Sunday, 7 October, 2012

APTMA welcomes cutin discount rate

PESHAWAR

APP

Chairman, All Pakistan TextileMills Association (APTMA),Mohsin Aziz has welcomed thedecision of the State Bank ofPakistan (SBP) for announcing0.50 per cent cut in the discountrate. He termed it very beneficialfor textile sector of the country andcontinuous and consequentreduction in two policies is a verywell come sign and be hoped thatsuch policies would continue and further reduction in discount rate inthe next monetary policies so as to bring the discount rate toapproximately 7-8%. In a statement issued here Saturday, Mohsin Azizsaid that APTMA was persistently persuading the central bank andsenior officials of the government functionaries and have brought itinto the notice of President of Asif Ali Zardari as well in the annualdinner of the association. He said that though the cut is still verynominal as compared to their expectations. However, he said that SBPin its last monitory policy have also cut down the discount rate by1.5%. He termed the decision very important for textile sector and itsgrowth. He said that according to the estimates of APTMA, the countrywill witness a bumper cotton crop this year and the textile sector willrequires investment to convert this cotton to value added textile andsuch kind of positive intervention on behalf of the financial mangers ofthe country will prove beneficial for the sector.

‘Cut in interest rate tostop flight of capital’

LAHORE

APP

The decision to cut interest rate to 10% is a welcome step and willbenefit the economy. These views were expressed by Pakistan TannersAssociation President Agha Saiddain in a statement here on Saturday.“SPB has taken a wise step to control capital flight,” he said andsuggested that interest rate be further reduced for the economic uplift ofthe country. He said the decision was a ray of hope in the circumstancesfaced by the industry due to the the energy crisis. It will reduce the costof doing business in the country, he added. He suggested that export-friendly policies, increase in the literacy rate, improvement in law andorder and such other steps were needed to further boost the economy.He urged the government to take steps for revival of developmentfinance institutions in the country for long term financing to theindustry. DFIs have played a remarkable role in the past and they can dothe same if they are given an atmosphere of working in the country, headded. Praising SBP’s efforts for revival of the economy, he said hisassociation would continue to support all positive steps.

BERLIN

AFP

The International Monetary Fund has cutits global growth forecasts for this yearand 2013 and called on politicians in theeurozone and the US to take “decisive”steps to restore confidence, a German

newspaper said Friday.Citing excerpts from the IMF’s World Eco-

nomic Outlook to be released early next week,the Handelsblatt business daily said that theWashington-based body predicted world eco-nomic growth of 3.3 percent in 2012 and 3.6 per-cent in 2013.

In July, the IMF issued forecasts of 3.5 percentand 3.9 percent, respectively. The German-languagepaper quoted the report as saying that the “furthercooling of growth in the world economy this year andnext goes along with a clear increase in downwardrisks.” The forecast depends in particular on “whetherdecisive political steps are taken in the eurozone andthe US to stabilise confidence,” the paper quoted thereport as saying. The IMF forecasts a shrinking of theeurozone economy of 0.4 percent this year and a smallpositive growth of 0.2 percent in 2013. The fund alsosaw a “further drop in inflation” given the sluggishglobal economic output and recom-mended additional cuts in interest ratesto stimulate activity. Three leadingEuropean economic institutes have

estimated meanwhile that the eurozone economy willremain in recession until the end of this year. TheFrench institute INSEE and its German and Italian

counterparts IFO andISTAT forecast a con-

traction in business ac-tivity of 0.2 percent inthe third quarter,

they said in a jointstatement.

IMF slashes globalgrowth forecast

LAHORE

ONLINE

The Pakistan Association of AutomotiveParts and Accessories Manufacturers (PAA-PAM) has welcomed the Economic Coordi-nation Committee (ECC) decision togradually bring down tariff regime for themotorcycle industry in such a way that localindustry would not be adversely affected.

The decision will go a long way in stimu-lating the growth of the domestic industryand a flagging economy.

The newly-elected Chairman MunirBana and Vice Chairman Usman Malik saidthat Federal Minister for Finance and Eco-nomic Affairs, Dr Abdul Hafeez Shaikh, de-serves appreciation for accepting thedemand of local auto industry to rationalizetariff regime gradually.

They agreed with the Finance Minister’sobservations that in the whole process it

must be ensured that the local motorcycleindustry is not affected and that a level play-ing field is provided to all the stakeholders.

The PAAPAM leaders, however, calledfor measures to overcome energy crisis, se-curity challenges and political instability tomake investment-friendly decisions mean-ingful and result-oriented.

“If these factors are not brought undercontrol, they would continue to createproblems for the economy in general andfor the foreign investment in particular,”Bana observed.

PAAPAM chairman and vice chairmansaid that Pakistan’s motorcycle industry hasprogressed in a very impressive fashion overthe last half decade based on the AIDP. Ad-equate competition has been introduced andtoday well over 60 companies are producingmotorcycles in Pakistan.

They added that during the period 2001-2007, with the help of stable policies of the

government, the automobile industry wentthrough a period of tremendous expansion,with investments of over Rs 40 billion andvolumes going up by over 500 per cent.

These developments made the auto in-dustry one of the top five industrial sectorsof the country in terms of contribution totax revenue, acquisition of hi-tech manu-facturing technologies and generation ofemployment. Unfortunately, due to importof used vehicles and other adverse policyfactors, our industry is now suffering fromexcess Capacity.

Currently, car assemblers and partsmanufacturers are intermittently shuttingdown their plants by observing Non Produc-tion Days (NPDs) and retrenching labour.

Desperate times call for desperate meas-ures, concluded Munir Bana. Minister of Fi-nance must immediately intervene and stopcar dealers from using “Used car imports fa-cility meant for overseas Pakistanis only”.

Auto sector welcomes ecc decisionto grAduAlly cut tAriff regime

NEW DELHI

AFP

An Indian business group said Saturday a del-egation was visiting Iran to boost trade withthe Islamic republic, which is under strainfrom Western sanctions over its alleged nu-clear weapons programme.

The Associated Chambers of Commerce andIndustry of India (ASSOCHAM) said the “high-powered” 50-member business delegation wason a four-day visit to Iran to attend the TehranInternational Industry Exhibition (TIIE).

Anil Agarwal, chairman of InternationalAffairs Council of ASSOCHAM, called oppor-tunities for trade a “win-win situation” for thetwo countries. Iran is a major oil supplier toenergy-hungry India, and New Delhi is seek-ing to increase its exports to Tehran as theWest’s sanctions campaign dries up paymentroutes it was using to pay for Iranian fuel im-ports. India and Iran have worked out a dealunder which New Delhi will pay for a bigchunk of its Iranian oil imports in rupees. Therupee payments will be used by Iran to pur-chase Indian goods.

“Indian industry has huge scope for in-vestments” in Iran in sectors like construc-tion, pharmaceuticals, telecom and textiles,“while Iran can import fertilizers, zinc, copperand iron”, Agarwal said.

The visit to Tehran, one in a series of re-cent commercial exchanges between the twocountries, comes as ordinary Iranians strug-gle with growing economic problems amid theUS-led Western sanctions.

Annual trade between India and Iran to-tals $15 billion and heavily skewed towardsTehran, which exports mainly oil.

India has been walking a diplomatictightrope as it pursues good ties with the Gulfnation while deepening relations with theUnited States. India, a longtime Tehran ally,sharing historical, trading and cultural links,views Iran as an important counterweight torival Pakistan in the region.

In June, Washington said it would exemptseven emerging economies including Indiafrom reprisals after they pledged to cut backon oil purchases from Iran.

India expects to import less than 14 mil-lion tonnes of Iranian crude in 2012-13, belowofficial estimates of 15.5 million tonnes due tothe sanctions, the Economic Times newspaperreported earlier in the week.

By contrast, India imported 21.8 milliontonnes of crude from Iran in 2008-09, thenewspaper quoted an unnamed governmentofficial as saying. Iran is keen to increasecrude oil sales to New Delhi and is looking atways to work round Western sanctions, theofficial added.

India business group visits

Iran for ‘win-win’ trade

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Sunday, 7 October, 2012

Business

KARACHI: The British Deputy High Commissioner and Director of Trade and Investment in Pakistan Mr Francis Campbell hosteda reception for UK delegation participating in the 7th Expo Pakistan Exhibition at his residence. Photo shows (left to right) MrShehzad G.Dada CEO Barclays Bank, Mr Mian Abrar (Former President Chamber), Mr Francis Campbell, Mr Waqar A Malik CheifExecutive AkzoNobel, Mr Ghouse Akbar (Director Akbar Groups), Mr Aslam Faruque (Chairmen Ghulam Faruque Group).

KARACHI: Participants of Air Safety Investigators training photographed with PIA MD Muhammad Junaid Yunus, PIA DMD Air Vice MarshalQasim Masood, Canadian Safety Experts Caj Erik Frostell and Mike Doiron, Wing Commander (r) Syed Nasim Ahmed and Capt. Mohsin Ausaf ofSASI after the certificate distribution ceremony at PIA Training Centre. PR

NEW YORK

AGENCIES

WALL Street, however, erased earlygains With the S&P 500 breaking afour-day string of gains, weighed byconcerns about the upcoming earn-ings season, which begins with Alcoa

(AA.N) next week.The dollar advanced to a two-week high versus the

yen and the euro gained as investors sold the U.S. andJapanese currencies, which are often perceived as safehavens. The United States added 114,000 jobs last month,driving the jobless rate down to 7.8 percent, its lowestsince January 2009, the Labor Department reported.Payroll gains for both July and August were revisedhigher. "The details were about as good as they realisti-cally could be under the circumstances," said MichaelWoolfolk, senior currency strategist at BNY Mellon inNew York. The MSCI global stock index.MIWD00000PUS rose 0.3 percent to 336.55.

The Dow Jones industrial average .DJI ended up34.79 points, or 0.26 percent, to 13,610.15. The Standard& Poor's 500 Index .SPX closed down 0.47 points, or 0.03percent, to 1,460.93. The Nasdaq Composite Index.IXICdropped 13.27 points, or 0.42 percent, to 3,136.19.

The S&P 500 is still up 16.4 percent so far this year.The benchmark is on track for its best yearly run since2009 when stocks rebounded after the financial crisis.

"The speed with which the market will get overboughton continued strength may pose a problem," said RalphEdwards, director of derivatives strategy at ITG in NewYork. "The market never had a truly ugly day since thehighs registered on September 14th."

Europe's FTSEurofirst 300 index .FTEU3 rallied 1percent to close at 1,111.65. European markets had risenearlier after reassurance from the European Central Bankon Thursday that it stood ready to buy Spain's bonds if itrequested aid. The ECB also said Europe had a "fully ef-

fective backstop mechanism in place" to protect the euro.The ECB envisions buying large volumes of sovereign

debt for periods of one to two months once its bond-buy-ing program is triggered, senior central bank sources toldReuters. The dollar rose to 78.87 yen, the highest sinceSeptember 19, before pulling back to 78.62 yen, up 0.2percent on the day. The euro rose 0.1 percent to $1.3029.

Safe-haven government bond prices fell. The bench-mark 10-year U.S. Treasury note was down 18/32, withthe yield at 1.7341 percent. "Treasuries sank after the jobsreport," said Cary Leahey, economist and senior advisorto Decision Economics in New York.

"Though September job growth was close to expecta-tions, several facets of the report, particularly the largedrop in the unemployment rate to 7.8 percent, suggestedthat the Fed was closer to the exit window," he said, re-ferring to the Federal Reserve's program of unconven-tional monetary easing. Brent futures lost 56 cents tosettle at $112.02 a barrel. U.S. crude futures eased $1.83to settle at $89.88 per barrel, after climbing nearly 4 per-cent in the prior session.

Gold retreated from an 11-month high as the jobs datadampened its appeal as an inflation hedge. Spot gold roseabove $1,795 an ounce earlier, the highest since Novem-ber, and was last down slightly at around $1,781.

NEW YORK

AGENCIES

All three major U.S. stock indexes cameoff session highs by afternoon trade, withthe S&P 500 turning negative for the firsttime this week, as investors braced forweak corporate results.

The Nasdaq was pressured by AppleInc (AAPL.O), which fell 2.1 percent toclose at $652.59. S&P 500 earnings for thethird quarter are forecast to have fallen 2.4percent from the year-ago period, whichwould be the first decline in three years,according to Thomson Reuters data. "It's a

bit 'sell-on-the-news' type of a situation.We had the big jobs numbers this morning,but traders and investors don't want tokeep their positions going into the week-end and next week," said Chris Bertelsen,chief investment officer of Global FinancialPrivate Capital, a Sarasota, Florida-basedwealth manager with $1.5 billion in assetsunder management.

Despite the lackluster performance forthe day, the S&P 500 is still up 16.2 per-cent so far this year. The benchmark is ontrack for its best yearly run since 2009when stocks rebounded after the financialcrisis. "On the negative side, the speed

with which the market will get overboughton continued strength may pose a prob-lem," said Ralph Edwards, director of de-rivatives strategy at ITG in New York. "Themarket never had a truly ugly day since thehighs registered on September 14th."

Most of the market's gains this yearhave been prompted by easy monetarypolicies. The improvement in U.S. hiringlast month is one bright spot as manufac-turing around the world has been show-ing signs of softness in recent months.

The Dow Jones industrial average.DJI rose 34.79 points, or 0.26 percent, to13,610.15 at the close. The Standard &

Poor's 500 Index .SPX dipped just 0.47 ofa point, or 0.03 percent, to 1,460.93. TheNasdaq Composite Index .IXIC slipped13.27 points, or 0.42 percent, to end at3,136.19. For the week, the Dow rose 1.3percent, the S&P 500 advanced 1.4 per-cent and the Nasdaq added 0.6 percent.

Dow component Alcoa Inc (AA.N)will kick off the earnings period on Tues-day, when the aluminum company is ex-pected to report that it broke even,compared with earnings of 15 cents ashare a year ago. Alcoa's stock edged up0.2 percent to close at$9.07 on Friday.

Labor Department data showed the

U.S. unemployment rate dropped by 0.3percentage point in September to 7.8 per-cent, its lowest since January 2009. In-vestors focused on a survey of householdsthat pointed to a big surge in hiring.

A separate survey of business establish-ments showed employers added 114,000jobs to their payrolls last month while datafor July and August was revised to show86,000 more jobs created than previouslyreported. Zynga (ZNGA.O) shares plunged11.9 percent to $2.48 after it slashed its2012 outlook for a second time, fanningdoubts about the games maker's ability toshore up its dwindling earnings.

WASHINGTON

AGENCIES

The deficit equaled about 7 percent of U.S.economic output, down from 8.7 percent in2011, 9 percent in 2010 and 10.1 percent in2009, but it was still greater than in any otheryear since 1947, the non-partisan Congres-sional Budget Office said.

Economists generally consider any deficitthat exceeds 3 percent of U.S. gross domesticproduct to be unsustainable in the long term.

CBO said a $75 billion surplus Septembersurplus helped to hold the full-year fiscal 2012deficit to $1.09 trillion, compared with a$1.297 trillion deficit in fiscal 2012.

The September surplus was just the sec-ond month in the black for the U.S. govern-ment since September 2008, when thecountry was in the throes of a financial crisis.The September data was buoyed by strongquarterly corporate income taxpayments and $7 billion from thesale of shares in bailed-out in-surer American Interna-tional Group. The U.S.Treasury is expected torelease official finalfigures for the yearended September 30next week.

Republicans, includingpresidential nominee MittRomney, have long been ham-mering President Barack Obamafor overseeing four straightyears of trillion-dollar deficitsduring his time in office. De-mocrats have countered thatthese were necessary to avoidanother depression and helpdig out of a deep recessionthey inherited.

Whether the U.S. deficit will mark a fifthyear above $1 trillion in fiscal 2013 dependson how Congress handles the year-end "fiscalcliff" of expiring tax cuts and automaticspending cuts.

If that massive fiscal tightening happensas scheduled, the deficit could be as low as$641 billion next year, according to a CBO es-timate in August. But if Congress keeps cur-rent tax rates in place and finds a way to avoidthe spending cuts, CBO estimates the deficitat about where it is now -- $1.04 trillion.

In September's rare surplus, the CBO es-timated that receipts grew $23 billion com-pared with a year earlier, while outlays shrankby $115 billion. Most of the spending declinewas the result of calendar shifts associatedwith benefit payments, but adjusting for this,there were some notable changes.

Net payments to government-controlledhousing finance giants Fannie Mae and Fred-die Mac fell by $7 billion in September be-

cause they did not need any capitalinjections. Outlays for unem-

ployment benefits fell by $6billion while military spend-

ing fell by $5 billion.For the full fiscal year,

total receipts grew 6.4 per-cent to $2.45 trillion, whileoutlays fell 1.6 percent to$3.54 trillion, CBO esti-mated. Individual income

tax receipts rose 3.4 percentwhile corporate income tax col-

lections rose 33.7 percent. Mostcategories of spending fell, exceptfor Social Security benefits,which rose 5.9 percent, to $762billion, and Medicare, whichrose 3.2 percent to $469 billionafter adjusting for offsettingreceipts.

Shares gain, bondstumble as USunemployment falls Global shares edged higher on Friday and Treasury prices tumbledafter the US unemployment rate unexpectedly fell to a near four-year low, pointing to improvement in the labor market

The federal budget deficit for the just-ended 2012fiscal year shrank by $207 billion from the prior year,but still marked its fourth straight year above $1trillion, Congress' budget referee estimated

S&P 500 dips after four days of gains; earnings eyedThe S&P 500 broke a four-day string of gains, ending slightly lower as an unexpected drop in the US unemployment rate wasovershadowed by concerns about the coming earnings season, which begins with Alcoa next week

us deficit ends fourth fiscalyear above $1 trillion: cBo

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