Tuesday, June 09, 2009

HONG KONG--Major stock markets across Asia sagged Tuesday, as lower commodity prices dealt a blow to mining and resource shares. China Huiyuan Juice dived in the Hong Kong market on news of a U.S. private equity firm's exit. Carriers extended losses, as China sought to consolidate its airline industry.

Japan's Nikkei 225 index dipped 0.8% to 9,786.82. Trading firms with commodities businesses fell across the board. Mitsui & Co dropped 3.7% to 1,256 yen ($12.82), Mitsubishi Corp slid 2.2% to 1,876 yen ($19.14) and Itochu Corp declined 2.5% to 700 yen ($7.14).

Mining companies and smelters were hit hard with Dowa Holdings shedding 3.1%, to 434 yen ($4.43), and Mitsui Mining & Smelting falling 4.0%, to 243 yen ($2.48).

Copper continued to lead a selloff among base metals in Asia on a stronger U.S. dollar and worries that China will soon enter the low season for copper consumption.

Crude oil futures for July delivery, by contrast, rose more than 1%, to $69 per barrel in Asia on Tuesday, rebounding from a two-day decline.

The dollar traded near 98.00 yen, as of 4:30pm in Hong Kong.

In Sydney, the S&P/ASX 200 lost 0.9% to 3,934.90. A National Australia Bank survey showed business confidence in the country rose 12 index points in May to negative 2 index points. Infrastructure spending drove the biggest monthly gain since May 2001.

BHP Billiton slid 4.4% to 36.50 Australian dollars ($28.94), while its rival-turned-partner Rio Tinto lost 2.6% to 70.61 Australian dollars ($55.98).

South Korea's Kospi index shed 1.5%, to 1,371.84 points.


Courtesy: Forbes.Com

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Tuesday, June 09, 2009

Consumer foods giant General Mills on Monday lifted its fiscal 2009 earnings forecast, citing a lower tax rate in the fiscal fourth quarter.

The Minneapolis-based company said it expects to beat its previous full-year guidance for $3.87 to $3.89 per share, excluding several one-time items. Analysts currently expect a full-year profit of $3.89 per share.

General Mills is set to deliver its 2009 fiscal fourth-quarter and full-year earnings report July 1.

The company also said that its full-year 2010 profit would be around $4.15 per share. On average, Wall Street analysts expect a slightly higher $4.16 per share. General Mills shares rose $1.78, or +3.4%, in morning trading Monday.

We added shares of GIS to our "recommended" list back on April 24, when the stock was trading at $49.67. We still find shares of the cereal maker attractive at current levels. The company has a 3.30% dividend yield, based on Friday's closing stock price of $52.16.


Courtesy: Forbes.Com

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Tuesday, June 09, 2009

According to reports Monday, BlackRock is one of several companies in talks to buy Barclays' BGI asset management unit, for a reported $12 billion asking price.

The deal for the unit, Barclays Global Investors, could also include leveraged index specialists iShares. BCI is the largest fund manager in the world, with over $1.5 trillion in assets under management.

If the deal with BlackRock materializes, BlackRock would swell to a staggering $2.8 trillion in assets under management, making it more than double the size of its next closest competitor, State Street.

The complex deal would include Barclays taking up to a 20% stake in BlackRock. Bank of New York Mellon is also rumored to be in talks to purchase the Barclays unit. BlackRock shares rose $4.64, or +2.8%, in morning trading Monday, while Barclays shares fell 71 cents, or -3.8%.

We recently removed shares of BLK on May 27, when the stock was trading at $154.13. The company has a 1.91% dividend yield, based on Friday's closing stock price of $163.74. The stock has technical support in the $137 to $140 price area. If the shares can firm up, we see overhead resistance around the $179 to $180 price levels. We are watching shares very closely for a possible re-entry.

Courtesy: Forbes.Com

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Tuesday, June 09, 2009

Wal-Mart Stores:Wal-Mart's successes contrast starkly against the more bruised-and-battered retailers struggling through one of the worst recessions in modern times. The company's annual meeting revealed that the firm has benefited greatly from the economic downturn by increasing market share and amassing new customers. Despite the bullish news regarding the firm's growth, shares are currently off slightly by 1% to $50.50 today.

One might expect to see optimistic WMT option investors populating the stock. However, we observed a long-term bearish play in the January 2010 contract. It appears that the trader has sold 15,000 January 65 calls for a premium of 40 cents apiece in order to partially finance the purchase of 15,000 protective put options at the January 45 strike for a premium of $2.19 each. The net cost of the pessimistic-play amounts to $1.79 and begins to yield profits to the downside beginning at the breakeven share price of $43.21. This investor apparently feels the need to protect himself against a more than 14% decline in the stock over the next eight months time.

United States Steel:The steel producer's shares have declined more than 5.5% to $34.20. Options activity of interest on the stock involves the short sale of 15,000 puts at the October 27.5 strike price for a rich premium of $2.97 per contract. The investor who initiated the short sale receives the $2.97 premium and bears the risk that shares of the underlying are put to him by expiration. He will pocket the premium without further obligations at expiration in the event that shares of the steel magnate remain higher than $27.50. Shares would need to fall approximately 20% from the current price in order for the put options to land in-the-money. Elsewhere, a bearish investor was seen writing 1,600 calls short at the July 39 strike price for a premium of $1.60 apiece. The trader will retain the full premium if shares fail to recover up through $39 by expiration next month.

McDonald's Corp.:Shares of the McMuffin-maker have slipped more than 2% to $58.52 today despite reports that McDonald's global same-store sales increased 5.1% in May. The MCD ticker symbol edged onto our ‘most active by options volume' market scanner after a chunk of put options traded in the December contract. It appears that one investor has sold 10,000 puts short at the December 50 strike price for which he received $2 per contract. He enjoys the $2 in premium for writing the puts today and stands ready to have shares put to him at an effective price of $48 apiece should the puts land in-the-money by expiration. The stock would need to decline by about 15% from the current price for the puts to land in-the-money.
Palm, Inc. :It would appear that it wasn't just Palm's new Pre that went on sale over the weekend. The selling has expanded to the company's share price so it would seem with a double-digit decline to $11.64 at around lunchtime. Last week our market scanners sensed investors banking on a not so successful launch given the proliferation of put trading on the stock. In the event the lines outside of Sprint stores was not nearly as newsworthy as those associated with Apple and AT&T stores at the time of the launch of the iPhone. Analysts might be raving about the on-target volume of sales, but when the average store has only 30 phones to sell, one can see the market's disappointment when customers are turned away without a box of goodies. Option implied volatility came off around 10% to 105% after the weekend launch.

Sprint Nextel:The only notable option activity in carrier, Sprint after the Palm Pre went on sale was what appeared to be the closing leg of a previously bullish call spread. Some weeks ago we noted heavy August expiration activity between the 4.0 and 6.0 strike prices where sizeable bullish activity saw investors reduce the cost of taking long positions on the stock by selling equal amounts of higher strike calls against owning the lower strike. We also noted plenty of profit-taking on such positions of late.



Courtesy: Forbes.Com

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Tuesday, 09 June 2009 11:09

ISLAMABAD: A two day job fair will start here on Tuesday at the International Islamic University (IIU). The first day is specified for male students and the second for female students.

This was stated by IIU President Dr Anwar Siddiqui while speaking on the salient features of the job fair, said a press release issued here.He said provision of employment opportunities to young people, particularly highly qualified university graduates, might lead the country towards prosperity and free it from terrorism and extremism.

He said a common misconception prevailing in Pakistan is that no one can get a job without giving bribe or recommendation from an influential person. Dr Siddiqui said the job fair was aimed at providing an opportunity to employers and qualified youth to interact with each other

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Tuesday, 09 June 2009 11:09

ISLAMABAD: President Asif Ali Zardari on Monday said that Pakistan’s oil and gas sector offered great opportunity for investment as the government was pursuing a “visionary approach” based on the principles of de-regularisation, liberalisation and privatisation.

Talking to BRIDAS, Argentinean Oil Company chairman, President Zardari said owing to increasing energy demand over the next five years and low indigenous production, the sector offers great opportunities for investment.

He said that Petroleum Ministry has recently formulated, in consultation with all stakeholders, Petroleum Exploration and Production Policy 2009 which offered great incentives to the investors.

Zardari appreciated the Argentinean Energy Company for showing interest in the Turkmenistan-Afghanistan-Pakistan and India (TAPI) gas pipeline project and also in the exploration and development of gas fields in Balochistan and Sindh.

The President said that the government had set up Interstate Gas System (ISGS) as the project development vehicle company for the TAPI Gas Pipeline Project, the bidding round for which will be shortly advertised by the Ministry of Petroleum and Natural Resources.

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Tuesday, 09 June 2009 11:09

LAHORE: The industrial sector has drawn the attention of the government to the difference of $5.809 billion between 2003 and 2007 in figures of Chinese government for goods exported to Pakistan and the officially recorded imports of these goods in Pakistan.

The local manufacturers point out that though under-invoicing has been in vogue in Pakistan since long, it has never been possible to record its quantum as most of the imports were from open market economies where the officials do not bother if the goods are under-invoiced. However, ever since Pak-China trade started expanding it has become possible to at least document the quantum of under invoicing channelled through Chinese products.

The Chinese economy is still principally controlled by the state and the amount received by the Chinese exporter for under-invoicing the goods to the third country are well documented. The Chinese official data reflects the actual export figures while the data of the importing economy reflects the invoiced amount less the amount paid by the importer to the Chinese supplier in cash.

They pointed out that in 2003 the Chinese government in its exports statistics declared that it has exported goods worth $1854.970 millions to Pakistan but the official figures of imports from China was recorded by the Pakistani government as $1150.363 only during that year. There was a difference of $4704.607 million in the amount quoted on the official sites of both countries.

In 2004 Pakistani government declared that goods worth $1488.774 million were imported from China while the statistics of the Chinese government showed that the goods exported to Pakistan that year were worth $2465.769. The difference between the two countries on the goods imported in to Pakistan enlarged to $976.995 million. In 2005 Chinese claimed to have exported goods worth $33427.662 Pakistan while the local authorities claimed imports of only $2349.395 enlarging the differential in figures to $1078.267 million.

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Tuesday, 09 June 2009 11:09

KARACHI: Khalid Mehmood Chaudhry is a Pakistani businessman who runs a textile company in Riyadh, Saudi Arabia. Every now and then he has to send money back home to his business partners. Last time, he remitted some amount through a local bank to someone in Sialkot, but it got stuck somewhere in the process for four days.

Over four million Pakistanis working abroad face the same problem when they transfer money to their families at home. In these technologically advanced times, such delays are encouraging the use of informal channels for cross-border money transfers.

“All I want is my money to be delivered swiftly,” Chaudhry told The News over telephone from Riyadh, complaining the delay in his case was caused because the bank’s head office sent information to its branch via post. “Can you imagine this is happening when everything is going electronic?”

Pakistan’s banks with their 7,500-plus branch offices spanning across the country should have been the most effective source for expatriates to send remittances. But that is not happening even with incentives for remittance transactions the banks enjoy.

Overseas Pakistanis, who send home remittances, which are now literally supporting the economy by helping to maintain balance of payments, are not getting the government recognition and support they deserve, industry people say.

From little over $2 billion in fiscal year 2001-02, remittances jumped to $6.4bn in 2007-08. The current year has seen a further increase as by April 2009 remittances had already crossed $6.3bn. This makes up 56 per cent of foreign exchange reserves of $11.19bn.

Banking industry officials say remittances coming into Pakistan are required to be filtered through too many cumbersome checks, which drive up human resource and opportunity cost of remittance transactions.

“There is no point in making and marketing products for expatriates,” a branch manager of a local bank said, “especially when banks are conveniently earning higher returns on other financial services.”

Concern over terrorist financing has made the State Bank of Pakistan’s Foreign Exchange (FE) Manual, which governs remittances coming into the country, unworkable. The FE Manual makes it mandatory for banks to report particulars of every transaction to the SBP being made from a remittance account, which is difficult, bankers say.

There are other complicated issues with remittance accounts. An expatriate holding a non-resident rupee account can only use it for remitting money and not for taking deposits.“This means if you are an expatriate who owns a property that has been rented out, you cannot use non-resident rupee account for taking rent from your tenant,” explained an official of a foreign bank.

Such disparities make informal ‘hawala’ channel more favourable and have diluted the effects of the SBP incentive of reimbursing 25 riyals ($7-8) for every transaction to banks for not charging international customers for sending money.

While 80 per cent of the remittances coming into Pakistan are channeled through banks, exchange companies also play a vital role in bringing much-needed foreign exchange.


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Tuesday, 09 June 2009 11:09

KARACHI - The private sector advances of the scheduled banks have posted only one percent growth during July-March 2008-09 as against robust growth of 15.1 percent in the corresponding period of last year amid slowdown in business advances demand during the period under review. The YoY trend of private sector advances indicated that deceleration in business sector loans stemmed essentially from the fall in working and trade related loans. In fact, the extent of

deceleration in total working capital loans was strong enough to offset the high growth in fixed investment loans.

A disaggregated analysis given in SBP report reveals that the slowdown in the business sector advances was visible in various sectors including manufacturing, construction, telecom, commerce and trade sectors and other business services.

Report, however, also foresees that the sugar sector may seen higher demand for fixed investment loans in the months ahead as the government has recently allowed a few industrialists to set up new sugar mills.
Also, working capital demand in the cement sector is expected to increase slightly in the period to come

According to the sectoral break-up of private sector advances, the trade related loans exhibited a fall of 0.3 percent during Jul-Mar FY09 compared with strong growth of 24.7 percent in the corresponding period last year. The slowdown was contributed by both the import finance and export loans.

On the other hand, the monthly trend in import finance suggests that the stability in rupee value against US dollar since December 2008 has somewhat eased the downward pressure on import finance against FE-25 loans.

Advances growth to the manufacturing sector decelerated drastically to 7.3 percent during Jul-Mar FY09 compared with robust growth of 19.2 percent in the same period last year. Monthly trend depicts that after recording strong growth in the initial few months of FY09, there was an unusual drop in advances demand during November 2008 onwards, even during Jan-Mar FY09 a number of sectors had seen net retirement which is unlike to previous years.

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Tuesday, June 09, 2009

ISLAMABAD: Prime Minister Yousuf Raza Gilani has called upon the Ministry of Finance to expedite review of PSDP funds so as to ensure their maximum utilisation for timely completion of development projects. He also noted delay in the release of funds earmarked for the ministries for various development projects and directed the Ministry of Finance to ensure timely release of funds so that development programmes may not suffer.

The Prime Minister expressed these views while preisding over a meeting at the Ministry of Finance to review the forthcoming budget here on Monday and emphasised the importance of transparency to be observed in every aspect of financial transaction.

According to sources, the Prime Minister was briefed about the outlines of the budget for the fiscal year 2009-10, scheduled for announcement on June 13. The Prime Minister was told about the consolidated budget for the next fiscal year's amount to Rs 2.9 trillion, and Rs 1.4 trillion revenue collection, and measures to achieve the set target of revenue collection.

The Prime Minister said that macro-economic stability, widening of social protection net, promoting agriculture sector by increasing productivity and ensuring better return to farmers, industrial competitiveness by reviving the manufacturing sector through improved availability of energy supplies, better infrastructure and other incentives and infrastructure as well as social sector development are the priority areas before the government and all possible resources would be placed for achieving them.

He said that the Finance Ministry has the key role to maximise revenues for meeting financial demands of the various sectors of the economy. Therefore, the Ministry must enhance revenues streams from both tax and non-tax sources, as this is essential to provide more resources for development, relief and rehabilitation of IDPs, and meeting the defence and security needs of the country.

He emphasised that the forthcoming budget should incorporate pro-poor budgetary measures, and must reflect priorities of the present government. "The people have high expectations from the democratic government. Therefore, the budget must focus on meeting the very basic needs of the masses and their wellbeing," he added. He directed the Ministry of Finance that the budget speech should be in simple language so that it can be easily understood by the general public.

Underscoring the need to arrest inflationary trend, the Prime Minister said that high inflation is detrimental to the economy and the poor. He stressed that while launching various pro-poor growth generating initiatives, it must be ensured that inflation is kept within acceptable limits. He expressed confidence in the economic team that they would take necessary measures to revive growth and manage the economy in a professionally prudent manner.

The Prime Minister also underscored the need to avoid overlapping and duplication of work as this is not only waste of public money but also consuming precious time of the nation causing delay in the completion of projects. Advisor to PM on Finance, Shaukat Tarin, and Secretary, Finance, gave a detailed briefing to the Prime Minister on the forthcoming budget and the overall state of the economy in the country. Minister of State for Finance and Economic Affairs Hina Rabbani Khar was also present in the meeting.


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