Stocks end flat

as investors square positions

KARACHI: The Karachi Stock Exchange (KSE) benchmark 100-share index on Thursday closed down 0.01 percent, or 0.77 points, at 11,929.78 points. Volume rose to 107.72 million shares, compared with 93.44 million traded on Wednesday.

Shares ended flat as early gains were eroded after the Supreme Court set a contempt hearing for the prime minister, renewing political tensions between the civil government and the judiciary.

Trading activities slightly improved as the volumes at ready counter increased to 107.722 million shares as compared to 93.437 million shares traded on Wednesday.

Total market capitalisation increased by Rs3 billion to Rs3.1 trillion.

Of the total 318 active scrips, 123 closed in negative and 113 in positive while the value of 82 stocks remained unchanged.

"Cautious investors squared their positions after the prime minister was ordered to appear on February 13," said Ahsan Mehanti, director at Arif Habib Corp Ltd.

Dealers said investors accumulated textiles shares such as Azgard Nine and Nishat Mills after a World Trade Organisation committee meeting on Wednesday approved a European Union waiver on duties for 75 products from Pakistan.

Jahangir Siddiqui Co was the volume leader with 21.378 million shares and gained Re0.29 to close at Rs6.77.

In the fertilizer sector, Engro Corp and Fatima Fertilizer Co increased by Rs5.43 and Re0.53 to close at Rs122.07 and Rs22.48 with 8.210 million shares and 6.373 million shares respectively.

While Fauji Fertilizer Co and Fauji Fertilizer Bin Qasim were declined by Rs3.46 and Re0.37 to close at Rs184.68 and Rs46.50 with 4.360 million shares and 4.004 million shares respectively.

Azgard Nine ended 2.37 percent higher at 3.89 rupees and Nishat Mills gained 4.41 percent at 47.60 rupees.

In the currency market, the rupee ended firmer at 90.38/43 to the dollar, compared with Wednesday's close of 90.41/46 amid lack of import payments.

But dealers said the local unit is expected to stay under pressure due to increased import payments, especially of oil.

In the money market, overnight rates ended flat at 11.90 percent, unchanged from Wednesday's close, due to a lack of liquidity in the interbank market. - Reuters

WTO waiver to EU on 75 duty-free products hailed

ISLAMABAD: All Pakistan Textile Mills Association (APTMA) here on Thursday hailed the decision of the Council on Trade in Goods (CTG) of the World Trade Organization (WTO) for approving waiver to the European Union to import 75 duty free products from Pakistan.

Talking to APP, Chairman APTMA, Mohsin Aziz welcomed the decision and termed it a good step for enhancing the trade ties with the European Union member countries.

The products which include certain textile products, leather goods and ethanol will have duty free excess for EU for two years.

The EU had requested for this waiver in October 2010 to help Pakistan recover from the economic affects of the devastating floods that hit Pakistan in summer 2010, he remarked.

The passage of the waiver will lead to increased exports to the EU by 20 percent and will generate significant economic activity  in the country, he added.

He informed that total textile export to EU was stood at US$ 4.5 billion per annum which is expected to further increase by 20 percent, adding, special items like yarn and cloth export for EU was recorded at US$ 1 billion which would further increase by US$ 400-500 million.

Meanwhile, The Pakistan Business Council (PBC) here on Thursday welcomed the WTO waiver for EU concessions granted to certain textile exports from Pakistan post the 2010 floods.

The PBC, in a statement issued here, said that the move to request the EU for a short time market access came about at a meeting that the PBC had with President Asif Ali Zardari in August 2010, which was held to review post flood rehabilitation measures.

At the request of the President, a PBC team comprising its members; namely Bashir Ali Mohammad and Shabbir Diwan accompanied the then Foreign Minister and Secretary Commerce to the major European capitals and Brussels in September 2010 to plead Pakistan's case.

The PBC also acknowledged the support that was extended by Pakistan's friends in the EU Parliament, especially Sajjad Karim, Member European Parliament for liaising between various EU parliamentarians and the PBC/GOP to garner and maintain continued support for this concession. - Agencies

Top Indian court cancels 122 cellphone licences

NEW DELHI: India’s Supreme Court on Thursday scrapped 122 telecom licences awarded in a 2008 sale at the centre of a corruption scandal, further embarrassing the government and causing upheaval in the flagship sector.

Mis-selling of the second-generation (2G) mobile licences was estimated by the country’s public auditor to have cost the treasury up to $40 billion in lost revenue.

The minister in charge of the sale, A. Raja, is currently on trial accused of fraud and cheating, one of several corruption cases to have buffeted the government of Prime Minister Manmohan Singh.

While the cancellation order re-opens a damaging episode for the government, there was a reprieve for Home Minister P. Chidambaram who activists had wanted investigated by a special court trying suspects in the case. The Supreme Court declined to rule on the issue, saying it was up to a special court to decide if there was evidence against Chidambaram, who was finance minister at the time of the 2008 sales.

Raja, a member of the DMK, a regional party in the Congress party-led national coalition, is suspected of rigging rules over the sale of the licences to favour some firms in return for kickbacks.

Lawyer Prashant Bhushan, who brought the case to the Supreme Court, welcomed the cancellations and fines for the telecom firms involved.

‘This is a historic judgement for the reason that now these companies which were the beneficiaries of these illegal licences... will have to effectively refund the benefit,’ he told reporters.

The public exchequer will be able to recover some of the losses, he added, saying it would send a ‘strong signal’ to dissuade corrupt corporations and public officials from conspiring together.

Justice G.S. Singhvi told the New Delhi court the Telecom Regulatory Authority of India would make recommendations about a fresh auction within four months.

Among the companies affected are Swan Telecom, Tata Teleservices and Uninor, a joint venture between Norway’s Telenor and India’s Unitech.

Uninor said in a statement it was ‘shocked’ at the penalty, adding ‘we have been unfairly treated as we simply followed the government process we were asked to.’

Graft has become a hot political issue in India due to high-level scandals such as the so-called ‘2G scam’ and contracts awarded for the 2010 Commonwealth Games in Delhi, as well as a street-level campaign by activist Anna Hazare. - AFP

RCCI for line losses control

Islamabad: Javed Akhtar Bhatti President Rawalpindi chamber of Commerce and Industry (RCCI) has said there is a need to control lines losses, rationalise energy tariffs and establish a single coordinating agency for energy development in the country.

Participants expressed these reviews during a seminar on energy crises in the country held in National Press club here on Thursday.

The Participants said that due to non-consistency of policies energy crises has been worsen in the country. They said that there is no central coordinating agency dealing with energy sector as a whole in the country.

He said "we need comprehensive energy conservative plan to meet the growing energy demands in the country".

He said that Alternate Energy Development Board (AEDB), which was established to induct electricity into the system, has been failed to deliver and should be restructured.

Chairman All Pakistan CNG Association (APCNGA) said that government should focus on short term and medium term plans for energy conservation and work on these projects should be expedited. He said that government should create awareness among masses pertaining to the energy conservation.

At this occasion, he said that on Feb 10 APCNGA would give its report pertaining to energy conservations in the country. - Online

Forex reserves rise to $16.87b

KARACHI: Pakistan's foreign exchange reserves rose marginally to $16.87 billion in the week ending Jan. 27, boosted by an increase in commercial bank reserves, from $16.80 billion in the previous week, the State Bank of Pakistan said on Thursday.

Foreign exchange reserves hit a record $18.31 billion in July, but have since eased due to debt repayments.

Reserves held by the State Bank of Pakistan (SBP) fell to$12.52 billion from $12.55 billion a week earlier, while those held by commercial banks rose to $4.35 billion, compared with$4.25 billion the previous week.

Reserves were boosted in June last year by inflows of $411million, including a $191.9 million loan from the World Bank, and a $196.8 million loan from the Asian Development Bank.

Higher export proceeds and a record inflow of remittances have also helped support country's foreign exchange reserves.

According to official data, remittances rose 19.6 percent to$6.33 billion in the first half of the fiscal year (July-June),compared with $5.29 billion in the same period a year earlier. - Reuters

PIA adopts austerity measures

KARACHI: As part of austerity measures all PIA officers would travel in economy class.

This was stated by the PIA spokesman in a statement issued here on Thursday.

It said that the PIA management as part of austerity measures has decided that all categories of officers including Managing Director of the airline while traveling on official duty/ Corporation Business (OCS) who are entitled to travel in Business Class or Economy Plus class will now travel in Economy Class on Domestic and International routes.

The PIA spokesman further stated that this decision would be implemented with immediate effect.

However, all other terms and conditions of travelling facilities of employees remain unchanged, the PIA Spokesman added. - APP

Agri Forum flays flour mills for profiteering

LAHORE: Pakistan Agri Forum criticised flour mills for selling wheat flour at high rates. Addressing the Flour Consumers Association (FCA) here on Thursday, Pakistan Agri Forum chairman Muhammad Ibrahim Mughal said mini flour mills (Chakki's) were selling flour at Rs34 per kg while flour mills were selling the same at Rs29 per kg after purchasing wheat from the Food department at Rs24 per kg.

He alleged that flour mills were making illegal profit of Rs60 million monthly only in Lahore city from consumers adding that mills owners were purchasing wheat from farmers at Rs21 per Kg and farmers were bearing a loss of Rs10 billion and, on the other hand, mills owners were selling flour at high rates to consumers. - AFP

Sales tax on tractors slashed to 5%

KARACHI: The government has notified the reduction of sales tax on tractors from 16 percent to 5 percent with immediate effect.

According to a communique despatched by Millat Tractors Ltd to KSE here Thursday, the sales tax will be charged at the rate of 10 percent effective January 1, 2013 and standard rate shall be applicable with effect from January 1, 2014.

Millat Tractors said that this will have a positive impact on demand and sales of tractors as gradual increase in sales tax will be absorbed and accepted by the market. - APP

Worst yet to come for China growth

BEIJING: Facing stiff global headwinds and a downturn in its property sector, China should cut taxes and slash banks’ reserve requirements this year to underpin growth, a senior government economist said on Thursday.

Fears of a hard landing in China may have abated somewhat after recent data underscored its domestic resilience, but downward risks lie ahead and growth could hit a trough in the second quarter, said Zhu Baoliang, chief economist at the State Information Centre, a top government think-tank. “I believe the slowing trend in China’s economy has not changed,” Zhu, who helped prepare the annual policy-setting economic work conference in December, told Reuters in an interview in his office in the western part of Beijing.

The central bank could cut banks’ reserve requirement ratio (RRR) six times throughout 2012 — at 50 basis points each, that would release more than 2 trillion yuan ($317 billion) to spur bank lending, he said.

The next cut could come this month, Zhu added.

In an effort to shore up economic activity, the central bank cut the RRR in November for the first time in three years, and economists expect further RRR cuts of 200 basis points throughout the course of 2012, according to a Reuters poll.

But policymakers may not pull the trigger on benchmark interest rate cuts this year, since inflation remains higher than policymakers would like, and global liquidity could push commodity prices higher, Zhu said.

“They cannot relax (policy) too much. If they relax too much, inflation could pick up,” he said.

A surprising upturn in China’s factory activity in January fanned hopes the world’s second-biggest economy will avoid a hard landing.

That followed slightly stronger-than-expected gross domestic product growth of 8.9 percent in the fourth quarter of 2011.

DANGERS AHEAD

Zhu is pessimistic about the U.S. economic outlook, given weak consumer demand and believes Europe’s debt-ridden economy will only get worse in the coming months.

He also highlighted three major dangers in the Chinese economy: a downturn in the once-hot property market, risks from local government debt and underground lending activities.

“The main concern is about the property market,” he said.

China’s annual economic growth could slow to 8.5 percent in the first quarter and to around 8 percent in the second, when it may start bottoming out, according to Zhu’s forecast.

A Reuters poll predicted first-quarter growth of 8.2 percent and suggested that would be the low point for the year. However, full-year growth would still slow to 8.4 percent, the weakest in a decade, according to the outlook.

Sources told Reuters last month that China has set a target of 7.5 percent for economic growth this year, while keeping annual inflation near 4 percent.

But Zhu believes the economy will ultimately grow about 8.5 percent in 2012, thanks to supportive policies.

“(Full-year) economic growth cannot be lower than 8 percent as the pressure on job creation is still big,” he said.

Economists typically view growth of 7 to 8 percent as the bare minimum needed to generate enough jobs to help China absorb the urban influx of rural migrants and maintain social stability.

The government may keep its property restrictions in place this year by targeting speculative demand, but pent-up demand for housing could forestall a sharp price drop, Zhu said.

Beijing has taken an array of measures to rein in the property market — including raising mortgage rates and minimum down payments — to ease public discontent with rocketing home prices, a process that has made it difficult for both home buyers and developers to get bank loans.

The government will have to push through some long-delayed structural reforms, including on taxes and income, to help boost consumption, but little headway is expected this year, he said.

Still, he added, a long-anticipated widening of the yuan’s current 0.5 percent daily trading band may finally happen. - Reuters