EUROPE STOCKS EXCHANGE: European stocks closed higher, with banks gaining after results at Goldman Sachs beat expectations, and as investors braced for a rate cut in the United States. The FTSEurofirst 300 index of top European shares closed up 0.9 percent at 834.84 points. The index has lost more than 44 percent this year, hurt by a credit crisis that has helped push several major economies into recession.
Goldman Sachs posted its first quarterly loss since going public nine years ago, but some investors had expected even deeper losses and its shares rose 8.6 percent on Wall Street.
FRANKFURT STOCKS EXCHANGE: The DAX index ended at 4729.91 points, up 75.09 or 1.61 percent.
PARIS STOCKS EXCHANGE: The CAC-40 index closed at 3251.66 points, up 66 or 2.07 percent.
ZURICH STOCKS EXCHANGE: The Swiss market index closed at 5567.14 points, up 40.6 or 0.73 percent.
MILAN STOCKS EXCHANGE: The All Share Mibtel index closed at 15064 points, up 152 or 1.02 percent.
SYDNEY STOCKS EXCHANGE: Stocks fell 0.98 percent, dragged down by top phone company Telstra Corp, while Macarthur Coal tumbled on a profit downgrade. The S&P/ASX 200 index fell 35.2 points to 3,556.2, after rising 2.3 percent on Monday.
JOHANNESBURG STOCKS EXCHANGE: South Africa's markets were closed today for the Reconciliation Day public holiday. They will reopen tomorrow. On Monday, the All-share index closed at 21805.83 points. The All Gold index closed at 2366.99 points, while the Industrial index closed at 16584.83 points.
Wednesday, December 17, 2008
Wall Street drops on financial worry
US stocks stumbled on Monday, roiled by worries about how big a bite the global financial crisis has taken from banks' profits and fallout from a massive investment fraud scheme. J.P. Morgan Chase & Co was the biggest drag on the Dow after Merrill Lynch cut the stock to an "underperform" rating and forecast a loss for the bank's fourth quarter.
Another blow to sentiment was concern about the financial sector's exposure to potential losses related to investment manager Bernard Madoff, who is accused by US authorities of masterminding a $50 billion fraud. "There will be some investors as a result of this who say, 'I'm going to put all my money in cash,'" said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.
The Dow Jones industrial average shed 65.15 points, or 0.75 percent, to end at 8,564.53. The Standard & Poor's 500 Index fell 11.16 points, or 1.27 percent, to 868.57. The Nasdaq Composite Index dropped 32.38 points, or 2.10 percent, to 1,508.34.
The Dow is down 35 percent year to date and nearly 40 percent from its record closing high on October 9, 2007. The downgrade of J.P. Morgan comes before earnings this week from two other big financial names, Goldman Sachs on Tuesday and Morgan Stanley on Wednesday. Analysts expect Goldman Sachs to report its first quarterly loss since going public in 1999. The S&P financial index fell 4 percent, with J.P. Morgan's stock down 7.5 percent at $28.63.
Goldman Sachs Group Inc shed 1.9 percent to $66.46 while Morgan Stanley slid 1.5 percent to $13.64. Technology shares also pulled the market lower after Goldman Sachs cut its rating on Apple to "neutral" and removed the iPod maker from its conviction buy list, citing falling consumer demand for its products. Apple's stock slid 3.6 percent to $94.75 on Nasdaq.
Economic data gave investors more reasons for caution. A gauge of manufacturing in New York State hit a record low in December, while homebuilder sentiment remained at record lows for the month. Investors looked ahead to an interest-rate decision from the Federal Reserve on Tuesday. The US central bank is expected to cut its benchmark fed funds rate to 0.5 percent from 1 percent in hopes of boosting the weak US economy.
The Dow Jones US Home Construction Index fell 5.5 percent a day before the US Commerce Department is expected to report another monthly drop in housing starts. An index of energy stocks slipped 0.3 percent after crude oil fell below $45 a barrel on concerns about global energy demand as major world economies struggle with recession.
When Opec ministers meet on Wednesday, they may make their deepest oil supply cut ever. Bucking the session's downtrend were shares of General Motors and Ford, which rose on hopes that a financial lifeline could still materialise. The timing and size of any US government aid package, however, were still in question.
GM's stock rose 3.6 percent to $4.08 and Ford added 4.6 percent to $3.18. Volume was modest on the New York Stock Exchange, where about 1.21 billion shares changed hands, below last year's estimated daily average of 1.90 billion. On the Nasdaq, about 1.68 billion shares traded, below last year's daily average of 2.17 billion. Decliners outnumbered advancers on both the NYSE and the Nasdaq by a ratio of about 3 to 1.
Another blow to sentiment was concern about the financial sector's exposure to potential losses related to investment manager Bernard Madoff, who is accused by US authorities of masterminding a $50 billion fraud. "There will be some investors as a result of this who say, 'I'm going to put all my money in cash,'" said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.
The Dow Jones industrial average shed 65.15 points, or 0.75 percent, to end at 8,564.53. The Standard & Poor's 500 Index fell 11.16 points, or 1.27 percent, to 868.57. The Nasdaq Composite Index dropped 32.38 points, or 2.10 percent, to 1,508.34.
The Dow is down 35 percent year to date and nearly 40 percent from its record closing high on October 9, 2007. The downgrade of J.P. Morgan comes before earnings this week from two other big financial names, Goldman Sachs on Tuesday and Morgan Stanley on Wednesday. Analysts expect Goldman Sachs to report its first quarterly loss since going public in 1999. The S&P financial index fell 4 percent, with J.P. Morgan's stock down 7.5 percent at $28.63.
Goldman Sachs Group Inc shed 1.9 percent to $66.46 while Morgan Stanley slid 1.5 percent to $13.64. Technology shares also pulled the market lower after Goldman Sachs cut its rating on Apple to "neutral" and removed the iPod maker from its conviction buy list, citing falling consumer demand for its products. Apple's stock slid 3.6 percent to $94.75 on Nasdaq.
Economic data gave investors more reasons for caution. A gauge of manufacturing in New York State hit a record low in December, while homebuilder sentiment remained at record lows for the month. Investors looked ahead to an interest-rate decision from the Federal Reserve on Tuesday. The US central bank is expected to cut its benchmark fed funds rate to 0.5 percent from 1 percent in hopes of boosting the weak US economy.
The Dow Jones US Home Construction Index fell 5.5 percent a day before the US Commerce Department is expected to report another monthly drop in housing starts. An index of energy stocks slipped 0.3 percent after crude oil fell below $45 a barrel on concerns about global energy demand as major world economies struggle with recession.
When Opec ministers meet on Wednesday, they may make their deepest oil supply cut ever. Bucking the session's downtrend were shares of General Motors and Ford, which rose on hopes that a financial lifeline could still materialise. The timing and size of any US government aid package, however, were still in question.
GM's stock rose 3.6 percent to $4.08 and Ford added 4.6 percent to $3.18. Volume was modest on the New York Stock Exchange, where about 1.21 billion shares changed hands, below last year's estimated daily average of 1.90 billion. On the Nasdaq, about 1.68 billion shares traded, below last year's daily average of 2.17 billion. Decliners outnumbered advancers on both the NYSE and the Nasdaq by a ratio of about 3 to 1.
KSE-100 index lost another 372.51 points
Heavy selling pressure continued at the Karachi share market on the second day after the removal of the price floor and the benchmark KSE-100 index lost another 372.51 points to close at 8,444.59 points level on Tuesday. Over 100 million shares of blue chip stocks remained available for sale at KATS, which, could not traded due to the absence of buyers.
The market started in the negative and the index was down by 307.03 points at the end of the session. After readjustment as per the Karachi Stock Exchange rule, the index was declared down by 372.51 points. Trading volume at the ready market increased to 25.360 million shares as compared to 17.863 million shares traded a day earlier. The future market witnessed an activity of 3,500 shares after many days.
The overall market capitalisation declined by Rs 109 billion to close at Rs 2.593 trillion. Trading took place in 150 scrips, out of which 130 scrips closed in the negative and 17 in the positive while the value of three scrips remained unchanged.
Zeal Pak was the overall volume leader of the day with 9.639 million shares and gained Re 0.11 to close at Re 0.50. KESC closed at Rs 1.81, up by Re 0.01 with 3.208 million shares. Dewan Salman lost Re 0.80 to close at Rs 1.14 with 2.157 million shares.
PIA declined by Re 0.95 to close at Rs 2.25 with 1.344 million shares. Telecard lost Re 0.76 to close at Rs 1.94 with 1.106 million shares. Pak PTA Limited decreased by Re 0.28 to close at Rs 1.90 with 1.046 million shares. IGI Investment Bank lost Re 0.92 to close at Rs 2.08 with 1.027 million shares. Nimir Ind Chemical gained Re 0.03 to close at Rs 1.18 with 0.999 million shares. Flying Cement lost Re 0.99 to close at Rs 2.33 with 0.949 million shares. Unity Modaraba closed at Re 0.25, up by Re 0.01 with 0.568 million shares.
Jubilee Spinning and Zephyr Textile were the highest gainers and gained Re 1.00 and Re 0.84 to close at Rs 3.00 and Rs 2.39 respectively while Unilever Pak and Pak Engineering were the worst losers and lost Rs 111.15 and Rs 16.13 to close at Rs 2111.85 and Rs 306.56 respectively.
Ahsan Mehanti at Shehzad Chamdia Securities said that uncertainty prevailed as the rupee lost strength against the dollar on foreign outflow from capital markets and rising economic disorder. Investors remained concerned over Sindh High Court decision with respect to CFS outstanding contracts and fate of CFS Financiers/Financee. Falling Index levels and rising mark to market losses remained a concern for stock brokerage houses.
Depressed sentiment continued for the second day on the Lahore Stock Exchange on Tuesday and the equities suffered losses amid ascending transaction volume on account of selling pressure. The LSE-25 index further declined by 143.71 points to close at 2475.02 against 2618.73 of Monday while trading turnover substantially increased to 1.228 million shares as compared to 0.761 million shares traded a day earlier.
While continuing overnight sentiment, the market opened on a negative note and remained under pressure throughout the day. During first hour of trading, all the major shares opened at their lower cap because of 5 percent circuit breaker and stayed in minus column. The market was totally lacking institutional support and kept on going down till the closing. The market lost about 10 percent just in two days and expected to further slide down by five percent on Wednesday as the stay against the CFS in the Sindh High Court has been extended for another day, said Aamir Hussain of Invest and Cap while commenting on the market trend. He was of the view the situation would be clear after the court verdict in the case.
Out of a total of 88 active issues, two companies improved their values, 15 stayed in negative zone, while 71 stayed glued to their previous levels. Among gainers, Southern Electric Power and Zeal Pak Cement improved their value by 8 and 5 paisa respectively. However, Sitara Energy lost Rs 1.98, Hub Power declined by Rs 1.02, Atlas Bank, Dewan Farooq Motors, Fauji Cement, NIB Bank, and Orix Investment Bank fell by Re 1 each. Zeal Pak Cement with trading of 610,000 shares topped the volume leaders followed by Dewan Salman Fibre with 261,000 shares.
Fresh bearish assault moved the entire ready-board in downward direction at the Islamabad Stock Exchange (ISE) where equities continued to show negative signs under the lead of hot favourite amid negative trend. ISE Ten Index was down by 88.20 points, as the index moved from 1,900.41 to 1,812.21 points.
The overall turnover stood at 82,319 shares as compared to previous volume of 419 shares. Total 65 companies participated in buying and selling activity. Majority of stocks (59) closed in negative territory, five closed in positive territory, whereas one company remained pegged to previous level. The volume of First UDL Modaraba was 20,000 shares. The turnover of Pakistan PTA was 20,000 shares. The turnover of PIA was 12,000 shares.
The market started in the negative and the index was down by 307.03 points at the end of the session. After readjustment as per the Karachi Stock Exchange rule, the index was declared down by 372.51 points. Trading volume at the ready market increased to 25.360 million shares as compared to 17.863 million shares traded a day earlier. The future market witnessed an activity of 3,500 shares after many days.
The overall market capitalisation declined by Rs 109 billion to close at Rs 2.593 trillion. Trading took place in 150 scrips, out of which 130 scrips closed in the negative and 17 in the positive while the value of three scrips remained unchanged.
Zeal Pak was the overall volume leader of the day with 9.639 million shares and gained Re 0.11 to close at Re 0.50. KESC closed at Rs 1.81, up by Re 0.01 with 3.208 million shares. Dewan Salman lost Re 0.80 to close at Rs 1.14 with 2.157 million shares.
PIA declined by Re 0.95 to close at Rs 2.25 with 1.344 million shares. Telecard lost Re 0.76 to close at Rs 1.94 with 1.106 million shares. Pak PTA Limited decreased by Re 0.28 to close at Rs 1.90 with 1.046 million shares. IGI Investment Bank lost Re 0.92 to close at Rs 2.08 with 1.027 million shares. Nimir Ind Chemical gained Re 0.03 to close at Rs 1.18 with 0.999 million shares. Flying Cement lost Re 0.99 to close at Rs 2.33 with 0.949 million shares. Unity Modaraba closed at Re 0.25, up by Re 0.01 with 0.568 million shares.
Jubilee Spinning and Zephyr Textile were the highest gainers and gained Re 1.00 and Re 0.84 to close at Rs 3.00 and Rs 2.39 respectively while Unilever Pak and Pak Engineering were the worst losers and lost Rs 111.15 and Rs 16.13 to close at Rs 2111.85 and Rs 306.56 respectively.
Ahsan Mehanti at Shehzad Chamdia Securities said that uncertainty prevailed as the rupee lost strength against the dollar on foreign outflow from capital markets and rising economic disorder. Investors remained concerned over Sindh High Court decision with respect to CFS outstanding contracts and fate of CFS Financiers/Financee. Falling Index levels and rising mark to market losses remained a concern for stock brokerage houses.
Depressed sentiment continued for the second day on the Lahore Stock Exchange on Tuesday and the equities suffered losses amid ascending transaction volume on account of selling pressure. The LSE-25 index further declined by 143.71 points to close at 2475.02 against 2618.73 of Monday while trading turnover substantially increased to 1.228 million shares as compared to 0.761 million shares traded a day earlier.
While continuing overnight sentiment, the market opened on a negative note and remained under pressure throughout the day. During first hour of trading, all the major shares opened at their lower cap because of 5 percent circuit breaker and stayed in minus column. The market was totally lacking institutional support and kept on going down till the closing. The market lost about 10 percent just in two days and expected to further slide down by five percent on Wednesday as the stay against the CFS in the Sindh High Court has been extended for another day, said Aamir Hussain of Invest and Cap while commenting on the market trend. He was of the view the situation would be clear after the court verdict in the case.
Out of a total of 88 active issues, two companies improved their values, 15 stayed in negative zone, while 71 stayed glued to their previous levels. Among gainers, Southern Electric Power and Zeal Pak Cement improved their value by 8 and 5 paisa respectively. However, Sitara Energy lost Rs 1.98, Hub Power declined by Rs 1.02, Atlas Bank, Dewan Farooq Motors, Fauji Cement, NIB Bank, and Orix Investment Bank fell by Re 1 each. Zeal Pak Cement with trading of 610,000 shares topped the volume leaders followed by Dewan Salman Fibre with 261,000 shares.
Fresh bearish assault moved the entire ready-board in downward direction at the Islamabad Stock Exchange (ISE) where equities continued to show negative signs under the lead of hot favourite amid negative trend. ISE Ten Index was down by 88.20 points, as the index moved from 1,900.41 to 1,812.21 points.
The overall turnover stood at 82,319 shares as compared to previous volume of 419 shares. Total 65 companies participated in buying and selling activity. Majority of stocks (59) closed in negative territory, five closed in positive territory, whereas one company remained pegged to previous level. The volume of First UDL Modaraba was 20,000 shares. The turnover of Pakistan PTA was 20,000 shares. The turnover of PIA was 12,000 shares.
Massive bankruptcies expected in early 2009
Massive bankruptcies expected in early 2009
The business community is expecting massive bankruptcies in early 2009, due to latest Pak-India tension in the backdrop of November 27 Mumbai attacks coupled with prevailing power and gas load shedding countrywide.
Right from retail to the wholesale markets and the Small and Medium Enterprises (SMEs) to the large-scale units, everyone from the business community is very much concerned over the prevailing negative trend in the business.
Interestingly, the government should focus on releasing development funds, instead of stimulating development activities, moreover the government should avoid working much fashioned 'stimulus plan' like rest of the world, businessmen said.
The large scale units are facing acute power and gas shortage, putting their machines off and the export-oriented industries, particularly the SMEs, are losing hope on any worthwhile 'relief package' in the days ahead.
"A delay in payments is very much likely against export shipments from apparel sector and majority of the apparel sector would be unable to meet recovery schedules of banks," said one leading exporter from hosiery sector. Another from Ready made Garments sector pointed out massive bankruptcies ahead with rising number of defaults.
"Heavy closures are in the offing across the board due to unfavorable state of affairs in the field business," said another exporter. Similarly, hopes regarding continuity of Research & Development (R&D) fund are also dying fast despite the fact that the IMF has agreed with the government for its continuity for value-added sector.
Those in retail and wholesale business are blaming electronic media for spreading fears on possible attack from India. According to them the panic has spread all around the markets and no one is ready to make fresh deals unless uncertainty fizzles out.
It is also worth mentioning that a good number of B-3 consumers have already shut down their businesses across the country due to unprecedented power shortage, continuing from last November. Reliable sources in the industry as well as the power sector revealed that the electricity consumption of B-3 consumers has slashed more than half in the last year, which reflects heavy closure in spinning and weaving sectors.
And those having captive power plants have entered into last round of a lost battle with the government over gas supply to their power generation units. The textile sector is striving to convince the government policymakers that supply of uninterrupted gas to its units carries worth than the CNG stations.
Meanwhile, sources in the Planning & Development Board admitted that the progress on ongoing as well new development schemes is terribly low. A string of meetings is in the process at the P&D Board at present to pursue different departments on gearing up development pace in the province ahead of mid-year development review meetings, scheduled in January. A scarcity of funds, as a matter of fact, has put all development priorities of the government on backburner, which is supposed to support some 40 different industries linked directly and indirectly with construction.
A change in fund release policy is underway before the Chief Minister Punjab Mian Shahbaz Sharif avails the opportunity of suspending a few more development planners in upcoming mid-year development review meetings.
Right from retail to the wholesale markets and the Small and Medium Enterprises (SMEs) to the large-scale units, everyone from the business community is very much concerned over the prevailing negative trend in the business.
Interestingly, the government should focus on releasing development funds, instead of stimulating development activities, moreover the government should avoid working much fashioned 'stimulus plan' like rest of the world, businessmen said.
The large scale units are facing acute power and gas shortage, putting their machines off and the export-oriented industries, particularly the SMEs, are losing hope on any worthwhile 'relief package' in the days ahead.
"A delay in payments is very much likely against export shipments from apparel sector and majority of the apparel sector would be unable to meet recovery schedules of banks," said one leading exporter from hosiery sector. Another from Ready made Garments sector pointed out massive bankruptcies ahead with rising number of defaults.
"Heavy closures are in the offing across the board due to unfavorable state of affairs in the field business," said another exporter. Similarly, hopes regarding continuity of Research & Development (R&D) fund are also dying fast despite the fact that the IMF has agreed with the government for its continuity for value-added sector.
Those in retail and wholesale business are blaming electronic media for spreading fears on possible attack from India. According to them the panic has spread all around the markets and no one is ready to make fresh deals unless uncertainty fizzles out.
It is also worth mentioning that a good number of B-3 consumers have already shut down their businesses across the country due to unprecedented power shortage, continuing from last November. Reliable sources in the industry as well as the power sector revealed that the electricity consumption of B-3 consumers has slashed more than half in the last year, which reflects heavy closure in spinning and weaving sectors.
And those having captive power plants have entered into last round of a lost battle with the government over gas supply to their power generation units. The textile sector is striving to convince the government policymakers that supply of uninterrupted gas to its units carries worth than the CNG stations.
Meanwhile, sources in the Planning & Development Board admitted that the progress on ongoing as well new development schemes is terribly low. A string of meetings is in the process at the P&D Board at present to pursue different departments on gearing up development pace in the province ahead of mid-year development review meetings, scheduled in January. A scarcity of funds, as a matter of fact, has put all development priorities of the government on backburner, which is supposed to support some 40 different industries linked directly and indirectly with construction.
A change in fund release policy is underway before the Chief Minister Punjab Mian Shahbaz Sharif avails the opportunity of suspending a few more development planners in upcoming mid-year development review meetings.
Rs 20 billion public entities shares to be offered to expatriates
Advisor to Prime Minister on Finance Shaukat Tarin said on Tuesday that the government would sell Rs 20 billion shares of public sector entities to non-resident Pakistanis, for which an agreement has been reached with International Monetary Fund (IMF).
Talking to newsmen after addressing a seminar on global financial crisis, jointly organised by Pakistan Institute of Development Economics (PIDE) and IMF in the Planning Commission Auditorium, he said that this option (provision of Rs 20 billion) was still intact, and the government would intervene at the right moment, with the right price, and added that "what we commit, we execute". He, however, clarified that he had never made any promise to establish any market support fund for stock market brokers.
Talking about the depreciation of the rupee after removal of floor from the stock market, he expressed optimism that the rupee would appreciate, saying that it was the result of speculation in the market, which would end soon. He said that the government would be receiving more than $1.5 billion from different international financial institutions (IFIs) in February, "after which our trade deficit would come down".
When asked if he had any timeline to bring down the soaring inflation, he said that it was the government's top priority, and steps were being taken in the right direction. He said that the Sensitive Price Indicator (SPI) and Consumer Price Indicator (CPI) for November had shown declining trend compared with October. From January, a substantial declining trend in inflation would be visible, he added.
He expressed hope about further decline in oil and commodity prices in the international market, and added that this would definitely help the government in arresting inflation. He said that the government would pay special attention to value-added textile products, "because this sector is in trouble".
The Advisor said that the government was expecting surplus agriculture produce because of its farmer-friendly policies. Regarding any new tax policy for improving the tax-to-GDP ratio, he said that the government was not introducing any new policy in this respect. He said that the government would discover and address administrative gaps in this respect. Tarin said that the government would soon promulgate 'Money Laundering Act' in the country.
option of market support fund still intact: Tarin Said
Talking to newsmen after addressing a seminar on global financial crisis, jointly organised by Pakistan Institute of Development Economics (PIDE) and IMF in the Planning Commission Auditorium, he said that this option (provision of Rs 20 billion) was still intact, and the government would intervene at the right moment, with the right price, and added that "what we commit, we execute". He, however, clarified that he had never made any promise to establish any market support fund for stock market brokers.
Talking about the depreciation of the rupee after removal of floor from the stock market, he expressed optimism that the rupee would appreciate, saying that it was the result of speculation in the market, which would end soon. He said that the government would be receiving more than $1.5 billion from different international financial institutions (IFIs) in February, "after which our trade deficit would come down".
When asked if he had any timeline to bring down the soaring inflation, he said that it was the government's top priority, and steps were being taken in the right direction. He said that the Sensitive Price Indicator (SPI) and Consumer Price Indicator (CPI) for November had shown declining trend compared with October. From January, a substantial declining trend in inflation would be visible, he added.
He expressed hope about further decline in oil and commodity prices in the international market, and added that this would definitely help the government in arresting inflation. He said that the government would pay special attention to value-added textile products, "because this sector is in trouble".
The Advisor said that the government was expecting surplus agriculture produce because of its farmer-friendly policies. Regarding any new tax policy for improving the tax-to-GDP ratio, he said that the government was not introducing any new policy in this respect. He said that the government would discover and address administrative gaps in this respect. Tarin said that the government would soon promulgate 'Money Laundering Act' in the country.
option of market support fund still intact: Tarin Said
KSE down despite fund talk; rupee firms
Shares in Karachi stock market fell in early trade on Wednesday and dealers said investors and institutions were reluctant to step in despite the reported announcement of a possible support fund for the market. Shaukat Tarin, the country's top economic adviser, said a support found was being set up and shares worth 20 billion rupees ($247 million) would be sold to overseas Pakistanis, the local daily reported.
Tarin, who was not available for comment, said the "modalities" of the fund would be released in two or three days, newspaper said.
The Karachi Stock Exchange benchmark 100-share index shed 0.56 percent, or 47.02 points, to 8,397.87, its lowest in more than three years, on turnover of 5.9 million shares by 10:30 a.m. (0530 GMT).
"Talk of this fund has been coming for many days but it has never materialised," said Atif Malik, head of international sales at JS Global Capital Ltd.
Authorities removed a floor on the main index on Monday. It was imposed in late August after sharp falls and led to the withering of trade.
Dealers had hoped the floor would be removed in October but authorities said they wanted to first set up a 20 billion rupees government support fund.
However, the International Monetary Fund (IMF), which last month approved a $7.6 billion loan for Pakistan to avert a balance of payment crisis, had opposed the use of public funds to support the share market, a senior exchange official said.
According to newspaper the IMF had now given the go-ahead for the fund.
Legal cases were also dampening trade.
The KSE management, including the Securities and Exchange Commission and the National Clearing Company of Pakistan Ltd, are facing cases filed by brokers seeking settlement of amounts borrowed through a continuous funding system, a funding mechanism for some stocks listed on the KSE.
One hearing is scheduled to resume on Wednesday.
In the currency market, the rupee was trading firmer at 80.40/60 to the dollar, compared with Tuesday's close of 81.25/35 and dealers said there were rumours of possible State Bank of Pakistan intervention.
The rupee slipped 1.6 percent on Wednesday as negative sentiment prevailed on fear of portfolio outflows following the removal on Monday of the stock index floor.
Tarin, who was not available for comment, said the "modalities" of the fund would be released in two or three days, newspaper said.
The Karachi Stock Exchange benchmark 100-share index shed 0.56 percent, or 47.02 points, to 8,397.87, its lowest in more than three years, on turnover of 5.9 million shares by 10:30 a.m. (0530 GMT).
"Talk of this fund has been coming for many days but it has never materialised," said Atif Malik, head of international sales at JS Global Capital Ltd.
Authorities removed a floor on the main index on Monday. It was imposed in late August after sharp falls and led to the withering of trade.
Dealers had hoped the floor would be removed in October but authorities said they wanted to first set up a 20 billion rupees government support fund.
However, the International Monetary Fund (IMF), which last month approved a $7.6 billion loan for Pakistan to avert a balance of payment crisis, had opposed the use of public funds to support the share market, a senior exchange official said.
According to newspaper the IMF had now given the go-ahead for the fund.
Legal cases were also dampening trade.
The KSE management, including the Securities and Exchange Commission and the National Clearing Company of Pakistan Ltd, are facing cases filed by brokers seeking settlement of amounts borrowed through a continuous funding system, a funding mechanism for some stocks listed on the KSE.
One hearing is scheduled to resume on Wednesday.
In the currency market, the rupee was trading firmer at 80.40/60 to the dollar, compared with Tuesday's close of 81.25/35 and dealers said there were rumours of possible State Bank of Pakistan intervention.
The rupee slipped 1.6 percent on Wednesday as negative sentiment prevailed on fear of portfolio outflows following the removal on Monday of the stock index floor.
Saturday, October 11, 2008
The Pakistani currency is facing the horrible devaluation.
The Pakistani currency is facing the horrible devaluation. The Govt has been failed completly in controlling the devaluation of Pak Rupee. The investment outflow continues. The currency dealer and money exchangers are also playing role in outflow of money.
The State Bank of Pakistan has disbursed some 25 million dollars at the notional rate of Rs 80 to the exchange companies aimed at stopping free fall of the rupee. However, no positive impact was witnessed on Friday, as once again the PKR lost 50 paisa against the dollar to close at Rs 80.70 in the open market, Business Recorder has learnt.
Although, on Thursday the central bank intervention had dealt a positive impact on the currency market and the rupee recovered some 25 paisa in the interbank and some 30 paisa in the open currency market. On Friday once again the dollar demand surged in the open currency market as the general public made huge buying of dollar amid strong rumours of banks' defaults. But, the interbank market remained stable due to the slow activity.
Sources said that exchange companies are taking full advantage of the SBP's offer to get dollar at a notional rate of Rs 80 to meet customers' requirements and during the last two days exchange companies acquired some 25 million dollars from the central bank.
"We have acquired some 10 million dollars on Thursday from the central bank, while on Friday about 15 million dollars were also taken to overcome the dollar shortage in the open currency market," said Munaf Kalia, general secretary of Exchange Companies of Pakistan.
He said that the SBP has assured full logistic support to maintain the dollar at a reasonable rate and it is expected that more positive results would be seen in the next few days. He said that the open currency market is still facing huge demand of the dollar, therefore some pressure was witnessed on Friday and the dollar closed at Rs 80.30 with a gain of 10 paisa.
However, market sources said that on Friday the rupee further depreciated, losing 50 paisa against the dollar to close at Rs 80.70 despite the SBP intervention. Sources said that Lahore and Peshawar currency markets see more demand of the dollar and in these markets the dollar was sold at Rs 81 on Friday and if the supply would not improve, it would go up further.
Munaf Kalia said that Lahore and Peshawar markets have huge demand, which would be met with the help of the SBP. He indicated that exchange companies would acquire more dollars on Saturday from the central bank. He requested the general public not to hold dollars, as its price would soon decline and they can suffer huge losses.
11-10-2008
The State Bank of Pakistan has disbursed some 25 million dollars at the notional rate of Rs 80 to the exchange companies aimed at stopping free fall of the rupee. However, no positive impact was witnessed on Friday, as once again the PKR lost 50 paisa against the dollar to close at Rs 80.70 in the open market, Business Recorder has learnt.
Although, on Thursday the central bank intervention had dealt a positive impact on the currency market and the rupee recovered some 25 paisa in the interbank and some 30 paisa in the open currency market. On Friday once again the dollar demand surged in the open currency market as the general public made huge buying of dollar amid strong rumours of banks' defaults. But, the interbank market remained stable due to the slow activity.
Sources said that exchange companies are taking full advantage of the SBP's offer to get dollar at a notional rate of Rs 80 to meet customers' requirements and during the last two days exchange companies acquired some 25 million dollars from the central bank.
"We have acquired some 10 million dollars on Thursday from the central bank, while on Friday about 15 million dollars were also taken to overcome the dollar shortage in the open currency market," said Munaf Kalia, general secretary of Exchange Companies of Pakistan.
He said that the SBP has assured full logistic support to maintain the dollar at a reasonable rate and it is expected that more positive results would be seen in the next few days. He said that the open currency market is still facing huge demand of the dollar, therefore some pressure was witnessed on Friday and the dollar closed at Rs 80.30 with a gain of 10 paisa.
However, market sources said that on Friday the rupee further depreciated, losing 50 paisa against the dollar to close at Rs 80.70 despite the SBP intervention. Sources said that Lahore and Peshawar currency markets see more demand of the dollar and in these markets the dollar was sold at Rs 81 on Friday and if the supply would not improve, it would go up further.
Munaf Kalia said that Lahore and Peshawar markets have huge demand, which would be met with the help of the SBP. He indicated that exchange companies would acquire more dollars on Saturday from the central bank. He requested the general public not to hold dollars, as its price would soon decline and they can suffer huge losses.
11-10-2008
Stock Market closure : SECP and KSE to take decision today
A crucial meeting between Securities and Exchange Commission of Pakistan (SECP) and Karachi Stock Exchange (KSE) will be held on Saturday (today) to decide whether the stock market is kept closed for a few days or to take any other step to save the investors from further losses.
The meeting will discuss the proposals of KSE members to cap the CFS rates at 24 percent and to extend the CFS settlement period from 21 days to 25 days. The members proposed to keep close the stock exchange closed for few days if their said proposals are not accepted.
The meeting is being held at the time when many KSE members are in critical condition due to continuous decline in the share prices and lack of liquidity while some of them are nearing a default position.
Sources said that an informal meeting of the KSE members was held here on Friday to discuss the prevailing situation of the stock market. The members discussed various proposals. The lack of liquidity was the main concern for them and they discussed various proposals as to how the situation could be eased.
Later these proposals were also discussed in a meeting between KSE Managing Director Adnan Afridi and National Clearing Company of Pakistan Limited (NCCPL) Chairman Ali Ansari. The Chairman KSE Kamran Mirza also joined the meeting later. According to some sources the CFS was rolled over for one day as borrowers failed to get funds from CFS market on Friday. All the Friday's trading will be merged into the Monday's trading and the settlement will be held on Tuesday.
Prevailing uncertainty and rising lending rates forced the investors to stay on the fences on Friday and the benchmark KSE-100 index remained unchanged at 9,181.35 points level. The prevailing economic conditions coupled with increased CFS rates did not allow the market participants to take fresh positions, analysts said, adding that lack of liquidity remained the main reason behind the dull activity at the share market.
The ready market volumes slightly increased to 1.833 million shares as compared to 1.792 million shares traded a day earlier. The overall market capitalisation declined by Rs 4 billion to Rs 2.841 trillion. Out of the total 70 scrips traded on Friday, 12 closed in positive territory, 10 in negative while 48 remained unchanged.
Nimir Resins was the overall volume leader with 0.618 million shares however it closed at Rs 5.30 without any change. NIB Bank also remained unchanged at Rs 8.45 with 0.268 million shares. Southern Electric gained Re. 0.02 to close at Rs 3.92 with 0.2 million shares. Sitara Energy increased by Re. 0.25 to close at Rs 22.30 with 0.139 million shares. UDL Mod closed at Rs 4.33, up by Re. 0.13 with 0.102 million shares. KESC closed at Rs 3.80 without any change with 77,000 shares.
Gharibwal Cement gained Re. 0.49 to close at Rs 17.99 with 65,000 shares. Pak Elektron increased by Re. 0.45 to close at Rs 37.50 with 56,700 shares. UTP-Large Cap. lost Re. 0.09 to close at Rs 5.50 with 52,000 shares. D.S. Ind Ltd closed at Rs 14.85 without any change with 49,500 shares. National Foods and Shakarganj Mills were top gainers with Rs 3.82 and Re. 0.66 to close at Rs 80.35 and Rs 12.50 respectively while Pak Datacom and Stand Chart Mod were the worst losers with Re. 0.85 and Re. 0.68 to close at Rs 48.25 and Rs 10.50, respectively.
Ahsan Mehanti at Shehzad Chamdia Securities said that investors remained concerned over prevailing capital market crises mainly due to liquidity issues. Falling equity values in the international capital markets, economic crisis, declining rupee value, foreign selling, broker defaults and high lending rates remained chief concerns for the market participants, who opted to remain on sidelines.
The meeting will discuss the proposals of KSE members to cap the CFS rates at 24 percent and to extend the CFS settlement period from 21 days to 25 days. The members proposed to keep close the stock exchange closed for few days if their said proposals are not accepted.
The meeting is being held at the time when many KSE members are in critical condition due to continuous decline in the share prices and lack of liquidity while some of them are nearing a default position.
Sources said that an informal meeting of the KSE members was held here on Friday to discuss the prevailing situation of the stock market. The members discussed various proposals. The lack of liquidity was the main concern for them and they discussed various proposals as to how the situation could be eased.
Later these proposals were also discussed in a meeting between KSE Managing Director Adnan Afridi and National Clearing Company of Pakistan Limited (NCCPL) Chairman Ali Ansari. The Chairman KSE Kamran Mirza also joined the meeting later. According to some sources the CFS was rolled over for one day as borrowers failed to get funds from CFS market on Friday. All the Friday's trading will be merged into the Monday's trading and the settlement will be held on Tuesday.
Prevailing uncertainty and rising lending rates forced the investors to stay on the fences on Friday and the benchmark KSE-100 index remained unchanged at 9,181.35 points level. The prevailing economic conditions coupled with increased CFS rates did not allow the market participants to take fresh positions, analysts said, adding that lack of liquidity remained the main reason behind the dull activity at the share market.
The ready market volumes slightly increased to 1.833 million shares as compared to 1.792 million shares traded a day earlier. The overall market capitalisation declined by Rs 4 billion to Rs 2.841 trillion. Out of the total 70 scrips traded on Friday, 12 closed in positive territory, 10 in negative while 48 remained unchanged.
Nimir Resins was the overall volume leader with 0.618 million shares however it closed at Rs 5.30 without any change. NIB Bank also remained unchanged at Rs 8.45 with 0.268 million shares. Southern Electric gained Re. 0.02 to close at Rs 3.92 with 0.2 million shares. Sitara Energy increased by Re. 0.25 to close at Rs 22.30 with 0.139 million shares. UDL Mod closed at Rs 4.33, up by Re. 0.13 with 0.102 million shares. KESC closed at Rs 3.80 without any change with 77,000 shares.
Gharibwal Cement gained Re. 0.49 to close at Rs 17.99 with 65,000 shares. Pak Elektron increased by Re. 0.45 to close at Rs 37.50 with 56,700 shares. UTP-Large Cap. lost Re. 0.09 to close at Rs 5.50 with 52,000 shares. D.S. Ind Ltd closed at Rs 14.85 without any change with 49,500 shares. National Foods and Shakarganj Mills were top gainers with Rs 3.82 and Re. 0.66 to close at Rs 80.35 and Rs 12.50 respectively while Pak Datacom and Stand Chart Mod were the worst losers with Re. 0.85 and Re. 0.68 to close at Rs 48.25 and Rs 10.50, respectively.
Ahsan Mehanti at Shehzad Chamdia Securities said that investors remained concerned over prevailing capital market crises mainly due to liquidity issues. Falling equity values in the international capital markets, economic crisis, declining rupee value, foreign selling, broker defaults and high lending rates remained chief concerns for the market participants, who opted to remain on sidelines.
The high Inflation rate in Pakistan
Pakistan current account deficit is more than double of India's, which is an emerging economy in the region whereas the position of Bangladesh is not alarming in the South Asian region.
According to IMF World Economic Outlook 2008, the current account balance of Pakistan is -8.7 per cent of its GDP in 2008 as compared to -3.9 per cent in 2006 that clearly shows a decline of 4.8 per cent in GDP growth.
The report has projected -6.4 per cent current account balance of GDP growth of Pakistan in 2009 as compared to India that is projected to have -3.1 per cent whereas Bangladesh's current account balance is 0.9 per cent.
Total current account balance of South Asia in 2008 remained -3.3 per cent that is 1.9 per cent less than that of -1.9 per cent in 2006. Similarly, the report shows that the projected current account balance of GDP growth in the region will remain -3.3 percent in 2009.
It is worthy of mentioning that the report has projected four times higher consumer prices in Pakistan than India and more than twice of Bangladesh in 2009. The inflation rate in Pakistan, according to the report, is projected to shoot up to 23 per cent in 2009 as compared to 12 per cent in 2008 whereas the inflation rate was just 7.9 per cent in 2006. This shows an increase of 15.1 per cent in inflation rate in 2009 as compared to that of 2006.
The inflation rate of India in 2009 is expected to be 8.8 per cent that is 16.3 per cent less than of Pakistan's while Bangladesh is expected to have 10 per cent high inflation that is 13 per cent less than of Pakistan's. The average inflation for 2009 in South Asia is projected at 8.8 per cent.
The report shows that Pakistan's economic growth rate may reduce to 3.5 per cent in 2009 as compared to 5.8 per cent in 2008. On the other hand, India and Bangladesh are expected to have 6.9 per cent, 5.6 per cent GDP rate respectively. Earlier, a recent report issued by the Asian Development Bank (ADB) showed that Pakistan GDP growth is expected to decrease to 4.5 per cent in the current fiscal year against 5.8 per cent achieved in the last fiscal, as, according to the report, the country would continue to face the deteriorated state of economic fundamentals and inflationary pressures.
The inflation measured through SPI surged by 30.67 percent during the week ending on October 9 over the same period of last year owing to increase in the prices of 20 essential commodities, according to the Federal Bureau of Statistics.
The Sensitive Price Indicator (SPI) released by the FBS on Friday shows that dearness of the lowest income group up to Rs 3,000 has registered increase of 2.15 percent over the previous week. The dearness for the same group was 33.04 percent more as compared to the same period of last year. The weekly SPI has been computed with base 2000-2001=100 covering 17 urban centres and 53 essential items for all income groups and combined.
The SPI for the combined group registered increase of 1.48 percent by moving up from 210.90 in the previous week to 214.03 in the week under review. The SPI for the groups falling in the income brackets of 3001-5000, 5001-12000 and above 12000 witnessed increase of 31.77, 31.25 and 30.67 per cent respectively over the same period of last year.
During the week under review average prices of 14 items registered decrease, while that of 20 items increase with the remaining 19 items' prices unchanged. The items which recorded decrease in their average prices during the week under review included, tomatoes, bananas, onions, vegetable ghee (loose), red chillies, moong pulse (washed), rice irri-6, LPG( 11-kg cylinder.), gram pulse (washed), mustard oil, rice Basmati (broken), lawn, mash pulse (washed) and masoor pulse (washed).
The items which registered increase in their prices included, wheat flour (average quality), wheat (average quality), sugar, egg hen (farm), milk powdered (Nido), chicken (farm), tea (prepared), gur, potatoes, garlic, bread plain (mid size), beef, coarse latha, mutton, milk (fresh), cooked beef, shirting, firewood, kerosene and curd.
The items with no change in their average prices during the week under review included, vegetable ghee (tin), cooking oil (tin), salt (powdered), tea (packet), cooked dal, cigarettes, voil (printed), sandal gents (Bata), sandal ladies (Bata), chappal spng (Bata), electricity bulb (60wats), match box, washing soap (Nylon), bath soap (Lifebuoy), gas charges (up to 3.3719 MMBTU), electricity charges, (1-100 unit), petrol, diesel and telephone local call.
According to IMF World Economic Outlook 2008, the current account balance of Pakistan is -8.7 per cent of its GDP in 2008 as compared to -3.9 per cent in 2006 that clearly shows a decline of 4.8 per cent in GDP growth.
The report has projected -6.4 per cent current account balance of GDP growth of Pakistan in 2009 as compared to India that is projected to have -3.1 per cent whereas Bangladesh's current account balance is 0.9 per cent.
Total current account balance of South Asia in 2008 remained -3.3 per cent that is 1.9 per cent less than that of -1.9 per cent in 2006. Similarly, the report shows that the projected current account balance of GDP growth in the region will remain -3.3 percent in 2009.
It is worthy of mentioning that the report has projected four times higher consumer prices in Pakistan than India and more than twice of Bangladesh in 2009. The inflation rate in Pakistan, according to the report, is projected to shoot up to 23 per cent in 2009 as compared to 12 per cent in 2008 whereas the inflation rate was just 7.9 per cent in 2006. This shows an increase of 15.1 per cent in inflation rate in 2009 as compared to that of 2006.
The inflation rate of India in 2009 is expected to be 8.8 per cent that is 16.3 per cent less than of Pakistan's while Bangladesh is expected to have 10 per cent high inflation that is 13 per cent less than of Pakistan's. The average inflation for 2009 in South Asia is projected at 8.8 per cent.
The report shows that Pakistan's economic growth rate may reduce to 3.5 per cent in 2009 as compared to 5.8 per cent in 2008. On the other hand, India and Bangladesh are expected to have 6.9 per cent, 5.6 per cent GDP rate respectively. Earlier, a recent report issued by the Asian Development Bank (ADB) showed that Pakistan GDP growth is expected to decrease to 4.5 per cent in the current fiscal year against 5.8 per cent achieved in the last fiscal, as, according to the report, the country would continue to face the deteriorated state of economic fundamentals and inflationary pressures.
The inflation measured through SPI surged by 30.67 percent during the week ending on October 9 over the same period of last year owing to increase in the prices of 20 essential commodities, according to the Federal Bureau of Statistics.
The Sensitive Price Indicator (SPI) released by the FBS on Friday shows that dearness of the lowest income group up to Rs 3,000 has registered increase of 2.15 percent over the previous week. The dearness for the same group was 33.04 percent more as compared to the same period of last year. The weekly SPI has been computed with base 2000-2001=100 covering 17 urban centres and 53 essential items for all income groups and combined.
The SPI for the combined group registered increase of 1.48 percent by moving up from 210.90 in the previous week to 214.03 in the week under review. The SPI for the groups falling in the income brackets of 3001-5000, 5001-12000 and above 12000 witnessed increase of 31.77, 31.25 and 30.67 per cent respectively over the same period of last year.
During the week under review average prices of 14 items registered decrease, while that of 20 items increase with the remaining 19 items' prices unchanged. The items which recorded decrease in their average prices during the week under review included, tomatoes, bananas, onions, vegetable ghee (loose), red chillies, moong pulse (washed), rice irri-6, LPG( 11-kg cylinder.), gram pulse (washed), mustard oil, rice Basmati (broken), lawn, mash pulse (washed) and masoor pulse (washed).
The items which registered increase in their prices included, wheat flour (average quality), wheat (average quality), sugar, egg hen (farm), milk powdered (Nido), chicken (farm), tea (prepared), gur, potatoes, garlic, bread plain (mid size), beef, coarse latha, mutton, milk (fresh), cooked beef, shirting, firewood, kerosene and curd.
The items with no change in their average prices during the week under review included, vegetable ghee (tin), cooking oil (tin), salt (powdered), tea (packet), cooked dal, cigarettes, voil (printed), sandal gents (Bata), sandal ladies (Bata), chappal spng (Bata), electricity bulb (60wats), match box, washing soap (Nylon), bath soap (Lifebuoy), gas charges (up to 3.3719 MMBTU), electricity charges, (1-100 unit), petrol, diesel and telephone local call.
Pakistan's three months trade deficit has widened to $5.549 billion
Pakistan's three months trade deficit has widened to $5.549 billion, registering an increase of 52.65 percent over the same period of last year, according to the Federal Bureau of Statistics. Trade figures released by the FBS on Friday show that Pakistan imported $10.818 billion goods during July-September 2008 against the total exports of $5.269 billion.
The trade deficit during the same period of last year was $3.635 billion but it increased to $5.549 billion this year. There has been an increase of 62.13 percent in trade deficit in September 2008 over the same period of last year with trade gap widening from $1.250 billion last September to $2.027 billion this September. Pakistan imports stood at $3.806 billion in September 2008 against exports of merely $1.77 billion.
Pakistan needs to do something on a war footing to bridge the whooping trade deficit that has brought under enormous pressure, its foreign exchange reserves as the mounting trade deficit is posing great threat to the economy, analysts said.
There has been a little positive sign with exports increasing by 12.34 percent in September over the previous month that is required to be further capitalized in the months ahead to reduce the gap. The exports in September increased to $1.77 billion from $1.584 billion in August. The increase in imports was marginal during September 2008 over the previous month with figures showing total imports of $3.806 billion in September compared to $3.461 billion in August 2008.
A comparison between September 2008 over the same month of last year shows an increase of 62.13 percent in trade deficit with gap going up from $1.250 billion in September last year to $2.027 billion this September. However, there has been an increase of 19.88 percent in export as compared to last year.
The exports have increased to $1.779 billion in September 2008 over $1.484 billion of the same month of previous year. At the same time imports registered an increase of 39.20 percent in September 2008 over the same month of last year going up from $2.734 billion last September to $3.806 billion this September.
Central banks pumped huge amounts of short-term funds into paralysed money markets on Friday as the world's attention turned to Washington where global finance leaders meet this weekend to discuss the deepening crisis.
Investors across all asset classes will look to Group of Seven finance ministers and central bankers, and International Monetary Fund for co-ordinated action to help arrest the panic that has frozen money markets and sent stock markets into a tailspin. IMF chief Dominic Strauss-Kahn on Friday called for a temporary guarantee of all interbank deposits.
"This means not only retail bank deposits but probably also interbank and money market deposits, so that activity may restart in these key markets," Strauss-Kahn told a conference in Washington. "Of course, such a step should be temporary and include safeguards such as heightened supervision and limits on deposit rates offered," he added.
Strauss-Kahn's comments followed another day of turmoil on global financial markets and virtual paralysis on money markets, which had prompted yet more liquidity provisions from monetary authorities around the world. The European Central Bank and Bank of England injected a combined $132 billion of one-day and one-week dollar liquidity into the European banking system.
In Asia, Singapore cut interest rates for the first time since 2003 and the Bank of Japan injected a record 4.5 trillion yen ($45.5 billion) in same-day funding. Investors dumped government bonds and scrambled for cash as insurer Yamato Life went bankrupt, selling that was also mirrored in European and US government bond markets in the scramble for cash. The Reserve Bank of Australia injected A$2.63 billion ($1.8 billion) into the banking system, adding about A$790 million more than the estimated need in an effort to ease funding pressures.
"With money markets disintegrating, the financial system is at risk. The deleveraging we thought should take place over years looks set to be brought about by dysfunctional funding markets in a matter of weeks." said Dresdner Kleinwort in a note to clients on Friday.
IN UNISON: Despite the myriad measures from individual central banks and governments, the deepening dislocation - in equity, credit, interbank, fixed income and currency markets - is increasing the clamour for co-ordinated action.
"Most euro zone governments have relied mostly on political promises of rescue if needed (but) we doubt stability will be restored until these promises are converted into concrete actions, preferably with an interbank guarantee," Goldman Sachs' European economists wrote in a note on Friday.
At the British Bankers Association's daily fixing of London interbank offered rates (Libor) on Friday, overnight sterling rates jumped, as dealers reported some UK banks faced a shortage of cash.
Sterling overnight Libor was fixed almost 40 basis points higher at 5.81250 percent, more than 140 basis points above the Bank of England's new target rate of 4.5 percent. This contrasted with overnight dollar and euro rates, which both fell closer to central banks' new, lower targets following the co-ordinated global cut in interest rates earlier this week.
Three-month euro Libor also fell but was among the few signs aggressive government and central bank action to unfreeze money markets may be working. Otherwise, the Libor fixings showed banks' lending rates to each other - for the limited lending being conducted - remain high.
The sense of distrust and fear in money markets was reflected by the latest data from the ECB that showed how much euro zone banks deposited at the central bank on Thursday rather than lend out.
Euro zone banks deposited 64.364 billion euros of overnight funds at the ECB, up from 39.831 billion euros the previous day. The BoE, meanwhile, said it will offer 40 billion pounds in a three-month repo operation next week, and will conduct two $30 billion auctions a week until further notice.
In the United States, banks borrowed a record $420 billion per day from the Federal Reserve in recent days - greater than the size of the economy of Belgium - as financial institutions continued to rely on the lender of last resort. High interbank lending rates have stymied funds from flowing into other parts of the money markets such as commercial paper, which continued to contract despite Federal Reserve support.
While lower overnight interest rates will prevent further deterioration in the global credit crisis for now, elevated term borrowing costs will hurt cash-strapped companies and consumers in the long run. That's why some sort of interbank guarantee from the G7 this weekend might be the only way to get the money market wheels turning again.
"Given the trillions of dollars of credit that has already been extended by the Treasury and the Fed, this action would appear to involve a manageable price tag - especially since it directly addresses the most immediate problem plaguing the credit markets and overall economy," said David Greenlaw, economist at Morgan Stanley.
The trade deficit during the same period of last year was $3.635 billion but it increased to $5.549 billion this year. There has been an increase of 62.13 percent in trade deficit in September 2008 over the same period of last year with trade gap widening from $1.250 billion last September to $2.027 billion this September. Pakistan imports stood at $3.806 billion in September 2008 against exports of merely $1.77 billion.
Pakistan needs to do something on a war footing to bridge the whooping trade deficit that has brought under enormous pressure, its foreign exchange reserves as the mounting trade deficit is posing great threat to the economy, analysts said.
There has been a little positive sign with exports increasing by 12.34 percent in September over the previous month that is required to be further capitalized in the months ahead to reduce the gap. The exports in September increased to $1.77 billion from $1.584 billion in August. The increase in imports was marginal during September 2008 over the previous month with figures showing total imports of $3.806 billion in September compared to $3.461 billion in August 2008.
A comparison between September 2008 over the same month of last year shows an increase of 62.13 percent in trade deficit with gap going up from $1.250 billion in September last year to $2.027 billion this September. However, there has been an increase of 19.88 percent in export as compared to last year.
The exports have increased to $1.779 billion in September 2008 over $1.484 billion of the same month of previous year. At the same time imports registered an increase of 39.20 percent in September 2008 over the same month of last year going up from $2.734 billion last September to $3.806 billion this September.
Central banks pumped huge amounts of short-term funds into paralysed money markets on Friday as the world's attention turned to Washington where global finance leaders meet this weekend to discuss the deepening crisis.
Investors across all asset classes will look to Group of Seven finance ministers and central bankers, and International Monetary Fund for co-ordinated action to help arrest the panic that has frozen money markets and sent stock markets into a tailspin. IMF chief Dominic Strauss-Kahn on Friday called for a temporary guarantee of all interbank deposits.
"This means not only retail bank deposits but probably also interbank and money market deposits, so that activity may restart in these key markets," Strauss-Kahn told a conference in Washington. "Of course, such a step should be temporary and include safeguards such as heightened supervision and limits on deposit rates offered," he added.
Strauss-Kahn's comments followed another day of turmoil on global financial markets and virtual paralysis on money markets, which had prompted yet more liquidity provisions from monetary authorities around the world. The European Central Bank and Bank of England injected a combined $132 billion of one-day and one-week dollar liquidity into the European banking system.
In Asia, Singapore cut interest rates for the first time since 2003 and the Bank of Japan injected a record 4.5 trillion yen ($45.5 billion) in same-day funding. Investors dumped government bonds and scrambled for cash as insurer Yamato Life went bankrupt, selling that was also mirrored in European and US government bond markets in the scramble for cash. The Reserve Bank of Australia injected A$2.63 billion ($1.8 billion) into the banking system, adding about A$790 million more than the estimated need in an effort to ease funding pressures.
"With money markets disintegrating, the financial system is at risk. The deleveraging we thought should take place over years looks set to be brought about by dysfunctional funding markets in a matter of weeks." said Dresdner Kleinwort in a note to clients on Friday.
IN UNISON: Despite the myriad measures from individual central banks and governments, the deepening dislocation - in equity, credit, interbank, fixed income and currency markets - is increasing the clamour for co-ordinated action.
"Most euro zone governments have relied mostly on political promises of rescue if needed (but) we doubt stability will be restored until these promises are converted into concrete actions, preferably with an interbank guarantee," Goldman Sachs' European economists wrote in a note on Friday.
At the British Bankers Association's daily fixing of London interbank offered rates (Libor) on Friday, overnight sterling rates jumped, as dealers reported some UK banks faced a shortage of cash.
Sterling overnight Libor was fixed almost 40 basis points higher at 5.81250 percent, more than 140 basis points above the Bank of England's new target rate of 4.5 percent. This contrasted with overnight dollar and euro rates, which both fell closer to central banks' new, lower targets following the co-ordinated global cut in interest rates earlier this week.
Three-month euro Libor also fell but was among the few signs aggressive government and central bank action to unfreeze money markets may be working. Otherwise, the Libor fixings showed banks' lending rates to each other - for the limited lending being conducted - remain high.
The sense of distrust and fear in money markets was reflected by the latest data from the ECB that showed how much euro zone banks deposited at the central bank on Thursday rather than lend out.
Euro zone banks deposited 64.364 billion euros of overnight funds at the ECB, up from 39.831 billion euros the previous day. The BoE, meanwhile, said it will offer 40 billion pounds in a three-month repo operation next week, and will conduct two $30 billion auctions a week until further notice.
In the United States, banks borrowed a record $420 billion per day from the Federal Reserve in recent days - greater than the size of the economy of Belgium - as financial institutions continued to rely on the lender of last resort. High interbank lending rates have stymied funds from flowing into other parts of the money markets such as commercial paper, which continued to contract despite Federal Reserve support.
While lower overnight interest rates will prevent further deterioration in the global credit crisis for now, elevated term borrowing costs will hurt cash-strapped companies and consumers in the long run. That's why some sort of interbank guarantee from the G7 this weekend might be the only way to get the money market wheels turning again.
"Given the trillions of dollars of credit that has already been extended by the Treasury and the Fed, this action would appear to involve a manageable price tag - especially since it directly addresses the most immediate problem plaguing the credit markets and overall economy," said David Greenlaw, economist at Morgan Stanley.
Wednesday, August 20, 2008
Economic Problems in Pakistan may take time to be resolved
Economic Problems in Pakistan may take time to be resolved
Pakistan's pressing economic problems could take a back seat as officials are caught up in the succession of President Pervez Musharraf, and this could have credit rating implications, a top Standard and Poor's executive said on Monday.
Musharraf's stepping down on Monday solved one dimension of the political crisis, but the country still had to grapple with a host of issues, including who will replace him, said David Beers, S&P's global head of sovereign ratings based in London.
"There are a lot of questions that remain unanswered about what happens with President Musharraf leaving office, which still, we're concerned, would keep the authorities totally preoccupied with these political issues and their eye continuing to be off the ball with these pressing fiscal and economic policy issues," he said.
Pakistan's escalating budget deficit and a large current account deficit in the balance of payments drove S&P in May to cut the country's credit rating to "B", with a negative outlook, which tells the market the rating could go lower.
Musharraf resigned to avoid impeachment charges, nearly nine years after taking power in a coup. He had been politically isolated since his allies lost parliamentary elections in February. The opposition coalition that took over the legislature seemed to have no unified economic policy.
"They have some very pressing economic policy issues to start dealing with," Beers said. "We don't have a sense that there is anything like a consensus within the government on how to get on top of this - that's a precarious situation to be in." The single B credit rating for Pakistan's sovereign debt is towards the low end of S&P's scale - deep into speculative-grade "junk" bond territory.
Pakistan shares its single B credit rating with countries like Argentina, which earned a black eye in foreign financial circles for its 2002-2005 default on $100 billion in debt. Moody's rates Pakistan at B2, one notch above Argentina. Lower credit ratings can raise a country's borrowing costs and hamper its efforts to tap international credit markets
Asked about the prospects for a rating change for Pakistan, Beers said: "We'll see whether the government in the coming weeks or months puts together a credible package of economic policies and that will tell us whether the rating is OK where it is or not." Prolonged jockeying and uncertainty over Musharraf's position has hurt financial markets in the nuclear-armed country of 165 million people.
The stock market rallied 4.5 percent on Monday but is still near two-year lows. Pakistan's rupee has slumped nearly a third since April, and the currency is near historic lows. "I think the pressure on the currency comes from both domestic and international sources," Beers said. The country was "hemorrhaging" foreign exchange, he said, and foreign investors were pulling out of its stock market.
"They have a very large current account payments deficit which they are having a problem financing," he said. "They (Pakistan) have not been borrowing as market conditions, obviously in line with our rating, have not been favorable."
The current account is a country's broadest measure of foreign transactions and a deficit can spell lower reserves if there are no offsetting capital inflows. S&P estimated the budget deficit in the just-ended fiscal year ballooned to 8 percent of the gross domestic product - double that budgeted by Musharraf, Beers said.
His resignation "solves one dimension of the political crisis which has been underway now for many months," he added. "But it doesn't necessarily signal in our view a dramatic change for the better in terms of the broader risks that we think are weighing on the credit rating.
Musharraf's stepping down on Monday solved one dimension of the political crisis, but the country still had to grapple with a host of issues, including who will replace him, said David Beers, S&P's global head of sovereign ratings based in London.
"There are a lot of questions that remain unanswered about what happens with President Musharraf leaving office, which still, we're concerned, would keep the authorities totally preoccupied with these political issues and their eye continuing to be off the ball with these pressing fiscal and economic policy issues," he said.
Pakistan's escalating budget deficit and a large current account deficit in the balance of payments drove S&P in May to cut the country's credit rating to "B", with a negative outlook, which tells the market the rating could go lower.
Musharraf resigned to avoid impeachment charges, nearly nine years after taking power in a coup. He had been politically isolated since his allies lost parliamentary elections in February. The opposition coalition that took over the legislature seemed to have no unified economic policy.
"They have some very pressing economic policy issues to start dealing with," Beers said. "We don't have a sense that there is anything like a consensus within the government on how to get on top of this - that's a precarious situation to be in." The single B credit rating for Pakistan's sovereign debt is towards the low end of S&P's scale - deep into speculative-grade "junk" bond territory.
Pakistan shares its single B credit rating with countries like Argentina, which earned a black eye in foreign financial circles for its 2002-2005 default on $100 billion in debt. Moody's rates Pakistan at B2, one notch above Argentina. Lower credit ratings can raise a country's borrowing costs and hamper its efforts to tap international credit markets
Asked about the prospects for a rating change for Pakistan, Beers said: "We'll see whether the government in the coming weeks or months puts together a credible package of economic policies and that will tell us whether the rating is OK where it is or not." Prolonged jockeying and uncertainty over Musharraf's position has hurt financial markets in the nuclear-armed country of 165 million people.
The stock market rallied 4.5 percent on Monday but is still near two-year lows. Pakistan's rupee has slumped nearly a third since April, and the currency is near historic lows. "I think the pressure on the currency comes from both domestic and international sources," Beers said. The country was "hemorrhaging" foreign exchange, he said, and foreign investors were pulling out of its stock market.
"They have a very large current account payments deficit which they are having a problem financing," he said. "They (Pakistan) have not been borrowing as market conditions, obviously in line with our rating, have not been favorable."
The current account is a country's broadest measure of foreign transactions and a deficit can spell lower reserves if there are no offsetting capital inflows. S&P estimated the budget deficit in the just-ended fiscal year ballooned to 8 percent of the gross domestic product - double that budgeted by Musharraf, Beers said.
His resignation "solves one dimension of the political crisis which has been underway now for many months," he added. "But it doesn't necessarily signal in our view a dramatic change for the better in terms of the broader risks that we think are weighing on the credit rating.
Punjab government to promote SMEs at grass-root level
Punjab government to promote SMEs at grass-root level
After launching the food stamp scheme in Punjab, Pakistan Muslim League-N led coalition government in Punjab is planning to undertake a programme of vigorous industrialisation and small and medium enterprises (SMEs) in the urban and rural areas of the province to absorb unemployed labour.
Sources in the PML-N told Business Recorder here on Tuesday that the major aim of the socio-economic policies of the PML-N led government is to create employment opportunities in order to reduce poverty and at the same time to ensure a fuller utilisation of the country's human resources for productive purposes.
Poverty alleviation is one of the important objectives of the PML-N led coalition government and the food stamp scheme has been launched in a bid to help the have nots to tackle poverty. "The PML-N government is launching a series of dialogue with the stakeholders to devise a policy for promotion of SMEs at grass root level", the sources said.
PML-N Lahore Vice President Shahbaz Haider said that provision of better health and education facilities to masses is the foremost priority of Chief Minister Shahbaz Sharif who is working day and night to change the fate of the people.
Analysts say there is considerable poverty in the fast growing cities of Punjab. Poverty in the urban areas is growing faster than the rural areas due to high food inflation and escalating price hike.
Beggary in Pakistan is now an established profession which is getting stronger in urban areas, they added. Coercive child beggary is also on the rise, with the parents forcibly sending their children out on the streets to beg, they say. Punjab Minister for Population Welfare, Neelam Jabbar Chaudhry said that poverty alleviation is only possible with the provision of modern educational facilities to all segments of the society.
She said the Punjab government has introduced reforms in education, health and other social sectors in a bid to provide relief to the masses apart from improving their standard of living.
In order to achieve desired results of the reform agenda, she said a comprehensive and effective monitoring and evaluation system is being implemented at district and provincial levels. She said that Rs 58.64 billion would be spent on social sector development programme whereas, Rs 30 billion have been earmarked for educational development projects and Rs 26.10 billion would be spent for the provision of healthcare facilities to the masses in the current fiscal year.
Under the universal primary enrolment campaign, 1.7 million children would be enrolled in the schools however, 100 percent children would be ensured to admit in the schools.
Huge amount is being provided for the provision of computers to 4000 high schools whereas, model schools will also be established at tehsil headquarter level, in addition free air-conditioned bus service would also be provided for pick and drop facility to the matric level students of less developed areas in the province, she added. Reacting to resignation of Pervez Musharraf, Neelam Jabbar Chaudhry said that Pakistan got independence through a democratic struggle and with vote power.
She said that Pakistan came into existence in the month of August and dictator Pervez Musharraf also resigned in the month of August whereas, another era of dictatorship of General Zia-ul-Haq finished in the same month and it was proved that dictatorship cannot stand in front of people's power.
Neelam said that Shaheed Mohtarma Benazir Bhutto's statement "democracy is the best revenge" has been proved; however, now it was the responsibility of the democratic forces to solve the people's problems and overcome the economic crises. She said that parliament is the elected body of people of the country and also answerable before the people, therefore, coalition government would ensure the supremacy of the parliament.
Sources in the PML-N told Business Recorder here on Tuesday that the major aim of the socio-economic policies of the PML-N led government is to create employment opportunities in order to reduce poverty and at the same time to ensure a fuller utilisation of the country's human resources for productive purposes.
Poverty alleviation is one of the important objectives of the PML-N led coalition government and the food stamp scheme has been launched in a bid to help the have nots to tackle poverty. "The PML-N government is launching a series of dialogue with the stakeholders to devise a policy for promotion of SMEs at grass root level", the sources said.
PML-N Lahore Vice President Shahbaz Haider said that provision of better health and education facilities to masses is the foremost priority of Chief Minister Shahbaz Sharif who is working day and night to change the fate of the people.
Analysts say there is considerable poverty in the fast growing cities of Punjab. Poverty in the urban areas is growing faster than the rural areas due to high food inflation and escalating price hike.
Beggary in Pakistan is now an established profession which is getting stronger in urban areas, they added. Coercive child beggary is also on the rise, with the parents forcibly sending their children out on the streets to beg, they say. Punjab Minister for Population Welfare, Neelam Jabbar Chaudhry said that poverty alleviation is only possible with the provision of modern educational facilities to all segments of the society.
She said the Punjab government has introduced reforms in education, health and other social sectors in a bid to provide relief to the masses apart from improving their standard of living.
In order to achieve desired results of the reform agenda, she said a comprehensive and effective monitoring and evaluation system is being implemented at district and provincial levels. She said that Rs 58.64 billion would be spent on social sector development programme whereas, Rs 30 billion have been earmarked for educational development projects and Rs 26.10 billion would be spent for the provision of healthcare facilities to the masses in the current fiscal year.
Under the universal primary enrolment campaign, 1.7 million children would be enrolled in the schools however, 100 percent children would be ensured to admit in the schools.
Huge amount is being provided for the provision of computers to 4000 high schools whereas, model schools will also be established at tehsil headquarter level, in addition free air-conditioned bus service would also be provided for pick and drop facility to the matric level students of less developed areas in the province, she added. Reacting to resignation of Pervez Musharraf, Neelam Jabbar Chaudhry said that Pakistan got independence through a democratic struggle and with vote power.
She said that Pakistan came into existence in the month of August and dictator Pervez Musharraf also resigned in the month of August whereas, another era of dictatorship of General Zia-ul-Haq finished in the same month and it was proved that dictatorship cannot stand in front of people's power.
Neelam said that Shaheed Mohtarma Benazir Bhutto's statement "democracy is the best revenge" has been proved; however, now it was the responsibility of the democratic forces to solve the people's problems and overcome the economic crises. She said that parliament is the elected body of people of the country and also answerable before the people, therefore, coalition government would ensure the supremacy of the parliament.
PTCL introducing new facility
PTCL introduced a new facility in Pakistan
The Pakistan Telecommunication Company Limited (PTCL) introduced IP TV facility on landline and mobile phones from August 14. Talking to reporters on Monday at Expo Center during the 8th ITCN Asia, senior executive vice president Dr Sadik Al-Jadir acknowledged that decline in the subscription of fixed line phones has taken place and linked it with the growing cellular phones subscription.
He said that PTCL is planning to improve its customer services and has apologised for the inconvenience, the customers faced during the protests and strikes recently by its employees. He said that the customer care for any institution is significant for its progress adding that PTCL is indebted to it. To a question, Jadir said that PTCL's next quarter financial results will improve as compared to the last quarter.
Earlier, speaking at a press conference at the lunching ceremony of the "easy learning", he said that PTCL in collaboration with Etisalat academy, has introduced it in a new method.
He said that the "easy learning" has been launched under the auspices of G77 of the United Nations to serve the developing countries. He said that it is aimed at human development and learning for everyone. Users can access over 500 high quality IT and professional courses through pre-paid technology, he said, adding that these courses are fashioned with different learning styles.
Etisalat's strong credit ratings are among the highest of all globally rated telecommunications companies and reflect Etisalat's strong competitive position, excellent profitability and a proven ability to provide strong and growing cash flows.
Moody's Investors Service recently assigned an AA2 long-term issuer rating to Emirates Telecommunications Corporation ("Etisalat"). These are the first ratings that Moody's assigns to Etisalat and the first time that it has rated a telecommunications company in the United Arab Emirates (UAE).
Etisalat, the leading telecom provider in the UAE and in 18 other countries including Pakistan, has a solid track record in the UAE over the last 30 years, evidenced by a robust operating and financial position. This has resulted in superior market share across its businesses, strong and stable revenue growth, efficient operations and stable cash flow generation.
According to PTCL spokesman Ali Qadir Gilani, Etisalat's strong credit ratings from the internationally recognised agencies confirms the success of Etisalat's strategy to continue as the market leader in the UAE and to become one of the global top telecom players. In Pakistan Etisalat management is responsible for holding 26 percent share of PTCL and introducing advance technologies. Etisalat has introduced new management skills in PTCL and helped introduce Pakistani telecom experts and workers to international telecom environments in its 18 overseas branches. The rating at AA2, the third-highest grade, is on par with the sovereign rating for the UAE.
He said that PTCL is planning to improve its customer services and has apologised for the inconvenience, the customers faced during the protests and strikes recently by its employees. He said that the customer care for any institution is significant for its progress adding that PTCL is indebted to it. To a question, Jadir said that PTCL's next quarter financial results will improve as compared to the last quarter.
Earlier, speaking at a press conference at the lunching ceremony of the "easy learning", he said that PTCL in collaboration with Etisalat academy, has introduced it in a new method.
He said that the "easy learning" has been launched under the auspices of G77 of the United Nations to serve the developing countries. He said that it is aimed at human development and learning for everyone. Users can access over 500 high quality IT and professional courses through pre-paid technology, he said, adding that these courses are fashioned with different learning styles.
Etisalat's strong credit ratings are among the highest of all globally rated telecommunications companies and reflect Etisalat's strong competitive position, excellent profitability and a proven ability to provide strong and growing cash flows.
Moody's Investors Service recently assigned an AA2 long-term issuer rating to Emirates Telecommunications Corporation ("Etisalat"). These are the first ratings that Moody's assigns to Etisalat and the first time that it has rated a telecommunications company in the United Arab Emirates (UAE).
Etisalat, the leading telecom provider in the UAE and in 18 other countries including Pakistan, has a solid track record in the UAE over the last 30 years, evidenced by a robust operating and financial position. This has resulted in superior market share across its businesses, strong and stable revenue growth, efficient operations and stable cash flow generation.
According to PTCL spokesman Ali Qadir Gilani, Etisalat's strong credit ratings from the internationally recognised agencies confirms the success of Etisalat's strategy to continue as the market leader in the UAE and to become one of the global top telecom players. In Pakistan Etisalat management is responsible for holding 26 percent share of PTCL and introducing advance technologies. Etisalat has introduced new management skills in PTCL and helped introduce Pakistani telecom experts and workers to international telecom environments in its 18 overseas branches. The rating at AA2, the third-highest grade, is on par with the sovereign rating for the UAE.
Economy offers best opportunity for Telecommunication Companies
Prime Minister Syed Yousuf Raza Gilani has said that Pakistan's economy offers best opportunity for the telecom sector as the government is committed to provide level playing field for their operations. He said this in a meeting with Ms Chua Sock Koong, President Group CEO SingTel, Singapore and Bashir A Tahir, CEO Abu Dhabi Group at the Prime Minister House this afternoon.
Prime Minister highlighted that Pakistan with population of 160 million has potential with growth rate of 2 percent per annum having high young/medium segment. Hence, Pakistan telecom market provides enough opportunities of investment in the sector, he added. He appreciated the confidence of the group by investing in the Banking and Telecom sectors in Pakistan.
Gilani also told the delegation that Pakistan also offers best investment opportunities in the agriculture and energy sectors. He ensured the delegation of his government's full support in this regard. He encouraged Abu Dhabi and SingTel Group to establish software centres and also business process outsourcing in Pakistan.
Abu Dhabi Group is one of the largest business groups of UAE and the largest foreign investor in Pakistan. Qamar-uz-Zaman Kaira, Federal Minister for Information Technology was also present in the meeting
Etisalat rated top telecom firm by Moody's
Etisalat's strong credit ratings are among the highest of all globally rated telecommunications companies and reflect Etisalat's strong competitive position, excellent profitability and a proven ability to provide strong and growing cash flows.
Moody's Investors Service recently assigned an Aa2 long-term issuer rating to Emirates Telecommunications Corporation ("Etisalat"). These are the first ratings that Moody's assigns to Etisalat and the first time that it has rated a telecommunications company in the United Arab Emirates (UAE).
Etisalat, the leading telecom provider in the UAE and in 18 other countries including Pakistan, has a solid track record in the UAE over the last 30 years, evidenced by a robust operating and financial position. This has resulted in superior market share across its businesses, strong and stable revenue growth, efficient operations and stable cash flow generation.
According to PTCL spokesman Ali Qadir Gilani, Etisalat's strong credit ratings from the internationally recognised agencies confirms the success of Etisalat's strategy to continue as the market leader in the UAE and to become one of the global top telecom players. In Pakistan Etisalat management is responsible for holding 26 percent share of PTCL and introducing advance technologies. Etisalat has introduced new management skills in PTCL and helped introduce Pakistani telecom experts and workers to international telecom environments in its 18 overseas branches. The rating at Aa2, the third-highest grade, is on par with the sovereign rating for the UAE.-PREtisalat's strong credit ratings are among the highest of all globally rated telecommunications companies and reflect Etisalat's strong competitive position, excellent profitability and a proven ability to provide strong and growing cash flows.
Moody's Investors Service recently assigned an Aa2 long-term issuer rating to Emirates Telecommunications Corporation ("Etisalat"). These are the first ratings that Moody's assigns to Etisalat and the first time that it has rated a telecommunications company in the United Arab Emirates (UAE).
Etisalat, the leading telecom provider in the UAE and in 18 other countries including Pakistan, has a solid track record in the UAE over the last 30 years, evidenced by a robust operating and financial position. This has resulted in superior market share across its businesses, strong and stable revenue growth, efficient operations and stable cash flow generation.
According to PTCL spokesman Ali Qadir Gilani, Etisalat's strong credit ratings from the internationally recognised agencies confirms the success of Etisalat's strategy to continue as the market leader in the UAE and to become one of the global top telecom players. In Pakistan Etisalat management is responsible for holding 26 percent share of PTCL and introducing advance technologies. Etisalat has introduced new management skills in PTCL and helped introduce Pakistani telecom experts and workers to international telecom environments in its 18 overseas branches. The rating at Aa2, the third-highest grade, is on par with the sovereign rating for the UAE.
Wateen recognised as pioneer in telecommunications
The world's largest business technology leadership magazine, CIO Pakistan's local edition recognised Wateen's CEO, Tariq Malik, for his leadership and vision in increasing broadband penetration and making IP-based communication accessible across country. The local edition of CIO was officially launched in country on 5th of August and acknowledged 16 pioneers from the local industry who have been making an impact in country.
Tariq Malik, CEO of Wateen said, "It is an honour for Wateen to be recognised. We are indeed a young company but the fact that we have established many milestones, the encouragement from the industry helps. We still have exciting plans and will continue to meet the standards that we have set." CIO Pakistan Editor-in Chief said, "Wateen has done great work as far as spreading the awareness of WiMAX and its other services. Their young team has allowed people to realise the potential of broadband in Pakistan again."
Prime Minister highlighted that Pakistan with population of 160 million has potential with growth rate of 2 percent per annum having high young/medium segment. Hence, Pakistan telecom market provides enough opportunities of investment in the sector, he added. He appreciated the confidence of the group by investing in the Banking and Telecom sectors in Pakistan.
Gilani also told the delegation that Pakistan also offers best investment opportunities in the agriculture and energy sectors. He ensured the delegation of his government's full support in this regard. He encouraged Abu Dhabi and SingTel Group to establish software centres and also business process outsourcing in Pakistan.
Abu Dhabi Group is one of the largest business groups of UAE and the largest foreign investor in Pakistan. Qamar-uz-Zaman Kaira, Federal Minister for Information Technology was also present in the meeting
Etisalat rated top telecom firm by Moody's
Etisalat's strong credit ratings are among the highest of all globally rated telecommunications companies and reflect Etisalat's strong competitive position, excellent profitability and a proven ability to provide strong and growing cash flows.
Moody's Investors Service recently assigned an Aa2 long-term issuer rating to Emirates Telecommunications Corporation ("Etisalat"). These are the first ratings that Moody's assigns to Etisalat and the first time that it has rated a telecommunications company in the United Arab Emirates (UAE).
Etisalat, the leading telecom provider in the UAE and in 18 other countries including Pakistan, has a solid track record in the UAE over the last 30 years, evidenced by a robust operating and financial position. This has resulted in superior market share across its businesses, strong and stable revenue growth, efficient operations and stable cash flow generation.
According to PTCL spokesman Ali Qadir Gilani, Etisalat's strong credit ratings from the internationally recognised agencies confirms the success of Etisalat's strategy to continue as the market leader in the UAE and to become one of the global top telecom players. In Pakistan Etisalat management is responsible for holding 26 percent share of PTCL and introducing advance technologies. Etisalat has introduced new management skills in PTCL and helped introduce Pakistani telecom experts and workers to international telecom environments in its 18 overseas branches. The rating at Aa2, the third-highest grade, is on par with the sovereign rating for the UAE.-PREtisalat's strong credit ratings are among the highest of all globally rated telecommunications companies and reflect Etisalat's strong competitive position, excellent profitability and a proven ability to provide strong and growing cash flows.
Moody's Investors Service recently assigned an Aa2 long-term issuer rating to Emirates Telecommunications Corporation ("Etisalat"). These are the first ratings that Moody's assigns to Etisalat and the first time that it has rated a telecommunications company in the United Arab Emirates (UAE).
Etisalat, the leading telecom provider in the UAE and in 18 other countries including Pakistan, has a solid track record in the UAE over the last 30 years, evidenced by a robust operating and financial position. This has resulted in superior market share across its businesses, strong and stable revenue growth, efficient operations and stable cash flow generation.
According to PTCL spokesman Ali Qadir Gilani, Etisalat's strong credit ratings from the internationally recognised agencies confirms the success of Etisalat's strategy to continue as the market leader in the UAE and to become one of the global top telecom players. In Pakistan Etisalat management is responsible for holding 26 percent share of PTCL and introducing advance technologies. Etisalat has introduced new management skills in PTCL and helped introduce Pakistani telecom experts and workers to international telecom environments in its 18 overseas branches. The rating at Aa2, the third-highest grade, is on par with the sovereign rating for the UAE.
Wateen recognised as pioneer in telecommunications
The world's largest business technology leadership magazine, CIO Pakistan's local edition recognised Wateen's CEO, Tariq Malik, for his leadership and vision in increasing broadband penetration and making IP-based communication accessible across country. The local edition of CIO was officially launched in country on 5th of August and acknowledged 16 pioneers from the local industry who have been making an impact in country.
Tariq Malik, CEO of Wateen said, "It is an honour for Wateen to be recognised. We are indeed a young company but the fact that we have established many milestones, the encouragement from the industry helps. We still have exciting plans and will continue to meet the standards that we have set." CIO Pakistan Editor-in Chief said, "Wateen has done great work as far as spreading the awareness of WiMAX and its other services. Their young team has allowed people to realise the potential of broadband in Pakistan again."
Monday, August 18, 2008
Pakistan to Get $75M from The Asian Development Bank
The Asian Development Bank (ADB) will provide Pakistan with $75 million in loans to build several multipurpose dams, irrigation canals and drinking water supplies across the Potohar Plateau near Islamabad.
The project will improve the livelihoods of about 22,000 farming households by bringing irrigation to 11,500 hectares of agricultural land that used to rely on irregular and unpredictable rainfall, as well as improving existing irrigation networks across another 10,000 hectares.
The project will also increase supplies of water for domestic use to rural communities and small towns in Punjab province’s districts of Attock, Rawalpindi, Jhelum, and Chakwal.
“Without secure water sources, farming in rain-fed ‘barani’ areas usually has low productivity and carries high risk because crops often fail when there is drought,” said Arnaud Cauchois, Rural Development Specialist at ADB. “Barani” is a term used in Pakistan to refer to agricultural areas dependent on rain.
“This project will give farmers a reliable water supply, which will increase crop and livestock productivity and therefore increase people’s incomes. At the same time, it will increase households’ access to cleaner water, therefore reducing sickness and mortality rates caused by waterborne diseases.”
The construction of dams across the Potohar Plateau started as early as the 1960s. But they were not as beneficial as had been hoped because local communities rarely participated in their development, farmers did not get the financial and technical support necessary to switch from rain-fed agriculture to irrigated farming, and there was no watershed management resulting in a high reservoir sedimentation rate.
In this new project, a more holistic approach is being used that is simultaneously looking at upstream watershed management and downstream irrigated area development. It will also involve local communities to ensure the project is demand driven.
Farming is the traditional source of livelihoods across Pothowar, but crop yields in the “barani” areas have been typically less than half those in areas with river-fed irrigation. The traditional crops are wheat and gram in winter and sorghum, millet, groundnuts or maize in summer when rainfall is sufficient.
Out of the total loan package, $20 million will be concessional and will carry low interest rates, while the balance of $55 million will be provided from ordinary capital resources under ADB’s London interbank offered rate-based lending facility.
Pakistan does not need loan in fiscal year 2008-09
Though high oil prices have depleted Pakistan's foreign exchange reserves to levels worth less than three months of imports, Pakistan does not need loan in fiscal year 2008-09 from the International Monetary Fund (IMF) for money in the next 10 months if the government cuts spending and gets other sources of funding to offset falling reserves, a senior IMF official said. Mohsin Khan, IMF's director for the Middle East and Central Asia, said Pakistan had not asked the IMF for loans.
He said Pakistan would not need an IMF loan in the fiscal year to June if the government abolishes all fuel subsidies by December as planned, and stops borrowing from the central bank to pay for its budget deficit. High oil prices have depleted Pakistan's foreign exchange reserves to levels worth less than three months of imports, sparking alarm among investors that Pakistan may need to take up loans from the IMF to pay for imports.
Khan said the government needs to stick to its privatisation plans to raise money, secure over $1 billion worth of loans from the World Bank and the Asian Development Bank, and get Saudi Arabia to defer an estimated $5.9 billion worth of oil payments.
"If things fall right for them in all these things that they are planning to do, I don't believe there will be any need for them to come to the IMF," Khan, who was in Pakistan this week, said in a phone interview.
"Unless there is a total collapse of foreign direct investments, they can ride this out," he said.
Pakistan, a repeat customer of the IMF, last took an IMF loan worth $1.3 billion in 2001 to help fight poverty and offset the effects of a regional war on the economy. Backing for the loan was helped by Pakistan's support for the US war on terrorism.
Pakistan's economy is going through its toughest period after six years of healthy growth. It is wrestling widening trade and fiscal deficits, soaring inflation, and dwindling investor confidence battered by the country's political tensions.
There is mounting speculation President Pervez Musharraf would quit after the coalition government said last week it planned to impeach him. The political turmoil has unnerved investors - Pakistani stocks are near two-year lows, while the Pakistan rupee has lost nearly a quarter of its value this year.
ACCUMULATE RESERVES:
Khan, who is from Pakistan and has been at the IMF for 36 years, said it is the responsibility of the State Bank of Pakistan (SBP), Pakistan's central bank, to boost reserves.
"You must build up your reserves back to where they were a year ago. Get back to that level, at the very least, and aim higher," he said. Khan said the central bank should ensure any future loans Pakistan receives will add to reserves, and that it should ask commercial banks to raise deposit rates by at least 2 percent to attract more money from investors.
However, he said the central bank does not need to raise its key discount rate from the current 13 percent because markets will ensure that the yields for treasury bills sold by the SBP are above the discount rate.
Pakistan's foreign exchange reserves fell $797 million in July, the first month of fiscal year 2008/09. They have plummeted 40 percent from a record $16.5 billion in October last year. Khan said the central bank was doing "exactly the right thing" by not selling dollars from its reserves to support the falling rupee.
"If the State Bank starts to lose reserves by defending a currency that is not defensible, then it will be ridiculous. They will really be shooting themselves in the foot for that," he said. "Don't fight the market. So many countries have run into serious problems by trying to defend the exchange rate when the market is saying that's not the exchange rate we like."
He said Pakistan would not need an IMF loan in the fiscal year to June if the government abolishes all fuel subsidies by December as planned, and stops borrowing from the central bank to pay for its budget deficit. High oil prices have depleted Pakistan's foreign exchange reserves to levels worth less than three months of imports, sparking alarm among investors that Pakistan may need to take up loans from the IMF to pay for imports.
Khan said the government needs to stick to its privatisation plans to raise money, secure over $1 billion worth of loans from the World Bank and the Asian Development Bank, and get Saudi Arabia to defer an estimated $5.9 billion worth of oil payments.
"If things fall right for them in all these things that they are planning to do, I don't believe there will be any need for them to come to the IMF," Khan, who was in Pakistan this week, said in a phone interview.
"Unless there is a total collapse of foreign direct investments, they can ride this out," he said.
Pakistan, a repeat customer of the IMF, last took an IMF loan worth $1.3 billion in 2001 to help fight poverty and offset the effects of a regional war on the economy. Backing for the loan was helped by Pakistan's support for the US war on terrorism.
Pakistan's economy is going through its toughest period after six years of healthy growth. It is wrestling widening trade and fiscal deficits, soaring inflation, and dwindling investor confidence battered by the country's political tensions.
There is mounting speculation President Pervez Musharraf would quit after the coalition government said last week it planned to impeach him. The political turmoil has unnerved investors - Pakistani stocks are near two-year lows, while the Pakistan rupee has lost nearly a quarter of its value this year.
ACCUMULATE RESERVES:
Khan, who is from Pakistan and has been at the IMF for 36 years, said it is the responsibility of the State Bank of Pakistan (SBP), Pakistan's central bank, to boost reserves.
"You must build up your reserves back to where they were a year ago. Get back to that level, at the very least, and aim higher," he said. Khan said the central bank should ensure any future loans Pakistan receives will add to reserves, and that it should ask commercial banks to raise deposit rates by at least 2 percent to attract more money from investors.
However, he said the central bank does not need to raise its key discount rate from the current 13 percent because markets will ensure that the yields for treasury bills sold by the SBP are above the discount rate.
Pakistan's foreign exchange reserves fell $797 million in July, the first month of fiscal year 2008/09. They have plummeted 40 percent from a record $16.5 billion in October last year. Khan said the central bank was doing "exactly the right thing" by not selling dollars from its reserves to support the falling rupee.
"If the State Bank starts to lose reserves by defending a currency that is not defensible, then it will be ridiculous. They will really be shooting themselves in the foot for that," he said. "Don't fight the market. So many countries have run into serious problems by trying to defend the exchange rate when the market is saying that's not the exchange rate we like."
Government to promote alternative energy
Government to Promote Alternative Energy
The Ministry of Water and Power was committed to promote alternative energy to overcome the acute shortage of energy and to meet the growing demand of electricity in the country. Minister for Water and Power Raja Pervaiz Ashraf said this while talking to Tariq Sayeed, President Saarc Chamber and former President FPCCI who called on him here along with Zubair Ahmed Malik, former Vice President FPCCI.
Tariq Sayeed invited the attention of the minister towards the problems being faced by the companies which although had been given letter of intents by the government and not been provided land to install wind turbines. He requested the minister to pay special attention to resolve this issue and review policy on alternative energy as the country has not been able to produce even single unit of electricity while neighbour country was generating 8,000 MW through wind power projects.
He was of the opinion that a huge potential in wind and solar energy exists in Pakistan, which needs to be tapped in true spirit and the success depends upon the reviewing of policies in compatible to the requirements of investors. The minister was agreed to the proposal and assured all possible co-operation to tap the potential of this non-conventional source of energy. He also suggested electrifying off-grid areas by solar energy.
Sindh Chief Minister Syed Qaim Ali Shah on Sunday constituted a four-member committee for evaluation of reserves of coal in Thar area. He formed the body at the first meeting of the Sindh Coal and Energy Board (SCEB), chaired by him at the Chief Minister House here.
Federal Secretary for Water and Power, Muhammad Ismail Qureshi, member SCEB, Syed Asad Ali Shah, Managing Director SCEB, Aslam Sanjrani and Secretary Mines Sindh, Younis Dagha will be members of the recently formed body.
Besides Sindh CM, who is also the Chairman of Sindh Coal and Energy Board, the Federal Minister for Water and Power and Vice-Chairman Thar Coal Energy Board, Raja Pervez Ashraf and other members of the Board were also present.
After the meeting, Syed Qaim Ali Shah briefed the media about the details of the meeting. He said after the Washington Conference the interests of foreign investors have developed in the project for electricity generation from Thar Coal, which, he added, the meeting reviewed.
He said that another conference about investment is going to be held at Hong Kong for which the invitation has also been received. Syed Qaim Ali Shah said there is no law and order problem in Sindh while electricity and other infrastructure also exist. Air travelling facilities will also be provided at Thar and the work is going to start on the project without any delay, he added.
He said Jahangir Siddiqi & Company, Engro Group, Al-Tawariqi Group of Saudi Arabia, Lucky Group, Giga Group of UAE and Metal Investment Company of UAE have showed interests in carrying out evaluation of Thar coal.
Later, talking to media, the Federal Minister for Water and Power, Raja Pervez Ashraf, said total 16,000 mega watt electricity will be needed in Pakistan in the year 2016.
He said an emergency long-term and short-term policy has been devised to fulfil the energy needs of the country. Under the policy, the agreements are being signed to purchase 1100 MW electricity from Iran and the Middle East, he said. He said that a Turkish company will start generation of 6 to 50 MW electricity from the 'wind mill' within next six weeks.
Raja Pervez Ashraf said due to increase in petroleum prices the attention was being paid to other sources for power generation and coal and wind power generation were an important element in it.
He said it is our luck that the reserves of about 175 billion tonnes coal exist in Thar through which inexpensive electricity will be available to Pakistan. The Sindh chief minister said that Shaheed Mohtarma Benazir Bhutto had started work to utilise Thar coal in 1994, but after discontinuation of our party's government the work on Keti Bander and Thar coal was stopped.
He said the government intends to launch projects to generate 6,000 MW electricity in next three years. To a question, Raja Pervez Ashraf said after the recent rains, the situation of rivers in the country has improved and, therefore, the electricity generation will also be enhanced, which will help minimise load-shedding in the coming days.
He informed that the Karachi Electric Supply Corporation (KESC) was being given 500 to 700 MW electricity daily. In the coming days after a change in the KESC management the power load-shedding in metropolis will be reduced.
Earlier, the meeting was attended by Deputy Chairman, Planning Commission Pakistan, Salman Farooqi, members SCEB, Syed Murad Ali Shah, Jam Saifullah Dharejo, Asad Ali Shah, and others.
Stock Markets Index Gained today
The resolutions passed by the provincial assemblies, seeking vote of confidence from President Pervez Musharraf and the coalition partners' preparation of framing charges to impeach the President kept the market under pressure during most of the trading days of the week under review.
Today after witnessing bearish trend during the last two consecutive weeks, the Karachi share market took upward trend in the outgoing week and the benchmark KSE-100 index once again close above 10,000 psychological level at 10,258.71 points with a modest gain of 3.5 percent or 349.26 points on week-on-week basis.
The parallel free float market capitalisation-based the KSE-30 index increased by 528.19 points on weekly basis and settled at 11,690.23 points level. Trading activity remained thin during the week as average daily volumes of ready market declined by 18 percent on weekly basis to 92.499 million shares. The average daily turnover of futures market increased by 3.9 percent on weekly basis to 15.982 million shares.
The overall market capitalization surged by Rs 102 billion on weekly basis to Rs 3.195 trillion. The market started under pressure on Monday, however, late buying mainly by local institutions supported the market to close in positive and the KSE-100 index increased by 262.41 points to close at 10,171.86 points level. The KSE-30 index gained 356.52 points and settled at 11,518.56 points level.
On Tuesday, the market witnessed heavy selling pressure due to investors concerns over the prevailing uncertainty on political front and the KSE-100 index lost 208.28 points to close at 9,963.58 points level. The KSE-30 index declined by 324.32 points and settled at 11,194.24 points level.
Bearish trend continued on Wednesday and the The KSE-100 index lost another 61.23 points to close at 9,902.35 points level, while the KSE-30 index declined by 16.36 points and settled at 11,177.88 points level. The market remained closed on Thursday on account of Independence Day. On Friday, the market took upward trend on the back of healthy interest by local institutions and foreign investors and the KSE-100 index increased by 356.36 points to close at 10,258.71 points level while the KSE-30 index gained 512.35 points and settled at 11,690.23 points level.
Umer Ayaz, an analyst at JS Global Capital Limited, said the equity market managed a positive closing this week with the KSE-100 Index gaining 349 points, however, the equity market is still down 27 percent to date in 2008 amid economic slowdown and political issues. The issue of impeachment of President Pervez Musharraf and late on report of President's resignation before impeachment continued to affect market sentiments. At the weekend, the market saw strong pull back mainly led by local buying and on Friday only the index was up by 3.6 percent amid hope that political dust will finally settle down.
The Lahore stock exchange recorded 4.3 percent increase amid mixed sentiments while the LSE-25 index gained 135.20 points to close at 3292.99 against 3157.20 of the last week. However, the transaction volume squeezed to 38.979 million shares as compared to previous week's volume of 42.207 million shares.
The resolutions passed by the provincial assemblies, seeking vote of confidence from President Pervez Musharraf and the coalition partners' preparation of framing charges to impeach the President kept the market under pressure during most of the trading days of the week under review.
Of four trading days of the week, the market showed recovery on first and last day while it failed to sustain during two trading sessions on Tuesday and Wednesday. The market on Monday managed a gain of over 102 points with ascending transaction volume of 14,274,900 shares because of aggressive buying in selective scrips. The MCB Bank, National Bank, United Bank, NIB Bank, Bank Alfalah, and the oil and energy sector shares; Attock Refinery, PSO, OGDC, PPL and Mari Gas in addition to Adamjee Insurance, and Engro Chemical attracted aggressive buying. A number of banking and oil sectors' shares had to face upper cap because of the rapid increase in their value that kept the market into green zone during the day's trading.
The market rise was attributed to the potential investors and the institutions that stayed on buying course to make fresh entries. In addition to the global trend, the maintenance of Pakistan rating at 'B' by the Moody's Investors Service remained the source of encouragement for the investors. The rebound in the oil prices at the international market helped the oil sector's improvement in the local bourses, the experts opined.
However, the market could not sustain and shed 98.55 points with low trading activity on Tuesday and thus lost momentum it gained on the first day. The selling pressure on account of profit-taking was the main factor that dragged the market into red zone. The investors, keeping in view the prevailing uncertain political situation, preferred offloading their holdings and booked the available margin.
The investors were scared of the political scenario. They believed that either the President can succumb to impeachment by the coalition government or he might use powers under section 58(2)b to dissolve the assemblies and both the actions were considered as negative by the investors, the experts said, adding that because of this fear, the small investors did not take positions and stayed away.
On Wednesday, the market remained under the grip of depressed sentiments that forced the market closure in red zone amid panic selling. Though, the index was marginally declined, the increasing volume reflected lack of interest on the part of investors, who continued getting out of the market to avert more declines.
One of the major factors that could be instrumental in market recovery in future is yearly June ending and the second quarters' financial result of the corporate sector. The experts foresee consolidation of about 2000 points at the present level and termed present period as best time for the investors to enter the market. The buying at the present level can yield a good amount of margin to the investors, the experts opined.
There were four trading sessions during the week under review because of the holiday on account of Independence Day. When market opened on Friday, the short covering by the investors pushed the index up by over 150 points. The oil and banking sectors performed well to lead the market upward on the last trading day of the week under review. The experts attributed the bearish rally to financial reports released by the companies during the week.
The market pundits in their opinion consider the next week very crucial for the stock market as well as the country. According to them, the political situation would commence moving towards normalisation, if the President resigns during next week as reported in national and international press.
They were of the view that the political uncertainty should not continue further because in its consequence, the stock business and the local currency remained under severe pressure. As soon as the political issues were settled, not only the stock market, but also the rupee would start improving and regaining strength, the experts said.
Today after witnessing bearish trend during the last two consecutive weeks, the Karachi share market took upward trend in the outgoing week and the benchmark KSE-100 index once again close above 10,000 psychological level at 10,258.71 points with a modest gain of 3.5 percent or 349.26 points on week-on-week basis.
The parallel free float market capitalisation-based the KSE-30 index increased by 528.19 points on weekly basis and settled at 11,690.23 points level. Trading activity remained thin during the week as average daily volumes of ready market declined by 18 percent on weekly basis to 92.499 million shares. The average daily turnover of futures market increased by 3.9 percent on weekly basis to 15.982 million shares.
The overall market capitalization surged by Rs 102 billion on weekly basis to Rs 3.195 trillion. The market started under pressure on Monday, however, late buying mainly by local institutions supported the market to close in positive and the KSE-100 index increased by 262.41 points to close at 10,171.86 points level. The KSE-30 index gained 356.52 points and settled at 11,518.56 points level.
On Tuesday, the market witnessed heavy selling pressure due to investors concerns over the prevailing uncertainty on political front and the KSE-100 index lost 208.28 points to close at 9,963.58 points level. The KSE-30 index declined by 324.32 points and settled at 11,194.24 points level.
Bearish trend continued on Wednesday and the The KSE-100 index lost another 61.23 points to close at 9,902.35 points level, while the KSE-30 index declined by 16.36 points and settled at 11,177.88 points level. The market remained closed on Thursday on account of Independence Day. On Friday, the market took upward trend on the back of healthy interest by local institutions and foreign investors and the KSE-100 index increased by 356.36 points to close at 10,258.71 points level while the KSE-30 index gained 512.35 points and settled at 11,690.23 points level.
Umer Ayaz, an analyst at JS Global Capital Limited, said the equity market managed a positive closing this week with the KSE-100 Index gaining 349 points, however, the equity market is still down 27 percent to date in 2008 amid economic slowdown and political issues. The issue of impeachment of President Pervez Musharraf and late on report of President's resignation before impeachment continued to affect market sentiments. At the weekend, the market saw strong pull back mainly led by local buying and on Friday only the index was up by 3.6 percent amid hope that political dust will finally settle down.
The Lahore stock exchange recorded 4.3 percent increase amid mixed sentiments while the LSE-25 index gained 135.20 points to close at 3292.99 against 3157.20 of the last week. However, the transaction volume squeezed to 38.979 million shares as compared to previous week's volume of 42.207 million shares.
The resolutions passed by the provincial assemblies, seeking vote of confidence from President Pervez Musharraf and the coalition partners' preparation of framing charges to impeach the President kept the market under pressure during most of the trading days of the week under review.
Of four trading days of the week, the market showed recovery on first and last day while it failed to sustain during two trading sessions on Tuesday and Wednesday. The market on Monday managed a gain of over 102 points with ascending transaction volume of 14,274,900 shares because of aggressive buying in selective scrips. The MCB Bank, National Bank, United Bank, NIB Bank, Bank Alfalah, and the oil and energy sector shares; Attock Refinery, PSO, OGDC, PPL and Mari Gas in addition to Adamjee Insurance, and Engro Chemical attracted aggressive buying. A number of banking and oil sectors' shares had to face upper cap because of the rapid increase in their value that kept the market into green zone during the day's trading.
The market rise was attributed to the potential investors and the institutions that stayed on buying course to make fresh entries. In addition to the global trend, the maintenance of Pakistan rating at 'B' by the Moody's Investors Service remained the source of encouragement for the investors. The rebound in the oil prices at the international market helped the oil sector's improvement in the local bourses, the experts opined.
However, the market could not sustain and shed 98.55 points with low trading activity on Tuesday and thus lost momentum it gained on the first day. The selling pressure on account of profit-taking was the main factor that dragged the market into red zone. The investors, keeping in view the prevailing uncertain political situation, preferred offloading their holdings and booked the available margin.
The investors were scared of the political scenario. They believed that either the President can succumb to impeachment by the coalition government or he might use powers under section 58(2)b to dissolve the assemblies and both the actions were considered as negative by the investors, the experts said, adding that because of this fear, the small investors did not take positions and stayed away.
On Wednesday, the market remained under the grip of depressed sentiments that forced the market closure in red zone amid panic selling. Though, the index was marginally declined, the increasing volume reflected lack of interest on the part of investors, who continued getting out of the market to avert more declines.
One of the major factors that could be instrumental in market recovery in future is yearly June ending and the second quarters' financial result of the corporate sector. The experts foresee consolidation of about 2000 points at the present level and termed present period as best time for the investors to enter the market. The buying at the present level can yield a good amount of margin to the investors, the experts opined.
There were four trading sessions during the week under review because of the holiday on account of Independence Day. When market opened on Friday, the short covering by the investors pushed the index up by over 150 points. The oil and banking sectors performed well to lead the market upward on the last trading day of the week under review. The experts attributed the bearish rally to financial reports released by the companies during the week.
The market pundits in their opinion consider the next week very crucial for the stock market as well as the country. According to them, the political situation would commence moving towards normalisation, if the President resigns during next week as reported in national and international press.
They were of the view that the political uncertainty should not continue further because in its consequence, the stock business and the local currency remained under severe pressure. As soon as the political issues were settled, not only the stock market, but also the rupee would start improving and regaining strength, the experts said.
Perviz Musharaf Has Resigned Today
President of Pakistan Perviz Musharaf has resigned today in an address to Nation. The Main Points of his speech are as under.
President Perviz Musharrf's address to the nation begins with the recitation of Holy Quran
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Country is facing difficult time
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Today is the day for important decisions
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Country was about to be declared as failed state
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I have full faith in Allah that if we work with honesty Allah is with you
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I faced several crises during these nine years
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Nobody faced challenges which I faced during my regime
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I have been facing challenges including 9/11, northern areas
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Allah helped me in facing all these challenges
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My intentions remained very positive
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I always preferred the country and people
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I gave a slogan "Pakistan first" to the nation
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Some elements give value to their interest above the country
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These elements levelled many allegations against me
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Some elements are accusing me of electricity crisis and others
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Details will be released in the press
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Our economy was on right track on December 2007 before seven months
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Our Foreign exchange reserves reached 17 billion dollars
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KSE index surpassed 16,000 points
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It was the power of our economic policies, These were the indicators of Pakistan seven months back
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World agencies declared Pakistan in N-11 countries
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Pakistan was also included with India, Russia, China in N-11 countries
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Now Reserves have reached below 10 billion dollars
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KSE index is now around 10,000 points
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Foreign investors have stopped investing in Pakistan now
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Wheat, pulses prices went up, poor people struggling
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Those who criticize our policies is cheating with the nation
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Power crises was the outcome of demand which increased after development projects
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3000 MW power generations during last 8-9 years
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Demand was higher than generation
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June 2007, we were generating
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750 km long coastal highway built during 7 years
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Islamabad-Murree Expressway built
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Many roads links built in northern areas
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Roads network built across the country
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Mirani dam inaugurated, dam in Skardu completed
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Capacity will be doubled for Mangla dam
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More dams are being built
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Thal, rany canals are being constructed
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3 million acres land will be irrigated
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Our agricultures will be boosted by these canals
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Gawadar port was constructed
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There is a revolution in telecom sector
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50 percent teledensity in Pakistan which was only two percent
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Massive industrialization was happening in Pakistan
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Four to five hotels are being constructed in Islamabad
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With the emergence of Industries, employment opportunities were created
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We made lot of progress in education sector
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We started technical training, thousands of children being trained
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Foreign universities were about to open their campus in Pakistan
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1500 Ph.Ds every month
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Primary and Secondary health care was given preference
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Safe drinking system planned across the country
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6000 purification plants were being planned in the country
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Three-pronged strategy adopted for women sector
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Political empowerment was result of our policies
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We abolished discriminatory laws
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We empowered minority by giving joint electorate power
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We have a rich heritage, culture, Quaid Mausoleum was renovated in a way that thousands of people sit there
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We have opened art gallery
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In Lahore, a Bab-e-Pakistan is under construction
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NIPA (National Institute of Performing Arts) made to promote performance
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There was only a label of democracy, we put essence in it, we introduced local government system
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Those who are against local government system, was against Pakistan
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Two elections were conducted under my rule
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It is the essence of democracy
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Before 9/11 nobody knew Pakistan, we gave image and value to Pakistan
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Pakistan is give value in international forums
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We made some inroads on law and order situation
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We inducted police personnel on basis of merits, we strengthened their capabilities
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No Kalshinkov culture on roads
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New terrorism culture began after 9/11 which we need to defeat and face jointly
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I am proud of all my achievments
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Delegates of 80 countries arrived in Pakistan during donors' conference
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We were committed more aid then expected
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These achievements are for People of Pakistan
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Current political situation
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I always promoted reconciliation in the country
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I have talked about three-phase transition gradually
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Third face was last year when I quit post of army chief
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Power was transformed after transparent election which all the world believes
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After election of Feb 18, people associated their hopes with the elected people
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They wanted better future, leaving behind past
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They wanted a developed Pakistan free of tussles
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Unfortunately, my all appeals regarding reconciliation went all in vain
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My efforts failed
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Some elements were playing politics with economy, terrorism
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Vendetta began
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I was blamed for hatching conspiracy from presidency which is completely baseless.
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Free fair elections were held in which all parties participated. We made sure everybody participates in the election.
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Prime Minister's unopposed election was held, how?
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In Sindh, Balochistan also a culture of decency developed
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I have publicly announced my support to the government
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I announced to share my experience with the government with all my capabilities to face the challenges
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Coalition thought me as problem not solution
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Collision wants to impeach me, why?
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Are they scared of my legal and constitutional right?
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Impeachment and charge-sheet right of people, and to defend the impeachment move is my right
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No charge-sheet can stand against me, They can not prove any charge against me
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I did all with basis of "Pakistan First"
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I took on boards all the stakeholders including army, politicians, civil society members, Ulemas on every critical decision
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I am not bothered about charge-sheet, They can not prove any charge
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Question arises is: Impeachment issue will affect the country
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Can country afford uncertainty and instability.
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Country can not bear politics of confrontation
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Office of the president should be impeachment, will it be a wise move
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I am thinking on these line since two to three days
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It is the time for some serious thoughts
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Nation will defeat whatever the result of impeachment would be
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President office can get affected, Pakistan is my love and everything
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I offer my life for the sake of the country,
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I served the country for 45 years
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I think that I should do something to bring the country out of crisis, it has ability.
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I don't want to do anything uncertain
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I have in mind to avoid the parliament from horse trading
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If impeachment is defeated, in my view, confrontation will exist between state institutions.
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Parliament and judiciary can face confrontation
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I don't want to drag the army into politics
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I consulted with legal advisers, army and aides, I resign form my post
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Speaker will have my resignation, I don't want anything from anyone
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We have given sacrifices, our sacrifices are exemplary, I salute to them
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I am thankful to my political companions to support me during this ear
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I am thankful to civil servants, their role in the functioning has been amazing, I am proud of them
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I am a middle class person and part of people
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I always think about the people's pain
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Prayers of my mother remained with me and my wife and children always supported my that is my strength
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May Allah protect the country
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May Allah made the lives of people better
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My life is always for the people of Pakistan
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Good Bye to Pakistan
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Pakistan Painda Abad
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