47 AM Page 1

Tuesday, 3 July, 2012

Uncle Sam sure knows how to orchestrate bull surges Page 02

The govt knows how to break promises… and backs Inflation to continue to be backbreaking as govt borrowings from SBP hike by an astronomical 289% KARACHI

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ISMAIL DILAWAR

HE inflationary pressures in the poverty-hit country are expected to persist in the months ahead as the cash-strapped government is heavily relying on the banking system for its ever-burgeoning budgetary needs. The FY12 saw the average Consumer Price Index inflation standing at 11.01 percent which though is lower than the SBP’s estimates of 11-12 percent is still in double digit. The official and unofficial analysts predict the price hike to persist in double digits throughout FY13. “On account of increased government’s borrowing, inflation outlook in FY13 is expected to remain elevated,” viewed Topline analyst Nauman Khan. Having succeeded in curtailing its borrowings from the State Bank during first half of the just-concluded FY12, the fundsstarved government seems to have shrugged off the warnings from economic observers that its dependence on the central bank’s loans would have a highly inflationary impact. The State Bank, in previous statements, has confirmed that it caters the government’s budgetary loans through printing new currency notes, a practice that reflects adversely on the supply of money in the currency market. According to State Bank of Pakistan

(SBP), during July-June 15 FY12 the government borrowed over 1.172 trillion from the central and scheduled banks. This amount is higher by 69 percent or Rs 479.27 billion than Rs 693.504 billion the government had borrowings from banks during corresponding period of last year. “The huge volume of budgetary borrowing will exert further inflationary pressure in coming months ahead including issues on fiscal side which still stands unreciprocated,” viewed Hasan Raza, analyst at In-

Inflation averages 11.01% in FY12 KARACHI: The Consumer Price Index (CPI) inflation in June stood at 11.26 percent as against 12.29 percent in May 2012. Subsequently, average FY12 CPI inflation stood at 11.01 percent which is lower than SBP expected range of 11-12 percent as well as last year average inflation of 13.66 percent last year. On MoM basis, inflation stood at 0.04 percent as against 1.15 percent last month, which after a lapse of 3-months have come below 1 percent. Moreover, average monthly CPI during FY12 stood at 0.9 percent a slight improvement from 1.1 percent average monthly inflation witness in FY11. “Though still awaiting detail break-up, we believe the subdued number in the month of June is a reflection of soft food prices and decline in the petroleum prices on account of decline in international oil prices,” said Topline analyst Nauman Khan. STAFF REPORT

vestCap Research. Alarming, however, is the fact that the government now seems to have shifted its borrowing focus from the scheduled to central bank, a highly inflationary practice. During the review period, the government borrowed over Rs 576.54 billion compared to Rs 148.079 percent, up by a mammoth 289 percent or Rs 428.465 billion in monetary terms. The commercial banks also find little liquidity to be extended to the growth-oriented private sector as much of the money available with them is sucked up by the resource-constrained government. The central bank reported that during the period under review the banks’ lending to the government marked an upsurge of 9.3 percent or Rs 51 billion to aggregate at Rs 596.232 billion compared to Rs 545.425 billion in same period in FY11. The analysts say even this huge amount is set to swell in the days ahead owing to what they say the economic mangers’ failure to take “rational” measures to slash the official budgetary expenditure, specially the current (non-development) one.

Seoul finally imports our mangoes KARACHI: South Korea has finally allowed import of Pakistani mango while approving the standard/quality of the king of fruits. The first ever shipment of mango to Seoul has been started during the ongoing season, said co-chairman, Pakistan Fruit and Vegetable Exporters, Importers and Merchant Association (PFVA) Waheed Ahmed here Monday. “With this land mark achievement, Pakistani mango exporters got the market access of a third highly valued and important country after United States and Japan”, he noted. He said mangoes can be exported to Korea through sea routs and it can become the second important destination for sea shipments after Dubai. The development was made after approval of standard of Pakistani mango by the visiting South Korean experts who recently visited the Hard Water Treatment Facility of Iftikhar Ahmed and Company and Pakistan Horti Fresh Processing and found the treatment facility as per required standard of the foreign country. Waheed noted that the contributions of PFVA, Pakistan Horticulture Export and Development Company and Pakistani Embassy in Seoul for getting the land mark achievement, were very appreciable. During the last three years, Pakistan has successfully obtained the market access of US, Japan, Jordan, Mauritius, and South Korea. Preparation for market access to Australia, another important destination are already under process, he added. Though Seoul also imports mango from Philippine, Thailand, Vietnam and others, the unique taste and quality of Pakistani fruit were enough to compete and get good share in foreign market. APP

Sindh govt beaten on the corridor of uncertainty ISLAMABAD AMER SIAL

Provincial govt unlikely to attract investment for Gharo Keti Bandar wind corridor

The government of Sindh is unlikely to attract investment in the Gharo Keti Bandar wind corridor, having an estimated potential of 50,000 MW, as investors have zero confidence in the provincial government which even lacks any appropriate department to process applications for wind power projects, an industry source said. The Sindh government has launched a media campaign on the private television networks claiming to generate 1000 MW within one year. He said the provincial government could not achieve the target as it lacked the necessary expertise to process the wind power projects. Furthermore he said the process for leasing the barren land for the projects is cumbersome which has resulted in initiation of only a few projects. The Gharo Keti Bandar wind corridor spreading 60 km along the coastline of Sindh HAS more than 170 km depth, which has a potential of 50,000 MW. However, despite its huge potential the government has failed to attract significant investment in the sector. The hurdles in allocation of land for the projects, is attributed as the main reason for the failure to attract investment. He said the Alternate Energy Development Board (AEDB) and Sindh government are already embroiled in a row over the allocation of the land in the wind corridor to the potential investors. The board wants the provincial government to lease land on fast track basis to the investors recommended by it. However, the provincial authorities want to retain complete control over the decision making. The cold shoulder to AEDB has placed on halt investment on many projects.

Smuggling smokes up exchequer ISLAMABAD APP

Smuggled cigarettes cause Rs 10b loss to national exchequer

Around 15 billion smuggled and duty-non-paid cigarettes are sold annually in the country causing loss of more than Rs 10 billion to the national exchequer. According to sources, besides financial loss, this illicit trade undermines public health agenda as these tobacco products fail to comply with the regulations issued by the government. Most of these packs do not even carry the Urdu health warning while the regulations prohibiting consumer promotions are also being blatantly violated, they added. People, while commenting on the situation, said that the health quarters concerned should take action for curtailing sale of smuggled and duty-non-paid tobacco products in the local markets to avoid heavy financial losses. They also stressed the need for efficacious implementation of tobacco control laws in the country. They also asked the authorities concerned to make proper strategies in preventing sale of tobacco to minors. Expressing dismay over flagrant disregard of anti-tobacco laws, the people said that effective on-ground implementation of the regulations could only serve the purpose of tobacco control. They said that sincere efforts were needed to prevent the spread of tobacco use as smoking at indoor public places, tobacco product advertising and promotion, printing of pictorial health warnings on packets and availability of duty-evaded and attractive looking smuggled brands in the market were still widespread. When contacted, an official said that in line with the spirit of Framework Convention on Tobacco Control (FCTC), the government had already enacted various tobacco control measures through the Prohibition of Smoking and Protection of Non-Smokers Health Ordinance 2002. The said law contains provisions restricting smoking at public places, restricting advertising and promotion of tobacco products and prohibiting sale of cigarettes to minors, he added. He said Pakistan was the 5th country in Asia, and the 26th in the entire world, which had introduced pictorial health warnings on cigarette packs.

CCP teaches banks a lesson for act violation g

Imposes Rs 770 million fine on 1-Link and its member banks ISLAMABAD STAFF REPORT

The Competition Commission of Pakistan (CCP) has imposed a total penalty in the sum of Rs 770 million, including Rs 50 million on 1-Link (Guarantee) Limited and Rs 50 million each on its 11 founding member banks and Rs 10 M on each of its 17 non-founding member banks for imposing uniform customer charges for ATM cash withdrawal transactions in violation of the Competition Act. A CCP Bench comprising of Chairperson Rahat Kaunain Hassan, Member Abdul Ghaffar and Member Dr. Joseph Wilson,

passed an Order on June 28, 2012 in respect of the proceedings initiated against 1Link and its member banks for imposing uniform customer charges for Off-Us cash withdrawal transactions, which amounts to violate Section 4 of the Competition Act. The detail of fines imposed by the Commission is Rs 50 million on 1-Link; Rs 50 million on each founding members namely; National Bank of Pakistan, Allied Bank Limited, Habib Bank Limited, Bank Al-Falah Limited, Askari Bank Limited, Soneri Bank Limited, NIB Bank Limited, United Bank Limited, Standard Chartered Bank Pakistan Limited, Faysal Bank Limited and Bank AL Habib Limited; and Rs

10 million on each non-founding members namely; Albaraka Bank Pakistan Limited, Burj Bank Limited, Meezan Bank Limited, Bank Islami, Khadim Ali Shah Bukhari Bank Limited, Habib Metropolitan Bank Limited, The Bank of Khyber, Dubai Islamic Bank Pakistan Limited, JS Bank Limited, Silk Bank Limited, The Bank of Punjab, Samba Bank Limited, Sindh Bank Limited, Barclays Bank PLC Pakistan Limited, Tameer Microfinance Bank Limited, Kashf Micro Finance Limited and Summit Bank Limited excluding Citi Bank which has not followed the collective behavior of charging uniform fee for Off Us ATM transaction.

However, the bench has granted exemption to the 1- Link Agreement entered into by and between founding members and Inter Bank Fund Transfer (IBFT) Agreement entered into by and between 1-Link and TPS Pakistan (Private) Limited and ABN AMRO Bank N.V. (now known as Faisal Bank Limited), to the extent of interchange (bank to bank) fee for ATM cash withdrawal and IBFT services and also Utility Bill Payment Services (UBPS) Agreements entered into by 1-Link with utilities companies. CCP on its own took notice of the uniform rates implemented by the banks in Pakistan for ATM cash withdrawal transac-

tions. In preliminary fact finding it was observed that 1-Link holds 80 percent of market share in shared ATM network services in Pakistan and is a consortium of 11 major banks that are also represented on its Board of Directors while the other 20 banks are its members. To further assess the matter CCP approached the State Bank of Pakistan (SBP) to enquire whether it has fixed the ATM charges. SBP in response stated the banks are free to determine these charges. Moreover, in response to letters sent to various banks seeking rationale for uniform rates, two member banks of 1-Link confirmed that they have to comply with the schedule of charges devised by the 1-Link.


PRO 03-07-2012_Layout 1 7/3/2012 12:47 AM Page 2

Tuesday, 3 July, 2012

A FAMILY AFFAIR

Major Gainers

Uncle Sam sure knows how to orchestrate bull surges index also gained 324.78 points to close at 12, 246.91 points against the previous 11, 992.13 points. The KSE all-share index closed with a gained of 227.47 points to 9, 935.78 points as against 9, 708.31 points. Fauji Fertilizer was the day’s volume leader counting its traded shares at 13.438 million with the opening and closing rates standing at Rs 111.05 and Rs 113.94, followed by Jahangir Siddiqui Company, D.G.K Cement, Lucky Cement, Fatima Fertilizer Company and National Bank of Pakistan with turnover of 9.650 million, 8.496 million, 4.725 million and 4.094 million shares respectively. On the future market, the turnover recovered remarkably by over 9 million shares to 10.413 million against 19.938 million shares of pervious day. The UniLever Food and Nestle Pakistan Limited, up Rs 78.61 and Rs 61.29, led highest price gainers while, Island Textile and Tri-Pack Films, down Rs 9.87 and Rs 2.99 respectively, led the losers.

Bulls officially go nuts as both uncle and nephew close in on the NATO supply decision. Oh and the index took a 342-point hike, accordingly. KARACHI

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STAFF REPORT

AKISTAN stocks closed bullish with investor interest in stocks across the board as Pak-US near resolution on Nato supply routes. This was viewed by Ahsan Mehanti, Director at Arif Habib Investments Limited. The Karachi Stock Exchange-KSE benchmark 100-share index went up by 341.51 points on first working day of the week and ended the session at 14, 142.92 points. The KMI-30 index gained 526.68 points as market closed at the level of 24, 303.16 points on Monday as against 23, 776.48 points, the closing figure of the previous session. The trading session remained

Barclays chairman resigns over rate rigging scandal

positive as index witnessed volumes of 106.453 million shares on Monday against 74.047 million shares traded in the previous session. The trading value increased to Rs 4.943 billion compared to Rs 3.038 billion of the previous session. The intraday high and low, respectively, stood at 14, 169.78 and 13, 801.41 points. Mehanti added that the Recovery in global stocks and commodities and expectations for flow-in of foreign portfolio investment on improvement in Pak-US ties played a catalyst role in bullish sentiments ahead of earning announcements due next week. The market capitalization grew modestly and increased to Rs 3.600 trillion from Rs 3.518 trillion a day earlier. Of the total 332 traded scrips, 178 gained, 78 lost and 76 finished as unchanged. The free-float KSE-30

Shares rise on euro zone bank relief, data in focus

ECB’s Asmussen urges Greeks to get behind reform

TOKYO

ATHENS

LONDON

AGENCIES

AGENCIES

AGENCIES

Asian shares rose on Monday with sentiment brightening at the start of the third quarter after Europe agreed to shore up the region’s banks, while investor attention is turning to the health of the U.S. economy. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.3 percent, after soaring 2.7 percent on Friday for its biggest one-day rise in more than six months. The MSCI Asia ex-Japan share index ended April-June down 7.4 percent, after rising for the previous two quarters. U.S. and European stocks rallied more than 2 percent on Friday. Japan’s Nikkei average opened up 1.1 percent, adding to Friday’s 1.5 percent gain when it rose above the key 9,000 level for the first time in 7 weeks.

The new government in Greece must put the country’s bailout programme back on track and Greeks must back reforms to ensure they succeed, ECB executive board member Joerg Asmussen said on Monday. Although important reforms had been implemented, “many other necessary reforms have not been followed through due to weak programme ownership,” Asmussen told a conference here organised by the Economist magazine. “The programme is the best option for Greece,” he said, referring to the raft of austerity measures agreed by Athens in return for two rounds of rescue loans and a public debt write-off that have kept the country afloat.

Barclays chairman Marcus Agius is standing down after the British banking giant was last week fined for attempting to manipulate inter-bank lending rates, the company said on Monday. Announcing his resignation, Agius said last week’s events had “dealt a devastating blow to Barclays’ reputation. As chairman, I am the ultimate guardian of the bank’s reputation. Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside.”

Business 02 COMPANY

OPEN

HIGH

LOW

CLOSE

CHANGE TURNOVER

Unilever Food Nestle Pakistan Ltd. Attock PetroleumXD National Refinery MCB Bank Ltd.

2619.39 4014.85 474.37 231.39 166.24

2699.99 4099.99 494.00 240.89 174.55

2698.00 4013.01 474.37 231.90 165.85

2698.00 4076.14 485.09 239.26 173.66

78.61 12 61.29 9 10.72 26,049 7.87 140,381 7.42 640,044

Major Losers Island Textile Tri-Pack Films Philip Morris Pak. Pak Engineering Packages Ltd.

207.07 209.99 169.45 48.15 99.70

197.25 208.00 174.95 45.76 98.70

197.10 206.00 165.00 45.75 97.00

197.20 207.00 166.69 45.75 97.63

-9.87 200 -2.99 8,798 -2.76 9,488 -2.40 1,550 -2.07 57,604

Volume Leaders Fauji Fertilizer Jah.Sidd. Co. D.G.K.Cement Lucky Cement Fatima Fertilizer Co

111.05 12.41 39.38 115.39 24.67

116.27 13.41 41.34 119.99 25.39

111.88 12.57 39.65 115.60 24.76

113.94 13.41 41.28 119.58 25.23

2.89 13,438,937 1.00 9,650,951 1.90 8,496,559 4.19 4,725,545 0.56 4,094,825

Interbank Rates US Dollar UK Pound Japanese Yen Euro

94.5233 147.3523 1.1899 118.9953

Dollar East US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal Australian Dollar

BUY

SELL

94.90 119.17 147.71 1.1763 92.55 12.02 25.68 25.18 96.39

95.50 120.65 149.55 1.1909 94.82 12.23 26.02 25.47 97.90

Apple settles iPad trademark dispute BEIJING: US technology giant Apple has paid $60 million to a Chinese firm to settle a long-running dispute over the iPad trademark in China, state media reported Monday, citing a provincial court. Proview Technology, based in the southern city of Shenzhen, had been locked in the legal battle with Apple over ownership of the Chinese rights to the “iPad” trademark, which both claimed as their own. AGENCIES

CORPORATE CORNER Qatar Airways to unveil new Boeing 787 Dreamliner

ability to shape the future of the entire family, and this initiative will help our women explore the wonders of a PC and the internet right at their door step.

DOHA: Qatar Airways will unveil its new Boeing 787 Dreamliner for the first time at the world’s largest aerospace event, Farnborough International Air Show, taking place in the UK between July 9 and 15. The global reveal of the 787 by Qatar Airways, Boeing’s Middle East launch customer of the aircraft, will be a highlight at Farnborough with more than 120,000 visitors expected to flock to the week-long show. Qatar Airways will have its 787 on static display at the event, which attracts over 1,400 exhibitors of aircraft, equipment and latest technologies across the commercial and defence aerospace industries. The debut of the airline’s new 787 Dreamliner in Qatar Airways’ colours marks a significant milestone as the carrier makes its final preparations to officially receive and commercially introduce the first of 60 aircraft on order this year. Qatar Airways is due to take delivery of five 787s during 2012. Qatar Airways Chief Executive Officer Akbar Al Baker said the airline’s prominent presence with the unveiling of the first Qatar Airways 787 Dreamliner at the largest global aviation event of its kind, signals the start of an exciting new chapter for travel in the Middle East and worldwide.

PIA certificates for 40 trainee airhostesses

Intel Pakistan, WeldonMoms conduct training ISLAMABAD: To promote computer literacy among Pakistani young mothers and homemakers, Intel Pakistan collaborated with WeldonMoms to train aspiring young housewives. Under Intel’s computer literacy drive, a one day training program was organized for a batch of 50 women using the latest machines, with an aim to help those women who are unable to venture into a business owing to lack of support, resources and confidence. This will largely help those housewives and stay-at-home mothers who want to make an extra income while staying in their home. Speaking at the event, Asma Aziz, PR & Marketing Manager, Intel Pakistan said, “The PC is a multifunctional device that allows consumers to work, play, learn and do more things simultaneously. We believe that mothers and homemakers have the

KARACHI: The Graduation Ceremony of some 40 newly-inducted PIA airhostesses was held here at PIA Training Centre. The trainees were awarded certificates on completion of the 11-week course. Air Chief Marshal (retd) Rao Qamar Suleman, Chairman and CEO PIAC was the chief guest at the ceremony. Speaking on the occasion, he said each one of you while on job must serve the PIA passengers with a ‘smile’. Such a greeting would prepare a passenger for comfortable traveling bringing excellence to PIA services. “Smile of the PIA airhostess will make the airline rise”. Chairman PIA added.

Karachi’s latest hot spot “Club Genova” opened KARACHI: Club Genova: a classy new addition to Karachi’s latest hot spots has opened its doors to general public here on Saturday June 30th. Club Genova is the only place in Karachi where one can find three different themes under one roof, a cigar lounge, restaurant, and café! It is a place where everyone will have a good time. With a Great Ambiance, Prime location and elegant atmosphere, Club Genova is definitely the next hot spot in town.

Bahria Town hospitals get tremendous response RAWALPINDI/LAHORE: Bahria Town Hospitals are accommodating a huge crowd of poor and needy patients who have been highly affected by the strike of Punjab young doctors association. The administration of Bahria Town had announced earlier for free checkups and free medicines for all poor and needy patients of Punjab who are unable to receive their due treatments lately in the province of Pun-

jab. An emergency was declared in all the Bahria Town hospitals of Rawalpindi & Lahore namely Begum Akhtar Rukhsana Memorial Trust Safari Villas Rawalpindi, Begum Akhtar Rukhsana Memorial Trust Phase 8 Rawalpindi, OPD Complex G. T. Road Rawalpindi & Bahria Town Hospital Lahore.

Pak-American Initiative (PAI) announced KARACHI: In light of the currently deteriorating relationship between the US and Pakistan, the PakAmerican Initiative has announced its mission to improve the situation. The PakAmerican Initiative (PAI) is a non-governmental effort which aims to build mutual confidence between the two countries to bring peace and harmony to the region. The Convener of PakAmerican Initiative, Syed Jawaid Iqbal, said, “The prime purpose of this body is to dilute the differences between the two countries. This is all the more important as Pakistan is a frontline state against the challenge of terrorism in the region. We realize that it is vital to keep this organization purely a non-governmental effort so that it is not perceived as being biased by either the US or the Pakistan side and is considered a neutral platform that is free from any influence.

SBP asks money exchangers to comply with rules KARACHI: Executive Director State Bank of Pakistan (SBP) Kazi Abdul Muktadir has stressed upon the exchange companies (ECs) to follow the best practices of corporate governance and ensure compliance of the prescribed rules and regulations of the central bank. Inaugurating an awareness program for the Directors/Chief Executive Officers (CEOs) of exchange companies at SBP BSC, Lahore, he explained to participants that there is a strong need for the ECs to understand the anti money laundering (AML) and terrorist financing risks associated with their business transactions and advised them to ensure compliance of the prescribed regulations on AML/CFT (Combating the Financing of Terrorism). STAFF REPORT

NBP ranked Pakistan’s top bank KARACH: National Bank of Pakistan (NBP) has been ranked by The Banker as the top bank of Pakistan in its ‘Top 1000 World Banks’ ranking for 2012. This way National Bank of Pakistan has once again outperformed all the local banks operating in Pakistan. Top 1000 World Banks’ has been setting the industry benchmark since 1970 by providing comprehensive intelligence about the health and wealth of the banking sector. The Banker is the premier resource for the world’s investment, retail and commercial banking sectors. It is the key source of data and analysis for the industry, providing global financial intelligence since 1926.

ACCA holds coordinator’s workshop ISLAMABAD: As part of ACCA continued efforts to develop excellence in professional accounting education and establish best practices amongst tertiary accounting education providers, ACCA Islamabad organised “Managing the mind gap” workshop recently in Islamabad. The workshop participants were student counselors, advisors and faculty members of ACCA Approved Learning Partners and tuition providers in the Northern region. The participants appreciated ACCA’s innovative efforts at enhancing the capacity of professional accounting education faculty. They were of the opinion that the workshop was useful and relevant to their work as it enabled them to understand the psychological dilemmas of students, learn new teaching skills and methods.

KARACHI: The writer of ‘Bounties of Health’ Fawzia Memon, along with prominent cooking expert Sherin Anwar, and other guests at launching ceremony.


profitepaper pakistantoday 03rd july, 2012