Tuesday June 30, 2009

KARACHI: Slight improvement was seen on the interbank market on Monday as the rupee gained five paisa against dollar for buying and selling at 81.40 and 81.45, experts said. In the first Asian trading day dollar regained some ground after falling broadly late last week on a renewed call by China for a super-sovereign reserve currency, placing higher-risk currencies such as the Australian dollar under pressure.

But activity was subdued ahead of significant data this week, including US employment numbers on Thursday, which investors are awaiting to see if a months-long rally in riskier assets such as commodity-linked currencies and shares is sustainable.

Open Market Rates: The rupee showed no change against dollar for buying at 81.50 and selling at 81.60, they said. The rupee, however, gained 80 paisa versus euro for buying at Rs 112.70 and rose by 30 paisa for selling at Rs 113.70, they said.

Buying Rs 81.40
Selling Rs.81.45

Interbank Closing Rates: Interbank Closing Rates For Dollar On Monday.

Open Buying Rs.81.50
Open Selling Rs.81.60


(BRecorder)

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Tuesday June 30, 2009

LONDON: Bank-to-bank lending rates for euro funds extended their decline on Monday and are set to remain low as the market is awash with liquidity following the European Central Bank's massive injection of one-year funds last week.

Highlighting the abundance of liquidity, commercial banks deposited 236.2 billion euros at the ECB's overnight vault - the most since January 19 - latest data showed, and well above the 7.4 billion euros banks had deposited before taking delivery of last week's record cash injection.

"What the deposit spike means is that banks are filling up with liquidity now. It's not a fear factor so much as excess liquidity," said David Keeble, global head of interest rate strategy at Calyon in London. The three-month London interbank offered rate was fixed at 1.10625 percent - the lowest on record. The equivalent dollar and sterling rates also hit fresh lows.

This followed a drop in the three-month Euribor rate, traditionally the main gauge of interbank euro lending, to a fresh all-time trough of 1.108 percent. At the very short end, the Euro overnight index average, a weighted average of all overnight unsecured lending in the interbank market, was last fixed at a record low of 0.388 percent.

The one-week refinancing operation on Tuesday will be closely watched. Last week, ahead of the one-year tender, banks borrowed just 167.902 billion euros of one-week funds from the ECB, compared with 309.621 billion euros previously.

The ECB lent 1,121 banks 442 billion euros of one-year funds at a 1 percent rate last week at its first 12-month refinancing operation, aimed at spurring lending and boosting the economy. Analysts said whether the ECB will deliver any more measures to boost the economy remains to be seen.

Dollar Libor rates were also mostly down with the three-month at a record low of 0.59688 percent. In Asia, Hong Kong interbank lending rates fell after the HKMA intervened to back the territory's currency peg by injecting cash into the money markets. The overnight HIBOR was fixed at 0.05000 percent, below Friday's 0.06929 percent and the 1-month HIBOR eased to 0.10214 percent from 0.11214 percent.

(Reuters)

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Tuesday June 30, 2009

WASHINGTON: The World Bank sees few signs of a positive trend in how people are governed, according to its annual report Monday on the quality of the world's ruling classes. The development bank's report also warned that a devastating financial crisis had exposed weaknesses in wealthier countries, which have "plenty of room for improvement" in how they govern their people.

Emerging countries including Chile, Botswana, the Baltic states and many Eastern European countries scored better than industrialised nations like Greece and Italy. "We should not presume that rich and powerful countries have the very best levels of governance and corruption control," said Daniel Kaufmann, a fellow at the Brookings Institution who co-authored the report. "The financial crisis reminds us that the quality of governance in G8 countries is not always exemplary."

Members of the Group of Eight (G8) - a bloc of leading industrialised countries - have been at the centre of a banking crisis that has spread to all corners of the globe. The World Bank also warned that governance in many countries has worsened over the last year. The report singled out Zimbabwe, Venezuela, Belarus, Cote d'Ivoire and Eritrea.


(DPA)

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Tuesday June 30, 2009

BRUSSELS: Eurozone economic sentiment improved more than expected in June, data showed on Monday, as the European Commission predicted the worst could be over for the 16-country currency area. A monthly survey by the Commission, the European Union's executive arm, showed economic sentiment in the eurozone rose to 73.3 points in June from 70.2 in May, the third improvement from a trough of 64.6 points in March.

In a separate, quarterly report, the Commission said the worst may be over for the eurozone, although growing unemployment posed a threat to recovery. "The worst seems to be behind us in terms of GDP contraction and our spring forecast predicts a subdued recovery for 2010," it said.

Analysts polled by Reuters had expected an increase in economic sentiment to 70.8 points. A separate business climate index released by the Commission also showed gains, but remained at weak levels. "Like many other surveys this indicator has underestimated the extent of the downturn in recent quarters," said Daniele Antonucci at Capital Economics.

"Hence, while we agree that the economy is no longer in free fall, we remain cautious at this stage," said Antonucci, noting there was still a mixed picture on the second quarter from core economic data released so far. Bayerische Landesbank economist Joerg Angele said the data heralded a slow recovery and expected the European Central Bank to keep interest rates low until the middle of next year.

The sentiment improvement was fuelled by the services sector, consumers and, to a lesser degree, industry. Morale in the construction sector stagnated and fell in the retail sector. "The increase observed at sector and country level is mainly driven by improving expectations, as the main economic actors seem to be gaining confidence that the crisis is easing," the Commission said in a statement.

The survey confirmed deflationary pressure in the eurozone. Inflation expectations 12 months ahead among households fell again in June to set a new low of -9 points from a downwardly revised -8 points in May, marking the third consecutive month of expectations of falling prices.

But selling-price expectations among manufacturers increased to -11 from May's -12. The European Central Bank watches inflation expectations closely in its policy decisions, aiming to anchor them at its price stability target of inflation just below 2 percent over the medium term.

With inflation moving to negative territory and recession persisting, the ECB has cut its main rate to a record low of 1.0 percent. Separately, the Commission said its business climate indicator rose to -2.97 in June from a revised -3.11 for May, fractionally above expectations but still at historically low levels.

(Reuters)

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Tuesday June 30, 2009

CHICAGO: Moody's Investors Service said on Monday it changed the outlook for the US port industry to negative from stable, citing economic trends, including the recession and weak consumer confidence. "The breadth and depth of the economic downturn may result in fundamental shifts in trade patterns, and negatively affect the competitive position of some ports," said Baye Larsen, a Moody's analyst, in a statement.

"While many ports entered the recession with strong financial metrics, these will likely diminish depending on the length and depth of the downturn." The outlook reflects the rating agency's expectations over the next 12 to 18 months. Moody's rates 53 ports with about $6.5 billion of outstanding debt, ranging from Ba3 to Aa2. Moody's said that the slowing activity at ports is allowing for capital projects aimed at improving capacity and operating efficiencies.

(Reuters)

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Tuesday June 30, 2009

SHANGHAI: Guilin Sanjin Pharmaceutical, the first firm to launch an initial public offering in China since September, started taking orders on Monday, expecting the offer to be heavily oversubscribed, dealers said. Analysts said the retail tranche of the IPO drew heavy demand from the early hours as investors believe Sanjin will shine on its debut due to ample liquidity in the market.

"As the first IPO, it is bound to appeal to retail investors and draw great amounts of subscription funds," Cai Junyi, an analyst with Shanghai Securities, told AFP. The company said last week it would raise 910.8 million yuan (133 million dollars), or 44 percent more than originally planned in its prospectus for the IPO. It said 20 percent, or 9.2 million shares, of the offering is available for institutional investors while the remaining 80 percent is earmarked for retail investors. Cai said that once Sanjin debuts on the stock exchange in mid-July, the price will have little to do with fundamentals and much more with market sentiment.

Guilin Sanjin said premarketing indicated the institutional tranche was 165 times oversubscribed. It is scheduled to announce the results of the subscriptions and the date of debut later this week. China's securities regulators halted IPOs in September due worries that pressure on liquidity would worsen the already ailing domestic stock markets.

The key index plummeted 65.5 percent last year as the global financial crisis kicked in. However, it has rebounded nearly 57 percent since the beginning of 2009 to become one of the world's best performing markets. More than 30 companies, including the country's largest home builder China State Construction Engineering Corp, have received initial regulatory approval but have been waiting for up to a year to sell shares to the public.


(AFPc)

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Tuesday June 30, 2009

TOKYO: Japanese industrial output jumped 5.9 percent in May as car and electronics production pulled out of a deep slump, although an inventory build-up in some sectors suggested the rebound would soon lose momentum. Manufacturers forecast output growth to slow to 3.1 percent in June and to just 0.9 percent in July amid an absence of a convincing global recovery.

"Output has been making big gains since February as manufacturers try to make up for overshoots in inventory cuts last year, but final demand is still weak and we expect output to dip again once inventory has been restocked," said Junko Nishioka, chief economist Japan at RBS Securities.

"Japan's economy won't bounce back in the true sense until the global economy, and especially the US economy, recovers. And that won't be until the second half of this year or early next year." Japanese factories can expect little help domestically, with rising unemployment and weak retail sales pointing to tepid domestic spending.

Inventories have dropped for five months in a row as the collapse of US investment bank Lehman Brothers last September sent Japan's key export markets plunging, prompting huge production cuts. Car production jumped 24.8 pct in Japan in May with inventories rising for the first time in four months, while electronic parts production rose 10.5 percent.

The 5.9 percent rise in overall industrial output matched the gain seen in April, which was the biggest rise since 1953, but lagged the median market forecast for a 7.0 percent rise.

Overall shipments picked up 4.5 percent in May, the fastest monthly rise since 1992 and inventories fell to their lowest level since 2004, but the inventories-to-shipments ratio edged up 0.1 percent for its first rise in three months. A decline in shipments of capital goods and general machinery suggested that companies still lack an appetite for spending on plant and equipment, said Takeshi Minami, chief economist at Norinchukin Research Institute.

Economists expect output to rise for a few more months as Japanese manufacturers rebuild stocks after cutting inventories more aggressively than rivals in other countries. That should help to push the Japanese economy out of its deepest recession in modern times, with growth of 0.4 percent seen in April-June after four straight quarters of contraction, Japan's longest recession on record.

The Bank of Japan's tankan business survey due out on Wednesday is likely to show the mood among big Japanese manufacturers improving from record lows a quarter ago. Still, the sharp recession leaves huge slack in factories and employment and analysts question whether the recovery is sustainable.

In a sign of weakness in Japan's economy, data last week showed Japanese consumer prices fell a record 1.1 percent in the year to May, with growing signs of falling demand pushing the economy deep into its second spell of deflation this decade.


(Reuters)

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Tuesday June 30, 2009

FAISALABAD: Textile exporters could bring in $25 billion forex from exports in the next two years and 120 billion during the next 10 years, if they were provided a level playing field and productivity-conducive consistencies, claimed Azhar Majeed Sheikh Chairman FPCCI (Federation of Pakistan Chambers of Commerce and Industry) Standing committee on export trade, here Monday, in post-budget proposals to Shaukat Tarin, Advisor Finance.

A major issue pertaining to exports still remained unattended and unsettled, he said. Pin pointing the major irritants he advocated that exports should be zero-rated, as exporters were heavily burdened with 6.8% local taxes, whereas China, India, Bangladesh's exporters got 17% incentives. The difference with regional players was 25%, he said and demanded a 8% minimum, duty draw-back against local taxes for a level playing-field.

The 10% regulatory duty on pigment-thickeners should also be withdrawn, he said. Similarly, any projected increase in the Polyester fibre duty would also scuttle the power-loom sector, he asserted. He also demanded an exemption of federal excise duty on insurance, banking, port and terminal operations for zero-rating purposes. Yet another demand was the refund of duty draw-back and Sales tax at the time of negotiations in banks.

As is the case with the deduction of income tax, he also demanded the payment of the pending refunds of earlier years, and also the release of 60% R&D claims. Pointing at the inconsistent and detrimental Monetary and Energy Policy's shortcomings, he said that the financial cost of credit borrowings, all over the world, was 0.4%, but in Pakistan, it was 14 to 18%.

Lamenting the tremendous increase in electricity and gas prices, he demanded a 10% deduction in gas prices, as well as mandatory exemption for textiles from gas load-shedding, to allow it to fulfil its export commitments. Azhar Majeed Sheikh demanded that free access of Bangladesh and other regional countries to Europe and America be offset through export incentives to the local industry.

These constraints had put exporters in a very difficult cash-flow situation, he contested and demanded the capping of the mark-up rate on various products to 7.5%, and the freezing of the earlier accumulated mark-up for 2years and the provision of Rs 40 billion for direct cash support to the export industry. He gave the assurance that if irritants were removed, a level playing field provided and export-conducive measures enforced, exporters would achieve the high targets for exports.


(BRecorder)

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