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WHaT aBoUT inFLaTion? Friday, 13 July, 2012 Page 02 China craves the Apple pie KARACHI ISMAIL DILAWAR T HE cash-strapped federal government has increased its budgetary reliance on the central bank as the prices of commodities, specially the oil, on interna- tional market have shown some ease during the re- cent months. Fearing a direct inflationary impact of its borrowings from the State Bank, which caters to the same through printing more currency notes, the funds-starved government has been showing enough re- straint during first half of FY2 in borrow- ing from the State Bank of Pakistan. Instead, it depended heavily on the scheduled banks to finance its ever-widening fis- cal deficit. Accord- ing to offi- cial figures, the Consumer Price Index in- flation in month of June (2012) stood at 11.26 percent against 12.29 percent in May. Further, on average during FY12 the CPI inflation stood at 11.01 percent, lower than SBP expected range of 11-12 percent as well as the average inflation of 13.66 percent last year. “The subdued number in the month of June is a reflection of soft food prices and decline in the petroleum prices on account of decline in international oil prices,” viewed Topline analyst Nauman Khan. Now when the easing international commodity prices, specially that of the oil constituting the costliest head on Pak- istan’s import bill, have started unfold- ing its positive impact on inflation rate at home, still in double-digit however, the government seems to have rolled up sleeves to borrow directly from the State Bank. The SBP data show that during July-June 22 (FY2012) the funds-starved gov- ernment’s budget- ary borrowings from the central bank accumu- lated to over Rs 597.6 billion, up 90 percent or Rs 6 billion from Rs 592.04 billion the gov- ernment bor- rowed from the scheduled banks during the review period. Compared year-on-year (YoY), the government’s budgetary borrowings from the state and commercial banks depict a respective increase of Rs 439.9 billion or 279 percent or Rs 88.7 billion or 18 per- cent over corresponding months in FY11. In total, during the period under re- view the government raised over Rs 1.279 trillion from the banking system against last year’s Rs 645.33 billion. This shows a mammoth growth of Rs 634 billion or 98 percent over last year. The borrowing from scheduled banks was made through the auction of the heavily-weighted and risk-free govern- ment papers in which the risk-averse banks invested heavily to earn billions without, what an analyst aptly pointed out, “lifting a finger”. This huge investment in the govern- ment securities, according to SBP figures, has skyrocketed the Net Domestic Assets (NDA) of the banks to over Rs 1.074 tril- lion compared to last year’s Rs 583.118 billion. The analysts also cite an improved private sector off-take as a contributing factor in the NDA growth. “This positivity was overshadowed by persistent increase in borrowing for budgetary support,” said Mazhar A. Sabir of InvestCap Resreach. This trend, however, does not augur well in the long run for country’s already troubled economy which, the analysts say, is still grappling with challenges like an enhanced money supply, the result- ant double-digit inflation and reduced bank advances to the private sector, con- sidered to be the engine of growth in de- veloping economies. The economic observers believe that the Broad Money supply figures show a “dramatic rise” in money supply by Rs 181 billion during last week of June, posting the cumulative increase of 14.4%YTD till June 29. “The current trend in M2 growth is single-handedly driven by massive surge in the govern- ment borrowing,” said Mazhar. The analyst said, cumulatively, the government’s budgetary borrowings had contributed 67.2 percent in incre- mental supply growth compared to the previous year. The positives like improving Pak-US ties and expected inflow of $ 1.1 billion under Coalition Support Fund and the current declining trend in international commodity prices, would provide the government with an alternative source of budget financing and keep the price hike lower in the coming months. “The monetary mechanism could get some relief, however, we expect that the SBP would hold the current stance and maintaining the DR at current in near fu- ture,” Mazhar observed. Another feather in SBP’s cap Romanian aid? Romania can help Pakistan tap EU market: envoy ISLAMABAD APP Ambassador of Romania to Pakistan Emilian Ion has invited Pakistani business community to participate in Romexpo to be held in Bucharest, to explore business opportunities aimed at boosting bilateral trade. He said that improved links between the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and the Federal Chamber of Romania was his dream which would come true soon. Ambassador Emilian Ion was talking to Chairman of the FPCCI Standing Committee on Diplomatic Affairs Sheikh Humayun Sayeed, who called on him here. Chairman Media FPCCI Malik Sohail, First Secretary Romanian Embassy Dragos Cosmin Luca and others were also present on the occasion. The envoy of the largest market in the South-Eastern Europe said that historical and friendly nature of the relations between the two states since 1964 called for more concentrated efforts to work together at all levels and promote cooperation in the political, economic, trade and cultural arenas. Pakistani and Romanian business communities should take advantage of the huge opportunities offered by the two economies, the representative of the seventh largest EU market underlined. Pakistani businessmen can export their products especially textile, garments, leather etc. to Romania and also to other EU countries through Bucharest, Emilian Ion informed. On the occasion, Chairman FPCCI Standing Committee on Diplomatic Affairs Chairman Sheikh Humayun Sayeed assured participation of business community in Romexpo. He thanked Romania for taking interest in Pakistan’s coal, energy, pharmaceutical, hydropower and other sectors. Sayeed offered full support of FPCCI to Romanian investors in exploring opportunities, developing linkages, holding exhibitions and exchanging business information. g Government’s budgetary borrowings from SBP exceed those from scheduled banks g Declining commodity prices in international market rids government of inflation woes g Budgetary loans from SBP cross Rs 597 billion compared to Rs 592 billion from commercial banks g SBP expected to keep discount rate intact at 12pc in near future ISLAMABAD ONLINE The current increase in trade deficit will drag our economy towards major downturn which is already in doldrums due to various core issues that need to be addressed by the Government on urgent basis. Asad Farid, Acting President, Islamabad Chamber of Commerce and Industry (ICCI) expressed deep concern over the increasing trend in trade deficit. He said that the country could not afford rise in trade deficit for long term with the current level of foreign exchange reserves. He was responding to the reports that trade deficit has in- creased by 36.3 percent and crossed the benchmark of $21billion during fiscal year 2011-12 as compared to $15.60 billion in the previous corresponding period. ICCI Acting President said that our ex- port oriented industries have failed to maintain export target due to severe energy shortage and our exports were on decline and recorded at $23.64 billion compared with $24.81billion in the same period last year, depicting a decline of 4.71 percent which would also put the country in a bal- ance of payments crisis. He said that the higher trade deficit leads to outflow of capital resources from the country and increases economic de- pendency. To control over the trade deficit, Government should improve the competitiveness of the domestic in- dustries by ensuring uninterrupted power supply which would also im- prove the exports of the indus- trial units. Asad Farid said that widening trade deficit would bring pressure on the current account deficit, which could ultimately press the rupee value down and this will further deteriorate the situa- tion. ICCI Acting Presi- dent called upon the Gov- ernment to take urgent measures to bring some sta- bility in rupee value against dollar so that rapid increase in import bill could be con- trolled as it was the major cause of widen- ing trade deficit. He cited the example of China, who was continuously trying to maintain its trade balance by controlling value of its currency. ‘Massive trade deficit’ scares the daylight out of ICCI Mining sector to grow by 3% this year ISLAMABAD: The growth rate of mining sector of the country has been set at 3 percent during the current fiscal year (2012-13), according to official sources. Focus of the mineral policy is on oil, gas, coal, iron ore, copper, and chromites to reduce import dependence, official documents revealed adding Public Sector Development Programme (PSDP) allocation of Rs.268 million has been made for mining this year. During the year 2012- 13 an area of about 3,900 sq. km is planned to be mapped in different parts of the country whereas about 300 samples will be collected and analyzed under geochemical surveying. Efforts will be concentrated on exploration and evaluation of coalfields in Punjab, Sindh and Balochistan. These studies aim at enhancing coal resource base and supplementing power generation and substituting furnace oil in different industrial units in the country. According to the document, copper, lead-zinc sulphide and iron ore occurrences in Chagai and Lasbela-Khuzdar Districts in Balochistan will be further explored. A total of 2 bore holes are tentatively planned to be drilled for a cumulative depth of 500 meters under different development projects. The ongoing projects namely including Up gradation/strengthening of Geosciences Advance Research laboratories, Accelerated Geological mapping and Geo chemical exploration of the out crop areas as well as the project review/updation of Mineral Policy will continue in the year 2012-13. AGENCIES PRO 12-07-2012_Layout 1 7/13/2012 6:17 AM Page 1
Transcript
Page 1: Profit E-paper 13th July,2012

WHaT aBoUT inFLaTion?

Friday, 13 July, 2012

Page 02

China craves the Apple pie

KARACHI

ISMAIL DILAWAR

THE cash-strapped federalgovernment has increasedits budgetary reliance on thecentral bank asthe prices of

commodities, speciallythe oil, on interna-tional market haveshown some easeduring the re-cent months.

Fearing a direct inflationary impactof its borrowings from the State Bank,which caters to the same through printingmore currency notes, the funds-starvedgovernment has been showing enough re-straint during first half of FY2 in borrow-ing from the State Bank of Pakistan.

Instead, it depended heavily on thescheduled banks to finance

its ever-widening fis-cal deficit.

A c c o r d -ing to

offi-

cial figures, the Consumer Price Index in-flation in month of June (2012) stood at11.26 percent against 12.29 percent inMay. Further, on average during FY12 theCPI inflation stood at 11.01 percent, lowerthan SBP expected range of 11-12 percentas well as the average inflation of 13.66percent last year.

“The subdued number in the monthof June is a reflection of soft food pricesand decline in the petroleum prices onaccount of decline in international oilprices,” viewed Topline analyst NaumanKhan. Now when the easing internationalcommodity prices, specially that of the oilconstituting the costliest head on Pak-istan’s import bill, have started unfold-

ing its positive impact on inflationrate at home, still in double-digit

however, the government seemsto have rolled up sleeves to

borrow directly from theState Bank.

The SBP data showthat during July-June22 (FY2012) the

funds-starved gov-ernment’s budget-ary borrowingsfrom the centralbank accumu-lated to over Rs597.6 billion,up 90 percentor Rs 6 billionfrom Rs 592.04billion the gov-ernment bor-

rowed from the scheduled banks duringthe review period.

Compared year-on-year (YoY), thegovernment’s budgetary borrowings fromthe state and commercial banks depict arespective increase of Rs 439.9 billion or279 percent or Rs 88.7 billion or 18 per-cent over corresponding months in FY11.

In total, during the period under re-view the government raised over Rs 1.279trillion from the banking system againstlast year’s Rs 645.33 billion. This showsa mammoth growth of Rs 634 billion or98 percent over last year.

The borrowing from scheduled bankswas made through the auction of theheavily-weighted and risk-free govern-ment papers in which the risk-aversebanks invested heavily to earn billionswithout, what an analyst aptly pointedout, “lifting a finger”.

This huge investment in the govern-ment securities, according to SBP figures,has skyrocketed the Net Domestic Assets(NDA) of the banks to over Rs 1.074 tril-lion compared to last year’s Rs 583.118billion. The analysts also cite an improvedprivate sector off-take as a contributingfactor in the NDA growth. “This positivitywas overshadowed by persistent increasein borrowing for budgetary support,” saidMazhar A. Sabir of InvestCap Resreach.

This trend, however, does not augurwell in the long run for country’s already

troubled economy which, the analystssay, is still grappling with challenges likean enhanced money supply, the result-ant double-digit inflation and reducedbank advances to the private sector, con-sidered to be the engine of growth in de-veloping economies.

The economic observers believe thatthe Broad Money supply figures show a“dramatic rise” in money supply by Rs181 billion during last week of June,posting the cumulative increase of14.4%YTD till June 29. “The currenttrend in M2 growth is single-handedlydriven by massive surge in the govern-ment borrowing,” said Mazhar.

The analyst said, cumulatively, thegovernment’s budgetary borrowingshad contributed 67.2 percent in incre-mental supply growth compared to theprevious year.

The positives like improving Pak-USties and expected inflow of $ 1.1 billionunder Coalition Support Fund and thecurrent declining trend in internationalcommodity prices, would provide thegovernment with an alternative source ofbudget financing and keep the price hikelower in the coming months.

“The monetary mechanism could getsome relief, however, we expect that theSBP would hold the current stance andmaintaining the DR at current in near fu-ture,” Mazhar observed.

Another feather in SBP’s cap

Romanian aid?

Romania can help Pakistantap EU market: envoy

ISLAMABAD

APP

Ambassador of Romania to Pakistan EmilianIon has invited Pakistani business communityto participate in Romexpo to be held inBucharest, to explore businessopportunities aimed at boosting bilateraltrade. He said that improved linksbetween the Federation of PakistanChambers of Commerce and Industry (FPCCI) and the Federal Chamberof Romania was his dream which would come true soon. AmbassadorEmilian Ion was talking to Chairman of the FPCCI Standing Committee onDiplomatic Affairs Sheikh Humayun Sayeed, who called on him here.Chairman Media FPCCI Malik Sohail, First Secretary Romanian EmbassyDragos Cosmin Luca and others were also present on the occasion. Theenvoy of the largest market in the South-Eastern Europe said thathistorical and friendly nature of the relations between the two states since1964 called for more concentrated efforts to work together at all levels andpromote cooperation in the political, economic, trade and cultural arenas.Pakistani and Romanian business communities should take advantage ofthe huge opportunities offered by the two economies, the representative ofthe seventh largest EU market underlined. Pakistani businessmen canexport their products especially textile, garments, leather etc. to Romaniaand also to other EU countries through Bucharest, Emilian Ion informed.On the occasion, Chairman FPCCI Standing Committee on DiplomaticAffairs Chairman Sheikh Humayun Sayeed assured participation ofbusiness community in Romexpo. He thanked Romania for taking interestin Pakistan’s coal, energy, pharmaceutical, hydropower and other sectors.Sayeed offered full support of FPCCI to Romanian investors in exploringopportunities, developing linkages, holding exhibitions and exchangingbusiness information.

g Government’s budgetary borrowings from SBP exceed

those from scheduled banksg Declining commodity prices in international market rids

government of inflation woesg Budgetary loans from SBP cross Rs 597 billion compared

to Rs 592 billion from commercial banksg SBP expected to keep discount rate intact at 12pc in near future

ISLAMABAD

ONLINE

The current increase in trade deficit willdrag our economy towards major downturnwhich is already in doldrums due to variouscore issues that need to be addressed by theGovernment on urgent basis.

Asad Farid, Acting President,I s l a m a b a dChamber ofCommerce andIndustry (ICCI)expressed deepconcern overthe increasingtrend in tradedeficit. He saidthat the countrycould not affordrise in trade deficitfor long term withthe current level offoreign exchange reserves.

He was responding to thereports that trade deficit has in-creased by 36.3 percent and crossed thebenchmark of $21billion during fiscal year2011-12 as compared to $15.60 billion in theprevious corresponding period.

ICCI Acting President said that our ex-port oriented industries have failed tomaintain export target due to severe energyshortage and our exports were on declineand recorded at $23.64 billion compared

with $24.81billion in the same period lastyear, depicting a decline of 4.71 percentwhich would also put the country in a bal-ance of payments crisis.

He said that the higher trade deficitleads to outflow of capital resources fromthe country and increases economic de-pendency. To control over the trade deficit,

Government should improve thecompetitiveness of the domestic in-dustries by ensuring uninterruptedpower supply which would also im-

prove the exports of the indus-trial units.

Asad Farid said thatwidening trade deficit

would bring pressureon the current accountdeficit, which couldultimately press therupee value down

and this will furtherdeteriorate the situa-tion.

ICCI Acting Presi-dent called upon the Gov-

ernment to take urgentmeasures to bring some sta-

bility in rupee value against dollar so thatrapid increase in import bill could be con-trolled as it was the major cause of widen-ing trade deficit. He cited the example ofChina, who was continuously trying tomaintain its trade balance by controllingvalue of its currency.

‘Massive trade deficit’ scares

the daylight out of ICCI

Mining sector to

grow by 3% this yearISLAMABAD: The growth rate ofmining sector of the country has been set at3 percent during the current fiscal year(2012-13), according to official sources.Focus of the mineral policy is on oil, gas,coal, iron ore, copper, and chromites toreduce import dependence, officialdocuments revealed adding Public SectorDevelopment Programme (PSDP)allocation of Rs.268 million has been madefor mining this year. During the year 2012-13 an area of about 3,900 sq. km is plannedto be mapped in different parts of thecountry whereas about 300 samples will becollected and analyzed under geochemicalsurveying. Efforts will be concentrated onexploration and evaluation of coalfields inPunjab, Sindh and Balochistan. Thesestudies aim at enhancing coal resourcebase and supplementing power generationand substituting furnace oil in differentindustrial units in the country. Accordingto the document, copper, lead-zincsulphide and iron ore occurrences inChagai and Lasbela-Khuzdar Districts inBalochistan will be further explored. Atotal of 2 bore holes are tentatively plannedto be drilled for a cumulative depth of 500meters under different developmentprojects. The ongoing projects namelyincluding Up gradation/strengthening ofGeosciences Advance Researchlaboratories, Accelerated Geologicalmapping and Geo chemical exploration ofthe out crop areas as well as the projectreview/updation of Mineral Policy willcontinue in the year 2012-13. AGENCIES

PRO 12-07-2012_Layout 1 7/13/2012 6:17 AM Page 1

Page 2: Profit E-paper 13th July,2012

Friday, 13 July, 2012

Major Gainers

COMPANY OPEN HIGH LOW CLOSE CHANGE TURNOVER

Rafhan Maize Prod. 3100.00 3210.00 3195.00 3200.00 100.00 107Nestle Pakistan Ltd. 4012.50 4150.00 4030.00 4104.00 91.50 26Colgate Palmolive 1150.00 1203.99 1105.01 1202.88 52.88 245Bata (Pak) Limited 640.01 672.01 640.01 669.00 28.99 40Mithchells Fruit 289.00 303.45 300.00 302.76 13.76 13,893

Major LosersUniLever Pak 7398.69 7249.99 7200.00 7213.50 -185.19 83Sanofi-Aventis Pak 194.05 190.00 184.35 184.50 -9.55 2,154Siemens Pakistan 685.05 709.00 680.00 680.40 -4.65 114Engro Foods Ltd. 73.41 74.40 69.74 69.86 -3.55 7,903,770Burshane LPG 52.43 52.80 49.81 49.97 -2.46 102,093

Volume LeadersD.G.K.Cement 42.94 43.67 42.85 43.06 0.12 12,394,128Engro Foods Ltd. 73.41 74.40 69.74 69.86 -3.55 7,903,770Fauji Cement 5.89 6.03 5.74 5.79 -0.10 5,508,815NIB Bank Limited 2.05 2.30 2.04 2.19 0.14 5,478,110Jah.Sidd. Co. 14.32 14.63 14.16 14.23 -0.09 5,253,124

Interbank RatesUS Dollar 94.3544UK Pound 145.9002Japanese Yen 1.1895Euro 115.2822

Dollar EastBUY SELL

US Dollar 94.50 95.20Euro 114.68 116.21Great Britain Pound 145.38 147.28Japanese Yen 1.1830 1.1984Canadian Dollar 91.66 93.37Hong Kong Dollar 12.03 12.25UAE Dirham 25.68 25.99Saudi Riyal 25.18 25.45

Australian Dollar 94.89 97.59

Business

KARACHI

STAFF REPORT

THE bulls kept dominating Karachistocks market on Thursday withbenchmark, KSE 100-share indexgained 21.28 points. The day sawthe index closing up by 0.15 per-

cent at 14, 401.74 points against 14, 380.46points of Wednesday. Pakistan Stocks closedhigher amid cautious activity by investors inthe lead up to the Supreme Court reaction onNRO judgment implementation, This wasviewed by Ahsan Mehanti, Director at ArifHabib Investments Limited.

On Thursday, the trading volumes at theready-counter were recorded higher at 109.104million shares against 80.603 million shares of

the previous day. The trading value increasedto Rs 4.629 billion compared to Rs 2.372 bil-lion of the previous session. The intraday highand low, respectively, stood at 14, 500.61 and14, 363.24 points.

He added that the profit taking witnessedin the corporate earning announcements ses-sion at KSE as global markets uncertainty per-sists. The market capitalization increased to Rs3.671 trillion from Rs 3.663 trillion a day ear-lier. Of the total 360 traded scrips, 163 gained,109 lost and 88 finished as unchanged.

The free-float KSE-30 index also gained5.19 points to close at 12, 492.03 points againstthe previous 12, 486.84 points. D.G.K Cementwas the day’s volume leader counting its tradedshares at 12.394 million with the opening andclosing rates standing at Rs 42.94 and Rs

43.06, followed by Engro Foods Limited, FaujiCement, NIB Bank Limited and Jahangir Sid-diqui Bank Limited with turnover of 7.903 mil-lion, 5.508 million, 5.478 million and 5.253million shares respectively.

According to analyst the institutional sup-port witnessed in blue chip stocks in oil, bankingand cement sector on improvement in Pak-USrelations and speculations ahead of release of USCoalition Support Fund of $1.5bn. On the futuremarket, the turnover recovered remarkably byover 4 million shares to 9.434 million against5.782 million shares of Wednesday.

The Rafhan Maize Prod and Nestle Pak-istan Limited, up Rs 100.00 and Rs 91.50, ledhighest price gainers while, UniLever Pakistanand Sanofi-Aventis Pakistan, down Rs 185.19and Rs 9.55 respectively, led the losers.

Bulls take judicial cueBulls edged out the bears, as KSE-100 witnessed a 21-point hike,courtesy SC reaction on NRO judgment implementation

China criticises EU trade

‘discrimination’

BEIJING: China on Thursdaycriticised Europe’s refusal to easetwo longtime trade restrictions as“discrimination”, following a high-level meeting between the two sidesthis week. “We believe that the twoissues are actually an embodiment ofthe discrimination against China bythe European side,” Hua Chunying, aforeign ministry councillor handlingEuropean affairs, told reporters.“The two issues reflect a lack of trustby the European side,” she said. “Ifthe European side can take a smallstep forward in solving these twoissues, then we can make a majorstep forward in enhancing mutualtrust.” AGENCIES

Forex reserves drop to $14,909b

KARACHI: Country’s foreign exchangereserves have dropped by $ 328 million tomore than $ 14,909 billion on July 12, 2012 onforeign payments. According to State Bank ofPakistan here Thursday, the foreign exchangereserves held by the Central Bank decreased to$ 10.496 billion while reserves held by banksimproved to about $ 4.413 billion during theweek. APP

Euro slumps to two-year low

LONDON: The European single currency fellbelow $1.22 on Thursday, striking a fresh two-year low amid the eurozone crisis and astraders saw receding prospects of US Fedstimulus measures. At about mid-day, the eurodived as low as $1.2185, striking the lowestlevel since June 30, 2010. That compared with$1.2238 late in New York on Tuesday. AGENCIES

Standard Chartered inaugurates

flagship Islamic Banking Branch

KARACHI: As part of Standard Chartered’scommitment to provide high quality Shariah-compliant banking products and services to itscustomers, the Bank inaugurated its flagshipIslamic banking branch at a new location atSharah-e-Faisal, Karachi. Al-Tijarah is thesecond flagship branch in Karachi and thirdin country for Standard Chartered Saadiq.The branch was inaugurated by SteveBertamini, Group Executive Director andCEO Consumer Banking. This furtherportrays that Standard Chartered Saadiq iscommitted to providing its customersconvenient, effective and rewarding Shariahcompliant banking. It also offers itscustomers unique Priority Banking solutionsthrough a dedicated Priority Banking Centrefor its customers. PRESS RELEASE

NBP wins ‘Top Corporate FinanceHouse’ award

KARACHI: Based on the value of transactions closed in 2011 byNBP Investment Banking the CFA Association of Pakistan hasdeclared NBP the winner of the ‘Top Corporate Finance House(Fixed Income) Award of the Year 2011’. Based on a competitiveprocess an independent panel of judges determined that thevolume, number, transaction complexity and other criteria madeNBP the winner of the award. NBP was also declared the winnerfor the “Transaction of the Year-2011” award by the CFAAssociation of Pakistan for the Private Placement and Offer-for-Sale of Engro Foods Limited. The CFA Association of Pakistan’spanel of judges, based on the innovativeness of structure,suitability to customer’s requirements, transaction size, width ofdistribution and the transaction’s impact on Pakistan’s financialmarkets, determined that NBP’s investment banking advisorymade it eligible to win the award.

Fast paced development at Bahria Enclave

RAWALPINDI: Bahria Enclave has fast paced development for itsland and amenities over a short span of time. The first batch ofplots is ready for possession before time. A quick paced work forthe provision of electricity & natural gas connections, has resultedin the availability of both at the moment. Trafalgar square monu-ment is already completed and other amenities are also in place forthe ready for possession site. Moreover, Bahria Enclave School &Mosque is also under construction to meet the basic necessity ofthe residents. Furthermore, Margalla Villas which is exclusive com-munity of more than 50 Villas, are under construction at rapid pace.

KARACHI: Aviation enthusiasts look on as Qatar Airways’ Boeing 787 Dreamlinertakes off as part of the flying display on the first three days of the dailyprogramme at Farnborough Air Show.

KARACHI: Nauman Fakhar, VP Customer Services, Warid Telecom (right) givingcheque of Rs. 10,000,000 to Arshad Ali of Hyderabad who won the grand prizein Warid ‘SMS Crore Ka’ promotion.

CORPORATE CORNER

European shares

weaken on Fed

disappointmentLONDON

AGENCIES

European shares weakened on Thursdayin a broad-based sell-off after minutes ofthe U.S. Federal Reserve’s June meetingdampened hopes for more risk-asset-boosting stimulus in the near term. TheFed minutes showed the world’s biggesteconomy would have to worsen beforethe central bank eased monetary policyfurther. A few officials thought morestimulus was justified, but the majoritywere unconvinced. “With the Fedholding back on QE3 (a third round ofquantitative easing), perhaps inanticipation of darker days ahead, theshort sellers are coming out in force,”Mike McCudden, head of derivatives atInteractive Investor, said. “Thinningvolumes as we trudge through thesummer months will bring increasedvolatility in the markets and right now,the picture is looking pretty bleak.” TheFTSEurofirst 300 was down 1.1 percentat 1,027.66 by 1057 GMT, in volume just29 percent of the 90-day daily average.The index was trading below its 100-daymoving average, a solid support which itbreached earlier in the day. Consistentcloses below that level at the end of Aprilsaw the index plunge 9 percent as eurozone debt and global growth worriesintensified, although the 200-daymoving average is on the rise, currentlyat 1,014. U.S. stock index futures pointedto a lower opening on Wall Street onThursday, with futures for the S&P 500,the Nasdaq 100 and the Dow Jones down0.7 to 0.9 percent, ahead of U.S. weeklyjobless claims data at 1230 GMT.“There’s still a tug of war between weakmacro — the most recent data we haveseen in Europe and the U.S. has beenpoor —and hope for policy intervention,”Emmanuel Cau, strategist at JPMorgan,said. “The Fed minutes yesterday did notprovide much clarity, in the sense thatthey kept the door open to interventionbut we think there is a big question markabout timing.

PARIS

AGENCIES

Oil prices in recent years have been marked byrapid and very wide fluctuations, causing prob-lems for both producer and consumer nations, theInternational Energy Agency said on Thursday.

Over the past three months, the price for theEuropean benchmark, Brent North Sea crude, hasvaried between a high point of $125 per barrel inMarch and a low of $89 in late June, the IEA saidin its latest monthly report. Such price volatilitycan hit “fiscal revenues, investment and confi-dence in the economy” for exporters, while it “canhave negative impacts on inflation and growthprospects” for importers. The G20 of developedand major developing countries has called for ef-forts to combat such price swings but the IEA saidprice “volatility itself is not the main problem ...the main challenge is (current) elevated price lev-els combined with higher volatility.”

The IEA said this had become more prevalentsince the 2008 global financial crisis, with Brentoil that year hitting a July high of $144 even as it

averaged just under $97 for the 12 months period.In 2011 and in 2012 so far, it has run at muchhigher levels of more than $111 and $113, respec-tively, it noted. “Given the fragile state of theglobal economic recovery, the impact of high oilprices on global growth, especially in oil importingcountries, is potentially more severe now than in2008,” the IEA said.

“High oil prices already threaten to aggra-vate global economic slowdown by wideningglobal imbalances, reducing household andbusiness income, and boosting inflation.”

The IEA said that while prices and volatilitycannot be separated from each other, persist-ently higher oil costs were the real concern, es-pecially for importers for which they dampenthe economy. Accordingly, “policies to deal withhigh oil prices should arguably be given priorityover policies dealing with volatility,” it said.

The IEA said in the report that while it ex-pected oil prices to hold at about current levelsfor the rest of 2012, they could fall by about 7.0percent next year, based on current market in-dications and anticipated sluggish demand.

China craves the Apple pie SHANGHAI: Apple Inc’s next-generation iPhone has not even beenreleased yet, but opportunistic sellers on China’s largest e-commerceplatform, Taobao, are already accepting pre-orders, complete with mock-up pictures and purported technical specifications. The hotly anticipatediPhone 5 is widely expected to be released sometime between August andOctober this year, although Apple itself has been tight-lipped about it.Sources have said the iPhone 5 would have a bigger screen than previousmodels, while Taiwanese media reported the phone’s voice recognitionsoftware, Siri, would have more powerful functions. Sellers on Taobao, aunit of Alibaba Group, are accepting orders for the iPhone 5, in somecases asking for a deposit of 1,000 yuan ($160) for the new phone. Oneseller, “Dahai99888”, who started accepting pre-orders this week, isasking for full payment upfront, at a cool 6,999 yuan ($1,100). Taobaosellers that Reuters spoke with said they planned to buy the iPhone 5 inHong Kong or the United States and then bring it to mainland China.Apple products are often available in Hong Kong before they are releasedon the mainland. The sellers could not promise a specific delivery time.The pre-order activity comes despite the mystery around the iPhone 5

and highlights the intense demand for new Apple products in China. Applehas not confirmed the specifications, details or price of the latest iPhone but the Internet rumour millhas been in overdrive, churning out photo renderings and pictures of purported iPhone 5 engineeringsamples, and speculating endlessly on its technical specifications and functions. AGENCIES

‘High oil prices, volatility hitproducers, consumers’

02

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