Pakistan Economy - News & Updates - Archive

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Thursday, May 31, 2007

Import, export of goods and services: IMF predicts trade gap of $13.8 billion

* Increase of $600m in current account also projected

By Sajid Chaudhry

ISLAMABAD: The International Monetary Fund (IMF) has projected a trade gap of $13.8 billion in the country’s import and export of goods and services in the year 2007.

The IMF, through its Survey and Regional Economic Outlook of May 2007 of Middle East and Central Asian countries, has predicted that Pakistan’s export of goods and services will grow to $22.7 billion in 2007 as compared with $22.3 billion in the year 2006 indicating a growth of $2.4 billion.

The import of goods and services will be $36.5 billion in 2007 as against $33.1 billion in the year 2006 showing an increase of $3.4 billion.

The gap between export and import of goods and services in year 2006 amounted to $12.8 billion, and now the IMF authorities have projected that in 2007, this gap will widen to $13.8 billion.

The IMF outlook has also predicted that the current account balance of government of Pakistan will be $5.6 billion in year 2007 as against the current account balance of $5 billion in the year 2006, projecting an increase of $600 million. The current account balance of the country, as compared with the GDP which was 3.9% of the DGP, will reach to four percent in the year 2007, projecting an increase of 0.1%.

The IMF is of the view that Pakistan’s total debt, which was 56% of the GDP in year 2006, will come down to 53% in year 2007 with a reduction of 3% in total debt as compared to DGP in 2007.

The total gross external debt of the country, which stood at 27.7% of the DGP in year 2006, will reduce to 26% of the GDP in year 2007, projecting a decrease of 2.7%.

The IMF report further predicts that the real GDP of the country, which grew by 6.2% in year 2006, is projected to grow by 6.5% in the year 2007, indicating an increase of 0.8%. The nominal GDP will reach to $141.4 billion in the year 2007, as against $129 billion in 2006, showing a growth of $12.4 billion.

Pakistan’s central government’s fiscal balance, which was 3.6% of the GDP in 2006, will be 3.5% in 2007, indicating a decrease of 0.1%. It also predicts that the central government’s revenues excluding grants, which were 14% of the GDP in 2006, will be 14.2% in the year 2007, with an increase of 0.2%. The central government’s expenditures and net lending are projected to come down to 18% of the GDP in 2007, as compared with 18.2% in 2006.

The gross official foreign exchange reserves are projected to increase to $12.1 billion in 2007, as compared with $10.1 billion in 2006 showing an increase of $2 billion. The Consumer Price Index, which registered an increase of 7.9% in 2006, is projected to come down to 6.3% in the 2007, indicating a decrease of 0.2%.

The report also suggests that in countries, where public sector revenues as a share of GDP are relatively lower such as Pakistan and Lebanon, efforts will be needed to broaden the tax base, reduce exemptions, and improve tax administration. It also says that in low-income and emerging market countries like Georgia, Pakistan, and Uzbekistan, inflation should ease in response to monetary tightening.

http://www.dailytimes.com.pk/default.asp?page=2007\05\31\story_31-5-2007_pg5_11

 

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Pakistan's Economy Will Probably Maintain Growth Pace Next Year

By Khalid Qayum and Haris Zamir

May 31 (Bloomberg) -- Pakistan's economy will probably maintain this year's growth pace into the next 12 months, as the government lifts spending ahead of polls and improved crop harvests boost rural incomes and consumption.

South Asia's second-largest economy will expand 7 percent in the year starting July 1, matching the clip of the previous 12 months, according to the median forecast of 11 analysts in a Bloomberg News survey. The government's National Economic Council is due to release its annual estimate in Islamabad today.

``Public spending for developing infrastructure ahead of national elections will bolster economic growth,'' said Zaheeruddin Khalid, who helps oversee the equivalent of $173 million as head of research at Al-Meezan Investment Management Ltd. in Karachi. ``To increase rural incomes, the government would also focus on boosting farm production.''

President Pervez Musharraf is facing his biggest test since seizing power in a military coup in 1999, with violent opposition to his rule increasing as he seeks re-election before parliamentary polls in January. The government of Shaukat Aziz, a former Citibank NA executive appointed as prime minister by Musharraf in 2004, will release next year's budget in ten days.

Aziz's government may increase outlays by as much as 16.5 percent to the equivalent of $30.3 billion in the budget, taking advantage of increased tax receipts to boost spending on power generation, roads and other infrastructure, according to analyst Ahsan Javed Chishty.

`Election Year'

``Infrastructure has been neglected over the decades,'' said Chishty, an economist at Standard Chartered in Karachi. ``The 2008 fiscal year is an election year and the government is running an augmented development spending program.''

Pakistan needs better infrastructure to achieve the annual economic growth of 7 percent to 7.5 percent that Aziz says is required to reduce poverty in a nation where the World Bank estimates about 70 percent of the population of 160 million people lives on less than $2 a day.

The $146 billion economy has expanded by an average 7.5 percent in the past four years, more than double the 3.4 percent averaged in the period from 1999 to 2002. Growth in the year ending June 30 is estimated at 7 percent, faster than 6.6 percent in the previous 12 months, Aziz said on May 28.

``We are heading in the right direction and every section of the economy will get a boost next year to maintain this robust growth,'' Aziz said when releasing this year's gross domestic product figures. Pakistan doesn't produce GDP numbers on a quarterly basis.

Record Harvest

Growth this year was spurred by a record wheat harvest and higher cement and sugar production, the State Bank of Pakistan said in its quarterly review of the economy on May 26.

Pakistan's farm sector, which accounts for about a quarter of the economy, probably expanded 5 percent in the 12 months ending June, more than double the 2.5 percent pace of the previous year, the central bank said.

Better-than-expected agricultural growth has lifted rural incomes, increasing sales of cement, cars and mobile phones. Manufacturers, in turn, are investing more to boost capacity to meet rising demand.

Pakistan's cement sales climbed by a third to 19.71 million metric tons in the July-to-April period, from 14.85 million tons a year earlier, the All-Pakistan Cement Manufacturers Association said. Exports increased to 2.452 million tons from 1.209 million tons a year earlier.

Cement output is expected to double to more than 40 million tons by the end of 2007 as several companies, including D.G. Khan Cement Ltd., the nation's biggest cement maker, expand capacity to meet higher demand locally and from Afghanistan.

Consumer Goods

``A new phenomena next year would be export of cement as production will beat local demand,'' Al-Meezan Investment's Khalid said.

Unilever Pakistan Ltd., the nation's biggest maker of consumer goods, expects sales to grow at an annual pace of as much as 20 percent over the next three years.

Indus Motor Co. Ltd., the local affiliate of Toyota Motor Corp., plans to more than triple its capacity as economic growth lifts demand for vehicles. Car sales have more than tripled in the last five years to 132,000 units in the 10 months ended April 30, from 41,838 in the year ended June 30, 2002, according to the Pakistan Automotive Manufacturers Association.

``Pakistan is riding the consumer wave,'' said Standard Chartered's Chishty. ``Armed with rising incomes and increased purchasing power, the average Pakistani is fast considering conspicuous consumption as a way of life.''

Foreign Investment

Overseas investors are pouring funds into Pakistan to take advantage of the nation's growing appetite for consumer goods.

Foreign direct investment, which was a record $3.5 billion last fiscal year, reached $6 billion in the first 10 months of this year helped by Standard Chartered in September completing a $487 million purchase of Union Bank Ltd., the biggest acquisition in Pakistan's banking history.

The Altria Group Inc.'s Philip Morris International said in January it will buy a majority stake in Pakistani cigarette maker Lakson Tobacco Co. for $338.9 million.

Pakistan raised $750 million selling foreign currency bonds to investors in Asia, Europe and the U.S., in the South Asian nation's fourth debt offering in three years, Aziz said May 24.

Offers of $3.54 billion for the sovereign bonds were received, or seven times more than the government's initial plan to sell $500 million bonds, he said.

`Positive Response'

``This positive response puts recent fears of waning international interest aside and indicates that attention toward Pakistan's growth story remains firmly in place despite ongoing political issues,'' BMA Capital Management Ltd. in Karachi, said in a report on May 25.

Pakistan's economy will also benefit from the increased government spending expected in this year's budget, said Nasim Beg, who helps manage the equivalent of $320 million at Arif Habib Investment Management Ltd. in Karachi.

``The development of farm-to-market roads and building infrastructure and utility facilities will have a positive impact on overall economic growth in the longer term,'' he said.

The government is boosting public spending ahead of national elections due by January 2008 and nationwide street protests by opposition parties and lawyers. Musharraf is facing protests that erupted after he removed Supreme Court Chief Justice Iftikhar Muhammad Chaudhry from his post on March 9 for alleged misuse of authority.

``A tense standoff between the government and the judiciary concerning the removal of the Chief Justice has elicited concerns about stability,'' Chishty said. ``The country enters a precarious political passage in the next 12 months with parliamentary and presidential elections around the corner.''

Musharraf is seeking a second-five year term from the parliament before it tenure ends on Nov. 15, a move rejected by Pakistan's opposition parties.

FY08

Abamco 7.50
JS Global Capital 7.50
Taurus Securities 7.50
Standard Chartered 7.20
First Capital 7.00
Foundation Securities 7.00
Investcapital 7.00
BMA Capital 7.00
KASB Securities 6.80
Invisor Securities 6.50
Al-Meezan Investment 6.50

http://www.bloomberg.com/apps/news?pid=20601080&sid=akVgnRyW1vzw

 

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Pakistan cotton crop second largest ever - US attache

Thursday May 31, 2007
WASHINGTON (Reuters) - Pakistan's upcoming 2007/08 cotton crop forecast is 2.265 million metric tons (MMT, lint basis), the second largest ever, a U.S. attache in Islamabad said in a report released on Wednesday.

"Progressive textile mills are focusing on producing better-quality products, particularly for the export market. Pakistan is a major cotton importer, especially for U.S. upland and Pima cotton," the attache said.

Consumption is forecast at 2.736 MMT, marginally less than the previous year.

"With domestic prices increasing mills are finding the importation of upland cotton increasingly attractive. Recently, the GOP has allowed import of long staple cotton through land routes from India and Central Asia."

Attache reports are not official USDA data.

Following are highlights of the report. To see the full report, visit the USDA's Foreign

"Pakistan's MY 2007/08 cotton crop is off to a good start due in part to near normal weather conditions, accompanied by a sufficient supply of inputs."

"The crop is planted from the end April through June and is harvested in the fall. Planted area is influenced by the relative prices of competing crops, such as sugarcane and paddy, weather forecasts, and government policy. MY 2007/08 cotton area is forecast at 3.0 million hectares, about 1 percent less than the area planted last year, due to better returns from sugarcane and rice."

"Due to delays in establishing biosafety regulations and a desire to develop Bt varieties indigenously, sources estimate that Pakistan is ten years behind major cotton-producing countries in the commercial use of Bt cotton.

"Last year, farmers planted an estimated 500,000 acres or about 5 percent of the crop in illegal Bt varieties, some of which were developed by a local institute; NIBGE where work on transgenic cultivar is under trial and most from pirated varieties from India, China, and Australia. This year, farmers are expected to plant about 30 percent of the crop in illegal Bt varieties."

http://in.news.yahoo.com/070530/137/6gh05.html

 

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5.31.2007 - 11:00amET

News from: Grameen Foundation USA

Grameen Foundation Supports Landmark deal for Kashf Foundation in Pakistan

First local currency syndication transaction for Pakistani Microfinance Sector

(CSRwire) May 31, 2007- Kashf Foundation has signed a US$ 8 million (PKR 484 million) Commercial Loan Facility, with a consortium of local Pakistani commercial banks. This Commercial Loan Facility is a 3-year facility in which Grameen Foundation, through its Growth Guarantee Program, provides partial risk coverage by way of a US$ 2 million Citibank Standby Letter of Credit in favour of the participating banks. Beside the US$8 million Commercial Loan Facility arranged by Habib Bank Ltd (HBL), MCB Bank Ltd (MCB) and Citibank N.A. (Citi), Citibank has also been mandated by Kashf to arrange additional US$ 14 million of long term financing for Kashf whereas HBL and MCB are jointly executing another PKR 720M term financing facility for Kashf through a Privately Placed TFC issue - the first private placement for a micro finance institution in Pakistan.

The Commercial Loan Facility has been jointly arranged by HBL, MCB and Citi while participating-banks include HBL at PKR 152.5 million, MCB at PKR 150 million, and ABN AMRO, at PKR 181.5 million. This is the first local currency loan syndication for an MFI in Pakistan and will provide innovative and diverse funding to support Kashf's significant growth plans.

The signing ceremony was held in Karachi in the presence of President Kashf Foundation Roshaneh Zafar, President HBL, R. Zakir Mahmood, Country Manager, ABN AMRO Naved A. Khan, Wholesale Banking Head, MCB Aamer H. Zaidi, and Regional Head for Citi's Commercial Banking Group, Farooq Masroor, amongst others.

Speaking at the occasion, Roshaneh Zafar, President Kashf Foundation said, "Microfinance is about giving poor households sustainable opportunities for a better economic future. The current commercial facility is about mainstreaming poor women within the financial sector and will enable Kashf to reach out to hundreds of thousands of such clients." Kashf has been a Grameen Foundation partner since 2002.

"Grameen Foundation is pleased to support the first syndicated loan facility for an MFI in Pakistan," said Alex Counts, Grameen Foundation’s president and CEO. "By supporting innovative financing structures such as this, the Growth Guarantees program is enabling MFIs to access greater financing amounts in a more efficient manner, which in turn allows them to accelerate their expansion to reach tens of thousands of additional poor families."

In February this year, Kashf signed a 5 year PKR 363 million (US$ 6 million) bilateral facility with Citi. Kashf has now secured commercial financing of PKR 847 million.

About Kashf Foundation

The Kashf Foundation was set in 1996 to provide microfinance services to the women in rural/sub-urban localities, initially in Punjab and is now expanding its geographical coverage to Sindh as well. Over the last 10 years, KF’s partners have included well recognized entities in the microfinance sector including the Grameen Foundation, DIFD, Acumen, Pakistan Poverty Alleviation Fund and the Grameen Bank. Additional information may be found at www.kashf.org

About Grameen Foundation

Grameen Foundation is a global non-profit organization that combines microfinance, technology, and innovation to empower the world's poorest people to escape poverty. It has established a global network of partners in 23 countries that has impacted an estimated 16 million lives in Asia, Africa, the Americas, and the Middle East. Grameen Foundation was founded by Alex Counts, who began his work in microfinance with Grameen Bank founder, and 2006 Nobel Peace Prize Laureate, Dr. Muhammad Yunus. Dr. Yunus is a founding and current member of Grameen Foundation’s board of directors. For more information on Grameen Foundation, please visit www.grameenfoundation.org.

About HBL

HBL, the largest private sector bank in Pakistan with world-wide presence, is backed by a leading blue-chip sponsor, the Aga Khan Fund for Economic Development. HBL has the ability to provide an entire spectrum of banking solutions, catering to every stage of a company’s life cycle. The core services that HBL provides to its clients include: Corporate Banking, Investment Banking, Commercial & Retail Banking, Consumer Banking, Treasury Services, Modaraba Management, and International & Overseas Banking.

About MCB

MCB is the 2nd largest private commercial bank by equity with the first Pakistani GDR offering entity in the last 10 years . MCB is also the first Pakistani bank to be declared "Best Bank in Pakistan” for 2006 by Euromoney- Only bank to receive Euromoney Award for the sixth time in the last seven years. MCB’s growth has been as a result of improved service quality, investment in technology and people, utilizing its extensive branch network, developing a large and stable deposit base and managing its non-performing loans via improved risk management processes.

About Citi

Citi, the leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citi’s major brand names include Citibank, CitiFinancial, Primerica, Citi Smith Barney and Banamex. Additional information may be found at www.citigroup.com or www.citi.com.

Certain statements in this document are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in Citigroup's filings with the Securities and Exchange Commission.

http://www.csrwire.com/News/8737.html

 

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Buying spree continues, KSE near 13,000 mark

KARACHI: After two subdued performance equity market rebound and came close to psychological level of 13000. The KSE 100 index touched intra day high of 12,994.4 with a 180 points jump only to close at 12,961.26 points up 154.33 points (1.21 percent).

Bulls over ruled the bears, strengthen their position and did not allowed the bears to enter the market.

KSE-30 was up by 315.70 points to close at 16,277.49 levels (1.98 percent) showing that banking sector was major supporter of market.

Institutional and retail investors were very active and buying trend was witnessed in all the counters. Positive sentiments prevailed through out the day and pre budget rally continued and positive news and expectations boosted investors’ confidence globally.

Investors believed that being last budget in the election year government will make it a maximum corporate friendly budget this expectation is boosting the market confidence.

News of the UBS Investment Bank a Swiss based bank signing a contract with two Karachi based brokerage houses for their investment in Karachi Stock Exchange is another reason for the bullish sentiments in the market.

All the blue chip remained in limelight particularly banking and cement however some profit taking was witnessed in cement sector.

Banking sector ruled the trend of the market on the back of high spreads and foreign interest in the banking scrips.

JP Morgan’s recent meeting at Lahore where representatives of foreign equity firms came to meet a select group of companies listed on the Pakistani bourses also fuelled the market sentiments.

Ahsan Mehanti CEO of Shehzad Chamdia Securities said that market is witnessing institutional and retail support and marching ahead amid positive news from all channels boosting the investors’ confidence.

He said that retail investors and government institutions actively accumulated oil and cement scrips. Portfolio gains of cement, oil, banking stocks were attracting investors and revising fundamentals positively and record high PSDP allocation in this budget. Moreover, record exports have enhanced interest in cement scrips.

Sponsor based buying in PICIC and ABL was also seen in the market and positive expectation of reduced taxes on banking sector interest income, Islamic Banks and CVT reduction expectations in the upcoming budget is leading the market towards its high levels.

He also said that all the major international market closed on their positive side and S&P 500 touch intra day record high level which directly or indirectly have also supported the global sentiments of the investors.

Positive news on Pak Iran India gas pipe line also added in the positive sentiments.

Atif Malik analyst of JS Global Capital said that pre budget driven really was seen in the market and positive expectation in the budget for corporate sector is supported the market. Banking, Telecom and cement sector remained in the lime light and highest foreign investment was seen in BOP which was the volume leader. Market remained positive throughout the day and all the major scrips performed well on the back of the positive news and expectations in each sector. Foreign Brokerage house JP Morgan’s positive outlook in the banking sector has helped the index to touch it’s intra day high level.

Trading activity was better as compared to the last trading session as the Ready market volume increased by 32.9percent 409.423million shares as compared to

volume of 307.859m shares a day earlier and the future market volume increases

71.610m shares as compared to Wednesday’s volume 41.979m shares

Market Capitalization stand near to Rs.3.738trillion. SCRA balances stand near $730 million. 220 companies advanced, 145 declined and 40 remained unchanged. Portfolio Investment

BOP was the volume leader with 40.883 million shares closed at Rs.118.80 with gain of Rs.5.55 follwed by TRG Pakistan with 34.595 million shares closed at Rs.12.90 and was up by 90 paisa, Askari Bank with 23.366 million shares closed at Rs.99 with a gain of Rs.3.10, DGK Cement with 21.580 million shares closed at Rs.105.70 with a gain of Rs.2.70, OGDC with 20.056 million shares and closed at Rs.122.45 with a gain of 95 paisa, Hub Power with 19.748 million shares closed at Rs.34.70 with a gain of Rs.1.60, Lucky cement with 15.756 million shares closed at Rs.110.15 with a gain of Rs.1.30, Fauji Fert Bin with 14.872 million shares closed at Rs.36.55 was down by 10 paisa, Maple Leaf with 14 million shares, closed at 22.80 was down by 20 pasia, and National Bank with 12 million shares closed at 253.30 with a gain of Rs. 5.30.

http://www.thenews.com.pk/daily_detail.asp?id=58685

 

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PIA gets $522m

KARACHI: Pakistan International Airlines (PIA) has succeeded in arranging a $522 million loan for acquisition of three new Boeing 777-300 ER aircraft, said a handout issued on Thursday. The financing arrangement comprises a 12-year term loan facility of $470 million supported by Export Import Bank of the US and Government of Pakistan’s guarantee and seven-year commercial facilities of $62 million, it added. The national flag carrier recently signed the loan financing agreement with finance facilitator ABN Amro Bank in Amsterdam. PIA Chairman Zaffar A Khan appreciated the efforts of the bank and the airline for finalising a large transaction at commercially-attractive rates.

http://www.thenews.com.pk/daily_detail.asp?id=58702

 

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Power supply demand gap may go up

ISLAMABAD (June 01 2007): The National Economic Council was informed on Thursday that power supply-demand gap was expected to increase to about 2500 MW in 2007-08 against 1000 to 1500 MW shortage experienced in 2006-07.

The meeting was informed that total designed capacity of power generation is 19540 MW of which Tarbela is 3478 MW, Ghazi Barotha 1450 MW, Mangla 1000 MW, Wapda thermal units 4834 MW, IPPs 5743 MW, KESC 2155 MW and others 880 MW.

However, the available capacity is 13900 MW while the demand is around 15200 MW. The demand will increase to substantial extent in 2007-08. The NEC urged that projects under implementation by Wapda and IPPs needed to be expedited.

The NEC also approved the Vision 2030. The Vision envisages developed, industrialised, just and prosperous Pakistan through rapid and sustainable development in a resource constrained economy by deploying knowledge inputs.

http://www.brecorder.com/index.php?id=571215&currPageNo=1&query=&search=&term=&supDate=

 

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PPIB blocks 500 megawatts thermal power station deal

ISLAMABAD (June 01 2007): The Private Power Infrastructure Board (PPIB) has blocked Board of Investment's (BoI) move for signing an Implementation Agreement (IA) with the Qatar government for financing 500 MW thermal power station at Chichoki Mallian.

After the refusal of PPIB to clear the IA, Qatar on Thursday signed a Memorandum of Understanding (MoU) on which implementation was not mandatory, sources close to Managing Director PPIB told Business Recorder.

The sources said that PPIB, in its letter on March 31, raised concern for not properly consulting the board on the proposed financing plan by the Qatar government. They said that PPIB has disputes with some of the clauses of the IA and refused to become a party despite BoI consistent perusal till Wednesday.

"On standard affirmation clause recommended by the Finance Ministry PPIB is of the view that this clause is in terms and conditions of the IA and PPA and there is no need of its inclusion in the project development agreement," the sources added.

The sources said that PPIB also pointed towards terms and conditions of permanent financing and GoPs obligations. Meanwhile, the Prime Minister House has issued a press release that says that Pakistan and Qatar signed two MoUs under which Qatar will invest in the banking insurance and power sector.

Prime Minister Shaukat Aziz and Yousef Hussain Kamal, Minister for Finance, Qatar witnessed the signing ceremony. Under one agreement, Qatar Islamic Bank will set up its branch in Pakistan. Qatar will commission 500 MW power plant in Pakistan under the second agreement signed today.

Earlier, Yousef Hussain Kamal, Minister for Finance Qatar called on Prime Minister Shaukat Aziz at the PM's House. Talking to the Qatari Minister, the Prime Minister said that foreign investment of $6 billion made in Pakistan this year is a testimony of the growing confidence of international community in economic growth, stability, policies and leadership of Pakistan.

Yousef Hussain Kamal said Qatar attaches great importance to its relations with Pakistan, which are characterised by cordiality, warmth and mutual trust. He said that Qatar has plans to invest $2 billion in agriculture, livestock, Banking, Airline and power sector in Pakistan.

http://www.brecorder.com/index.php?id=571212&currPageNo=1&query=&search=&term=&supDate=

 

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Portfolio investment: foreign investors stay away as market heats up

KARACHI (June 01 2007): The portfolio investment, as witnessed by balances under the Special Convertible Rupee Accounts (SCRAs) with the central bank, has remained stagnant around $730 - $735 million since May 24 when it posted a gain of $8 million to reach $739 million from $731 on May 21.

Earlier, on balances under SCRAs had plummeted to $784 million on May 16 from the record high figure of $827.5 million attained on May 14, 2007. The downslide had continued in the following days and reached $727 million on May 29 from $738 million on May 25. It stood around that level on May 26 before falling to $735 million on May 28.

During all this while the KSE-100 Index exhibited a record breaking bullish sentiment. The Index rose from 12,663 points on May 24 to 12,817 points on May 29 having crossed the 12,800 barrier only a day before on May 28.

Commenting on these positive trends in the Index, we had observed that the changes did show investors renewed interest in the market, but we have yet to see how far the interest of the foreign investors has been restored after the recent political unrest (cf BR May 27).

The trend in portfolio investment revealed that the foreign investors generally stayed away even though the market heated up to touch new historic highs. It was also established that the foreign investor indulges in share trading rather intelligently.

He buys when the market is bearish and sells when it is bullish. This is exactly what he is doing right now. Domestic investors, especially those of small means or who cannot bear losses, must also follow this principle to ward off the gimmicks of the heavyweights.

Such investors are also advised to revisit Aaj TV's two episodes on the subject aired recently under the title 'Aisa Kyun Hai'. Hence the conclusion: the foreign investor will re-enter the market only when he had established beyond doubt that the bulls, whoever were not playing the gimmick but following the rules. Accordingly, the changes in data on portfolio investment revealed that foreign investors withdrew about $11.4 million during these five days.

The largest withdrawal of $6.5 million took place in the case of UK followed by Switzerland, USA, and Hong Kong which withdrew $2.6 million, $1.4 million, and $1 million, respectively. A minor inflow of $0.1 million also occurred in the case of Singapore. UK investors consistently dis-invested amounts of varying magnitudes during all the five days.

http://www.brecorder.com/index.php?id=571241&currPageNo=1&query=&search=&term=&supDate=

 

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July-April raw cotton import reaches over $503 million

KARACHI (June 01 2007): Raw cotton's import has been up 57 percent to $503.743 million (Rs 30.57 billion) during the first ten months of the current fiscal year against same period of last fiscal. Importers said that this was due to because the country has missed its cotton production target.

"Monsoon rains in last August severely hit the country's cotton crop of Sanghar, Dhedadpur in the interior Sindh prevented country from achieving raw cotton production by around one million bales against the target of 14 million bales during the current fiscal," importers said.

They said that Pakistan is the fourth largest producer of cotton in the world but its textile industry's requirement could not be met that necessitated raw cotton import raising imports by 57 percent during July-April. The country 's raw cotton import is up $188.771 million during the first ten months of the current fiscal.

"We have imported around 1.832 million raw cotton bales worth $503.743 million (Rs 30.57 billion) during July-April of the current fiscal as compared to 1.527 million bales worth $314.972 million (Rs 18.84 billion) during the same period last fiscal,' they informed.

The government has planned schemes to help raise the output of raw cotton for the next season but currently the country is facing around 2.5-3 million bales shortfall, they added. They said that cotton production growth for the last few years has been of high concern and this year despite all claims the country's production did not show any improvement.

Our local production stood at around 12.4 million bales against the consumption of 15-16 million bales, therefore, textile millers are placing huge orders of raw cotton import to fulfil their export orders, said a leading textile miller.

"We need better quality cotton, which has limited production in the country therefore quality issue also has brought cotton import to 1.8 million bales," he added. He said although imported cotton is costlier than the domestic cotton but due to better quality, millers prefer the imported cotton.

http://www.brecorder.com/index.php?id=571260&currPageNo=2&query=&search=&term=&supDate=

 

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Budget deficit Rs 272.8 billion in nine months

ISLAMABAD (June 01 2007): Pakistan has suffered a huge budget deficit of Rs 272.8 billion during the first 9 months of the current fiscal that is 3.1 percent of GDP. According to the provisional consolidated federal and provincial budgetary operations of three quarters, released by the Finance Ministry on Thursday.

Total development expenditure during this period stood at Rs 244.22 billion of which Rs 149.8 billion were spent by the federal government and Rs 94.4 billion by the provinces.

Finance ministry's data also disclosed that the provinces received Rs 290.3 billion from the federal divisible pool in the first three quarters of the current fiscal while grants to provinces were Rs 20.87 billion. The country's defence expenditure stood at Rs 172.7 billion in three quarters which is 2 percent of the GDP

The government paid Rs 215.47 billion as domestic debt during July-March FY07 against Rs 139.58 billion in the corresponding period of last year whereas foreign debt servicing was Rs 37 billion. The data further revealed that the State Bank of Pakistan (SBP) earned total profit to Rs 39.2 billion during July-March FY07 whereas dividends were Rs 46.17 billion.

Surcharges on oil and gas and royalty were Rs 71.84 billion during July-March period, collection of agriculture tax stood at Rs 552 million and privatisation proceeds were Rs 52.5 billion. Total external financing during this period was Rs 93.7 billion whereas domestic financing was Rs 179 billion.

http://www.brecorder.com/index.php?id=571269&currPageNo=2&query=&search=&term=&supDate=

 

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Iran seeks joint investment company with Pakistan

KARACHI (June 01 2007): Iranian government has desired to establish Pak-Iran joint investment company to facilitate the business community of the two countries. According to a press release issued here on Thursday, Masood Mohammad Zamani, Consul General of Iran in Karachi stated this during a meeting with Farooq Dadabhoy, Acting President Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

Zamani said the business community of both the countries should join hands and intensify their interaction to promote bilateral trade and economic relation.

He said that in the recent past the visits of the President and the Prime Minister of Pakistan and federal minister of railways to Iran was indication of the desire to forge close relations. He said that the commercial section of Iran Consulate would organise a seminar on investment opportunities in Iran on June 30, 2007 in Karachi.

http://www.brecorder.com/index.php?id=571280&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Seven percent GDP growth pushes stock market to all-time high: Salman

LAHORE (June 01 2007): Advisor to the Prime Minister on Finance and Economic Affairs, Dr Salman Shah, has said that over 7 percent GDP growth in the current fiscal year (2006-2007) and high corporate sector profits has pushed the stock market index to all time high.

He was speaking to the group of foreign equity investors at the two-day investors meeting organised by J.P. Morgan here in Lahore, a press release issued here on Thursday said.

He said the government policy of liberalisation, privatisation and deregulation has enhanced potential for foreign investment and added that the recent road show for the Sovereign Bonds received orders of over $3.5 billion resulting in 7 times over subscription. He also stated that "the Pakistan economy is driven by market forces; has the world's 4th largest work force; and a large young population, which means more production and more savings."

Addressing the visiting investors, Governor State Bank of Pakistan Dr Shamshad Akhtar in her address said, "The banking sector in Pakistan has shown remarkable and unprecedented growth. Classified as Pakistan and the Region's best performing sector its assets have risen to over $60 billion, profitability is exceptional and all time high. Non-performing loans are at an all time low, assets are in private hands and almost 47 percent have foreign shareholders."

She also said that Pakistan has huge potential for foreign investment as presently only 3 percent of the population is borrowing from banks and only 30 percent of adults had bank accounts. Earlier, J.P. Morgan's Senior Country Officer in Pakistan Reza Rahim said that "representatives of foreign equity firms have come to Lahore to meet a select group of companies listed on the Pakistan Stock Market. The meetings are being held on one-on-one basis, over a two day period, providing the potential investors an insight into the leading companies traded on the Stock Market."

Reza Rahim also said that the cash equity breaking operations, started earlier this year is a significant development for J.P. Morgan's Pakistan business, which is the only foreign firm with a corporate seat at the Karachi Stock Exchange.

http://www.brecorder.com/index.php?id=571273&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

June 01, 2007
Trade gap swells on imports from China, India

KARACHI, May 31: Pakistan has doubled its trade with India and increased exports to China during the 10 months of current year but the volume of trade has put more pressure on the country’s widening trade deficit.

Both India and China put a cork over imports flow from Pakistan while the country failed to exploit the fastest growing economies of the region in its favour, apparently due to lack of strategy.

The available official trade figures showed that India surpassed even the ambitions trade target of $20 billion with China to reach $24.9 billion last year.

Pakistan’s trade volume with China reached $2.062 billion only during the first ten months of the current year. Out of this total, exports from Pakistan were just $379 million while China’s exports were in the tune of $1.647 billion. Pakistan has been facing a trade deficit of $1.268 billion.

Pakistan’s imports from India have doubled during the first ten months, while exports to the country remained limited to $196 million. Indian exports to Pakistan reached $912m during the ten months of the current year compared to $419 million during the corresponding period of last year.

The statistics showed that the Pakistani policy makers have yet to come out with a strategy to improve their trade relations with the regional countries and exploit the unique long-term friendly relations with China.

On the other side, India mended its territorial disputes with China and sharply increased trade with that country becoming the 10th largest trade partner of China, while China became 2nd biggest trade partner of India within seven years.

The miracles happened just next door to Pakistan but the lack of initiative left the country far behind the pace of economic development in the region resulting in record widening of trade deficits. The situation kept the country under pressure of Western countries begging for export incentives while opening its own market at their own terms.

Pakistan’s trade loss with India reached $716m during the ten months but soon it could reach $1 billion as imports have increased sharply in the recent months.

China and India will finish a joint study on a potential regional trade pact by October this year, which could play a key role in further enhancing of trade.

China said the study would play a key role in the economic integration in Asia if it led to a regional trade pact linking China and India.

The two countries signed an agreement in 2005 pledging to bring bilateral trade volume to $20 billion by 2008. This was achieved ahead of the targeted date and the two governments have now set a new target of $40 billion in bilateral trade by 2010.

In April 2007, Pakistan signed 27 agreements in Beijing, which included setting up a Chinese automobile plant, an engineering university in Pakistan and a joint investment company with a capital of $200 million.

Pakistan’s prime minister recently visited China to explore trade and investment opportunities but the output can only prove the fruitfulness of the visit.

http://www.dawn.com/2007/06/01/ebr4.htm

 

[Neo]

June 01, 2007
Power plant

KARACHI, May 31: The consul-general of Turkey in Pakistan, Erdem Mutaf, has said that Turkey is keen to make investment in energy sector, and there are many other venues for bilateral trade between the two countries.

Speaking at a meeting arranged by the Korangi Association of Trade and Industry’s chairman Masood Naqi at KATI, the Turkish consul-general said that a Turkish energy company was establishing 50MW power plant at a cost of $400 million in Jhimpir which would be completed by the end of this year, and next year the capapcity of this power plant would be increased up to 300MW, says a press release.

http://www.dawn.com/2007/06/01/ebr19.htm