Friday, June 12, 2009

European stocks drifted between gains and losses as a rally in health-care shares offset concern the three-month surge by the Dow Jones Stoxx 600 Index has outpaced prospects for earnings. Asian shares climbed for a third straight day.

GlaxoSmithKline Plc led pharmaceutical stocks higher as the World Health Organization declared the first influenza pandemic since 1968. BT Group Plc increased 5.2 percent after Bank of America Corp. advised buying the shares. Total SA led a decline by commodity producers as oil and base metals slid. Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc., rose 6.2 percent on higher retail sales in China.

Europe’s Stoxx 600 slid 0.1 percent to 214.6 at 11:26 a.m. in London, trimming its fourth straight weekly gain to 1.9 percent. The gauge has surged 36 percent since March 9 on speculation the $12.8 trillion pledged by the U.S. government and Federal Reserve will end the first global recession since World War II.

“There are lots of people who have missed the upturn in equities and there is the end of the quarter looming so I think we’ll see some buying there,” Christian Gattiker, head of research and strategy at Bank Julius Baer & Co. in Zurich, said in a Bloomberg Television interview. We are likely to see “some more difficult markets during the summer lull in July.”

(Bloomberg)

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Friday, June 12, 2009

Asian stocks rose, set for a fourth- straight weekly gain, on signs consumer spending in the region and the U.S. is improving and after new lending in China doubled.

Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc., jumped 6.2 percent after retail sales in the U.S. and China increased. Aeon Co., Japan’s biggest supermarket operator, soared 8.3 percent in Tokyo as Japanese consumer confidence climbed. China Construction Bank Corp., the nation’s second-largest lender, rose 2.9 percent in Hong Kong as new loans jumped in May. Baoshan Iron & Steel Co. slipped 3.2 percent amid concern new listings in China will flood the market with new shares.

“There is a general sense that the worst has passed,” said Matt Riordan, who helps manage about $3.2 billion at Paradice Investment Management in Sydney. “As things recover in the U.S., people will start buying imported products again, and that also flows through into resources.”

The MSCI Asia Pacific Index gained 0.2 percent to 105.23 as of 7:13 p.m. in Tokyo, the highest since Oct. 2 and bringing its three-day climb to 3.1 percent. The gauge added 1.9 percent on the week, its fourth-straight gain, after Australian consumer confidence jumped by the most in 22 years and fixed-asset investment in China accelerated.

Japan’s Nikkei 225 Stock Average added 1.6 percent, closing above 10,000 for the first time since Oct. 7. Stocks also climbed in South Korea and New Zealand. Australia’s S&P/ASX 200 Index advanced 0.4 percent to the highest since Nov. 10.

Chinese shares fell the most in almost two months after the 21st Century Business Herald newspaper reported the securities regulator will approve initial public offerings as early as this weekend.


(Bloomberg)

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Friday, June 12, 2009

European industrial production dropped by the most on record in April as the worldwide recession ravaged demand for goods.

Production in the euro region plunged 21.6 percent from a year earlier, the most since the data series started in 1986, the European Union’s statistics office in Luxembourg said today. Economists expected a 19.8 percent decline, according to the median of 14 estimates in a Bloomberg News survey. From March, output declined 1.9 percent.

The global economy will contract for the first time since World War II this year as the fallout from the financial crisis leads companies to scale back production and run down stocks, the World Bank predicts. The European Central Bank this month kept its benchmark interest rate at a record-low 1 percent and will soon buy bonds in a bid to improve the flow of credit.

“The region has simply been hammered by the downturn in global demand and hampered by the run-up in the euro,” said Peter Dixon, an economist at Commerzbank AG in London. “We see interest rates on hold right through next year. The euro zone has been especially badly hit compared to the more service- oriented economies of the U.K. and the U.S.”

Production of durable consumer goods such as washing machines in the 16-member euro region declined an annual 22.4 percent in April, and output of capital goods such as factory machinery dropped 26.7 percent, according to today’s report.


Courtesy: Bloomberg

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Friday, June 12, 2009

LONDON: Sterling hit a 2009 high against the euro on Thursday after a poll showing rising UK inflation expectations and data pointing to economic growth in April and May bolstered the view that the UK economy may be recovering. Sterling rose to around 85.00 pence against the euro according to Reuters data, its strongest since December. The pair's rally helped the pound to scale the year's high against a basket of currencies at 83.8.

Sterling rose broadly after the Bank of England/GfK NOP Inflation Attitudes Survey showed British inflation expectations for the coming year rose to 2.4 percent in May from 2.1 percent in February, the first rise since August. Thursday's data added to a string of fairly firm UK figures this week, which continue to boost the pound. Analysts added that ongoing speculation that the global economy may be starting to recover was also helping to boost demand for higher-risk currencies, a description often attached to sterling.

"All the local economic news is supportive for sterling," said Adarsh Sinha, forex strategist at Barclays Capital in London. He added: "Sterling has been perceived as a risky currency throughout the financial crisis so the better external markets get, sterling will outperform the dollar and the euro."

By 1345 GMT, the euro traded 0.3 percent lower at 85.15 pence, on track to post its fifth day of losses. The pound's trade-weighted index rose to 83.8, its highest since November 2008. Sterling's gains against the euro contributed to its rise against the currency basket, as a majority of that basket comprises euros.

Sterling traded 0.8 percent higher at $1.6475, near the day's high of $1.6493, and taking gains into a fourth day. The pound was well supported against the dollar after the pair broke through its 14-day moving average earlier in the week. On Thursday, the pair traded comfortably above that support level around $1.6180. The pound hit 161.84 yen to the Japanese currency according to Reuters data, its highest since November.


Courtesy: BRecorder

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Friday, June 12, 2009

The International Monetary Fund has revised its 2010 growth forecast sharply upwards, a source said on Thursday, and surging Chinese investment in May fuelled hopes of a global recovery. But underscoring the unclear outlook, World Bank President Robert Zoellick said the global economy is set to contract by close to 3 percent this year, worse than the previous estimate of a decline of 1.75 percent.

-- China investment surges, adding to recovery hopes

-- Japan Q1 GDP record low, slow rebound seen

"Although growth is expected to revive during the course of 2010, the pace of the recovery is uncertain and the poor in many developing countries will continue to be buffeted by the aftershocks," Zoellick said ahead of the Group of Eight finance ministers meeting in Italy. The IMF has raised global growth estimates for 2010 to 2.4 percent from 1.9 percent in April, a G8 source who has seen the latest figures said.

"The estimate has improved thanks to the impact of stimulus measures taken in recent months," said the source, who had access to an IMF briefing note, containing the figures, prepared for the G8 meeting this weekend. Global data has given increasing signals of a rebound from the deepest recession in six decades, driving stock markets sharply higher from a March trough.

However, financial markets remain concerned that huge government spending and central bank cash injections, led by the United States but mirrored in Europe and Japan, will spark inflation and undercut any budding rebound. Analysts also expect job losses to remain high even as the economy begins to recover, as companies remain wary of hiring.

A record slump in Japan's first quarter GDP also highlighted expectations that any rebound would be slow, and European officials said jobs would lag any return to growth. "The (global) economy should start to turn into positive territory somewhere between the end of this year and the middle of next year," European Central Bank policymaker Christian Noyer told Hong Kong businessmen on Thursday.

China has sought to cushion the blow from falling exports with a 4 trillion yuan ($585 billion) economic stimulus plan. Data showed annual growth of fixed asset investment in Chinese urban areas accelerated to 32.9 percent in the January-May period from 30.5 percent in the first four months of the year, suggesting the stimulus is working.

Underpinned by this optimism, commodity-related stocks in Asia rose for a third straight day while oil prices extended gains to seven-month highs. The International Energy Agency upgraded its 2009 world oil demand forecast for the first time in almost a year, saying 2009 demand would fall to 83.3 million barrels per day, a less steep decline than previously forecast.

China's need for government pump-priming was underlined by May customs data that showed exports fell 26.4 percent on the year, while imports fell 25.2 percent, resulting in a trade surplus of $13.4 billion, compared with $13.1 billion in April and $18.6 billion in March.

Meanwhile, Japan's economy contracted a revised 3.8 percent in the first three months of the year, less than the initial 4.0 percent estimate, but still the fastest pace since World War Two. Weak capital spending and personal consumption are expected to remain a drag.



Courtesy: BRecorder

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Friday, June 12, 2009

KARACHI : All-round gains were seen on the currency market on Thursday amid easy supply of dollars in process of trading, dealers said. The rupee on the interbank market, managed to gain 25 paisa against dollar for buying and selling at 80.80 and 80.85, they said.

Marketmen said that fluctuations in the rupee versus dollar is totally depending on the demand and supply factor. They also said that the rupee may not face sharp fluctuations till the end of the final session of the out-going fiscal year 2008-09. In the fourth session of the Asian trade dollar fell against a basket of currencies, paring some gains made after the benchmark US Treasury yield hit its highest point in eight months the previous day.


Courtesy: BRecorder

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Friday, June 12, 2009

ISLAMABAD: Inflation decelerated from a three decade high in May 2009 owing to slowing down of economy and slight easing in essential food prices.

The inflation measured through Consumer Price Index (CPI) eased to 14.39 per cent in May from 17.19 per cent in April. The downward trend in inflation has started since October 2008, which touched all time high of 25 per cent.

The dip in inflation during the period under review accrued partly due to one per centage point decrease in core inflation (non-food and non-energy) after four times increase in the bench mark interest rates during the year 2008.

The statistics showed that core inflation declined to 16.6 per cent in May from 17.7 per cent in April. Though the core inflation is still on the higher side in May 2009 as compared to 12.3 per cent of the same month last year but a downward trend has been witnessed, which is a healthy sign.

Core inflation is also rising on account of surging house rent and sub-indices related to medical care. The house index rent rose by 18.91 per cent and medical care cost by 6.50 per cent.

Governor Syed Salim Raza has slashed the central bank’s key rate in April last for the first time since 2002, reducing borrowing costs to 14 per cent from 15 per cent.

It is expected that the central bank may further consider further slight cuts in the up coming policy review in July to spur economic growth.

It is expected that government may also consider some relief measures to mitigate the drastic impact of raising interest rates, which may dent growth which is already expected to be around two per centage point by the end of June 2009.

While for the year 2008-09, government estimated annual inflation target at 12 per cent but the government seemed to have failed to bring down to the closer range despite the fact that oil prices witnessed a hefty decline during the period under review.

The government would be facing tough task to reduce inflation to 13 per cent in 2009-10 and 9.5 per cent under its so-called home-grown stabilization programme.

‘We would bring inflation to a single digit next year’ Depty Chairman Planning Commission Sardar Aseff Ahmad Ali told Dawn.

He said that in the budget measures will be announced to bring down inflation. He said that the current inflation is price driven. ‘I can’t disclose the proposed measures before the budget,’ he added.

Figures issued by the Federal Bureau of Statistics on Thursday showed that the average inflation hiked by 21.55 per cent in July-May period of the current fiscal year as against 11.11 per cent during the same period last year.

On a monthly basis, the food inflation increased by 12.11 per cent in May 2009 over the corresponding month of the last year. The food inflation has eased owing to availability of wheat and other commodities in the market. The food inflation has started decelerating trend in the past few months when it reached to all time high of 35 per cent in October last.

In the food basket, price of non-perishable food items witnessed an increase of 14 per cent and perishable items 11.86 per cent in the month under review, reflected that price spirals were not seasonal as industrial goods have also witnessed tremendous increase.

The food and lightening price witnessed an increase of 25.67 per cent during the month of May over the same month last year. With the rising trend in this index, the transport and communication price also witnessed an increase of 6.83 per cent.

The wholesale price index (WPI), the most commonly used measure to monitor the cost of production, rose to 4.73 per cent in May 2009 over the same month last year. However, the WPI in the first 11 months stood at 19.69 per cent of the current fiscal year as against 15.06 per cent over the same months last year.

The average weekly inflation of essential commodities witnessed an increase of 11.24 per cent in the year under review over the last year. However, in the July-May period it hiked by 24.75 per cent as against 15.56 per cent over the last year months.

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ISLAMABAD: Pakistan’s foreign exchange reserves fell by $10 million to $11.51 billion in the week that ended on June 6, the central bank said on Thursday.

The State Bank of Pakistan’s reserves edged up to $8.20 billion from $8.18 billion a week earlier, while reserves held by commercial banks fell to $3.31 billion from the previous week at $3.34 billion, the State Bank of Pakistan said.

Foreign reserves hit a record high of $16.5 billion in October 2007 but fell steadily to $6.6 billion by November last year, largely because of a soaring import bill.

Pakistan agreed in November to an International Monetary Fund emergency loan package of $7.6 billion to avert a balance of payments crisis and shore up reserves.

Courtesy: Reuters

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ISLAMABAD: Energy consumption declined in the 2008-9 fiscal year because of reduced economic activities and the circular debt issue arising out of high prices of petroleum products.

However, according to the Economic Survey released on Thursday, Pakistan is at present the largest CNG user country.

It said the consumption of petroleum products in the first nine months of the fiscal year declined by 3.4 per cent from the corresponding period of the previous year to 12.89 million tons, gas consumption declined by 2.5 per cent to 931,700 million cubic feet a day and the use of coal by 26.5 per cent to 4.82 million tons.

Electricity consumption grew by 0.7 per cent. The survey said the price difference between CNG and petrol was around 60 per cent and vehicles were still being converted.

There are around two million vehicles on CNG in the country. About 2,700 CNG stations have been set up with an investment of around Rs70 billion.

Consumption of gas increased in commercial, fertiliser, industrial and transport sectors, but declined in power, household and cement sectors.

‘Key power plants remained inoperative due to high circular debt and the cement sector faced a construction slump,’ the survey said.

Liquefied petroleum gas (LPG) contributes around 0.7 per cent of the country’s primary energy supply mix. The survey recommends that use of LPG should be encouraged in areas where supply of natural gas was not feasible.

The survey said that the total recoverable crude oil reserves in the country on Jan 1 were estimated at 313 million barrels.

Friday, June 12, 2009

The average crude oil production during July-March 2008-9 was 66,532 barrels per day, compared to 70,166 barrels during the same period of the previous year -- a decrease of 5.2 per cent.

The northern region witnessed a decrease of 4,490 barrels per day, but in the southern region the average production increased by 856 barrels per day.

The survey said that the trend of a slowdown in growth of electricity consumption had started in 2006-7.

‘Reduction in electricity consumption was mainly due to shortage of electricity as the power generation companies were unable to meet the high cost of fuel because of circular debt,’ it said.

Coal remained the fuel mainly for brick kilns, but some of it was used by the cement sector.


Courtesy: DAWN

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Friday, June 12, 2009

LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) while expressing grave concern over sharp decline in manufacturing sector growth, has urged the government to take immediate and urgent measures to stabilise the economy.

The decline in manufacturing sector, particularly in the large scale manufacturing sector that has shown a negative 7.7 per cent growth was an eye opener and there was a dire need to identify the root cause of this meltdown, said LCCI President Mian Muzaffar Ali in a statement issued here on Thursday.

He said that the most worrying factor in the overall scenario is that the growth rate of 2 per cent was the lowest in the region: Bangladesh had a growth rate of 5 percent, India 4.5 percent and even Sri Lanka experienced a growth rate of 2.2 per cent.

The LCCI chief said that the Lahore Chamber of Commerce and Industry had repeatedly pointed out that acute shortage of electricity, deteriorating law and order situation, and high mark-up rates were heavily denting the overall economic activity in the country and there was a dire need to take corrective measures. But the situation turned bad to worse for the want of any well-directed steps, he added.

He said that there was nothing wrong with the policies but the poor level of implementation deteriorated the industrial production. "Had a little attention been given towards the proper implementation of policies the situation would have not been so bad", he said adding that the performance of agriculture sector was, however, appreciable and needs to be maintained to wear off the negative impact of the industrial degradation.

Mian Muzaffar said that no one could challenge the multiplicity of factors that have negatively impacted on the manufacturing sector during the year. Major contributors to this decline were: automobile group (negative 39 per cent) followed by electrical (negative 31.3 percent), petroleum (negative 9.2 percent), food, beverage and tobacco (negative 10.5 percent), steel products (negative 5.62 percent), tyres and tubes (negative 4.0 percent) and textile (negative 0.73 percent).

The textile sector most affected by the global recession witnessed a decline of 7.6 percent in its export performance with cotton yarn's export performance declining by 15.5 percent, bed wear declining by 11.7 percent and readymade garments by 13.1 percent, he added.

Courtesy: BRecorder

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Friday, June 12, 2009

KARACHI: Remittances sent by overseas Pakistanis continued to show a rising trend and an amount of $7.07626 billion was received in the first eleven months (July-May) of the current fiscal year 2008-09, showing an increase of $1.17243 billion or 19.86 percent over the same period of the last fiscal year.

The amount of $7.07626 billion includes $0.46 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs). In May 2009, an amount of $720.68 million was sent home by overseas Pakistanis, up 23.25 percent or $135.93 million, when compared with $584.75 million received in the same month last year.

This is the second highest amount of remittances received in a single month. Earlier, the overseas workers had sent the highest-ever amount of $739.43 million as remittances in March 2009.

The inflow of remittances in the July-May, 2009 period from USA, UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,581.48 million, $1523.89 million, $1,407.23 million, $1,094.54 million, $537.11 million and $224.71 million respectively as compared to $1,618.46 million, $1,002.01 million, $1,127.65 million, $892.41 million, $420.79 million and $162.66 million respectively in the July-May, 2008 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first eleven months of the current fiscal year 2008-09 amounted to $706.84 million as against $677.49 million in the same period last year.

The monthly average remittances for the period July-May 2008-09 comes to $643.30 million as compared to $536.71 million during the same period of the last fiscal year, registering an increase of 19.86 percent.

During last month ie May 2009, remittances from UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $157.10 million, $145.83 million, $143.16 million, $98.52 million, $69.13 million and $28.18 million respectively as compared to $94.49 million, $154.73 million, $125.94 million, $97.23 million, $41.76 million and $15.01 million in May 2008. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during May, 2009 amounted to $78.75 million, up from $55.43 million received in same month last year.

Courtesy: BRecorder

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Friday, June 12, 2009

ISLAMABAD: Advisor to Prime Minister on Finance Shaukat Tarin said on Thursday that finance and insurance sector registered a negative growth of 1.2 percent in ongoing fiscal year ie 2008-09 whereas real GDP growth stood at 2 percent against 4.1 percent last year.

While launching Economic Survey 2008-09, Tarin stated that the performance of finance and insurance sector shows that Pakistan's financial sector is integrated in the world economy and is feeling the heat of the crisis plaguing international financial markets.

He said that total investment declined from 22.5 percent of GDP in 2006-07 to 19.7 percent of GDP in 2008-09. Fixed investment fell to 18.1 percent of GDP from 20.4 percent last year. Private sector investment was decelerating persistently since 2004-05 and its ratio to GDP has declined from 15.7 percent in 2004-05 to 13.2 percent in 2008-09.

Public sector investment to GDP ratio, which has been depicting a consistent increase from 4 percent in 2002-03 to 5.6 percent in 2006-07, declined to 4.9 percent in 2008-09. The overall foreign investment during the first 10 months (July-April) of the current fiscal year declined by 42.7 percent and stood at $2.2 billion against $3.9 billion in the comparable period of last year, the advisor said.

He said that foreign direct investment (private) showed some resilience and stood at $3205.4 million during the first 10 months of the current fiscal year against $3719.1 million in the same period last year thereby showing a decline of 13.8 percent. Private portfolio investment on the other hand showed a net outflow of $451.5 million against a net inflow of $98.9 million during the comparable period of last year.

Agriculture sector depicted a stellar growth of 4.7 percent as compared to 1.1 percent witnessed last year. Major crops registered an impressive growth of 7.7 percent against a negative growth of 6.4 percent last year and the livestock sector grew by 3.7 percent against 4.2 percent last year.

The advisor said that the output in the manufacturing sector contracted by 3.3 percent in 2008-09 as compared to expansion of 4.8 percent last year. Small and medium manufacturing sector maintained its healthy growth of last year at 7.5 percent. Large-scale manufacturing depicted contraction of 7.7 percent against expansion of 4 percent during last year.

The massive contraction is because of acute energy outages, a weak security environment and political disruption in March 2009. He said that the services sector grew by 3.6 percent against the target of 6.1 percent and value added in the wholesale and retail trade sector grew at 3.1 percent as compared to 5.3 percent last year. Finance and insurance sector registered negative growth of 1.2 percent in 2008-09.

He noted that the performance of this sector shows that Pakistan's financial sector is integrated in the world economy and is feeling the heat of the crisis plaguing international financial markets. The transport, storage and communication sub-sector depicted a sharp deceleration in growth to 2.9 percent in 2008-09 as compared to 5.7 percent last year.

He said that Pakistan's per capita real income has risen by 2.5 percent in 2008-09 as against 3.4 percent last year. The per capita income in dollar term rose from $1042 last year to $1046 in 2008-09, thereby showing marginal increase of 0.3 percent.

Real private consumption rose by 5.2 percent against negative growth of 1.3 percent attained last year. However, gross fixed capital formation could not maintain its strong growth momentum and real fixed investment growth contracted by 6.9 percent against the expansion of 3.8 percent in the last fiscal year. Large-scale manufacturing witnessed an across-the-board decline of 7.7 percent during ongoing fiscal year against the growth rate of 5.2 percent last year.

Severe energy shortages, deterioration in domestic law and order situation, sharp depreciation in rupee vis-à-vis US dollar and most importantly, weak external demand on the back of global recession coupled with slowdown in domestic demand are responsible factors for sluggish performance of manufacturing sector.

Interest payments surpassed their budgeted level by a significant margin. A sum of Rs 557 billion was budgeted for interest payments in 2008-09. The year is likely to end with interest payments of Rs 618 billion which are higher by Rs 61 billion over budgeted amount.

He said that government borrowing from the central bank has been dampened since December 2008 in line with the target set under the macroeconomic stabilisation programme as part of the IMF Stand-By Arrangement. The government budgetary borrowing from the banking system decreased by Rs 339.9 billion during July-May FY 09 against an increase of Rs 360.4 billion in the corresponding period of FY08.

Credit to private sector grew by Rs 21.8 billion during July-May in ongoing fiscal year as compared to Rs 369.8 billion during the corresponding period last year. Foreign portfolio investment stood at a negative $418.4 million during first nine months of 2008-09.Dismal performance owing to a confluence of factors was exhibited by different sectors of the economy and the dull indicators left a weighty impact on the stock market activity during 2008-09.

He said that the inflation rate as measured by the changes in Consumer Price Index (CPI) stood at 22.3 percent during the first 10 months (July-April) of the current fiscal year ie 2008-09, against 10.3 percent in the comparable period of last year. The food inflation is estimated at 26.6 percent and non-food 19.0 percent, against 15.0 percent and 6.8 percent in the corresponding period of last year.

The increase in inflation rate during the current 2008-09 is attributable to the increase in food price inflation which has been due to increase in prices of wheat, wheat flour, sugar, milk, poultry, meat, fresh vegetables and fruits. Services account deficit shrank by 41.3 percent during July-April 2008-09 to reach $3. billion and financial account contracts from $6,224 million to $3,476 million during July-April against corresponding period last year.

Workers remittances amounted to $6355.6 million in July-April against $5319.1 in corresponding period last year, thereby showing an increase of 19.5 percent. Pakistan's total liquid foreign exchange reserves amounted to $11.6 billion by the end of May 2009.Of which, reserves held by State Bank of Pakistan stood at $8.28 billion and banks at 3.32 billion, the advisor said.

Courtesy: BRecorder

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