ISLAMABAD: Pakistan stocks dropped on Wednesday, with the market wary of selling by foreign investors given the bearish trend in the region, dealers said.

The Karachi Stock Exchange (KSE) benchmark 100-share index ended 1.63 per cent, or 232.6 points, lower at 14,081.07, with a volume of 110.6 million shares, compared to Tuesday’s close of 14,313.67 points.

“Investors trimmed their position as they fear more foreign selling if regional markets’ bearish trend continues,” said Samar Iqbal, a dealer at Topline Securities.

In the currency market, the Pakistani rupee ended almost flat at 90.86/91 to the dollar, compared with Tuesday’s close of 90.83/88.

The rupee has been supported by remittances, which rose 20.2 per cent to $10.88 billion in the first 10 months of the 2011/12 fiscal year, compared with $9.05 billion in the same period last year.

In April, remittances totalled $1.14 billion.

Overnight rates in the money market ended at 11.90 per cent, the same level as on Tuesday.

(Dawn)

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MUMBAI: Wednesday to their lowest levels in over 4 months as the India rupee dropped to a record low reinforcing uncertainty about the country’s fiscal and economic fundamentals at a time of steep global risk aversion.

The rupee fell to a record low 54.52 against the dollar surpassing the previous record low of 54.30 hit in mid-December, as worries about the euro zone intensified as Greece gears up for new elections.

“I think the rupee is likely to touch 56 to the dollar by June-end. As of now, the only support can come from the Reserve Bank of India. There is no dollar supply in the market and exporters are not selling,” said Deepak Kundu, dealer FX and rates, ING Vysya in Mumbai.

India is seen particularly vulnerable at a time of global risk aversion given the concerns about its fiscal and current account deficits, and slowing growth at a time of persistently high inflation.

Domestic stocks have tumbled 13 per cent since hitting a 2012 peak in mid-February, compared to a 10.7 per cent fall in the MSCI Asia-Pacific ex-Japan index during the same period.

“This is a big negative,” said Jagannadham Thunuguntla, a strategist at SMC Global Securities in New Delhi, referring the rupee and adding it would raise concerns among foreign investors.

“The outlook is appearing to be quite bleak. I think the stock market is open to a 5-10 per cent downside in the next month or two.”

The country’s main 30-share BSE index fell 1.83 per cent to 16,030.09 while the broader 50-share NSE index lost 1.71 per cent to 4,858.25 points.

Bank of America-Merrill Lynch said it expects the BSE index to drift to 15,000, given economic growth and current account concerns and noting business confidence was below the Lehman crisis levels.

Although a weaker rupee should help exporters, analysts said overall sentiment was being trumped by concerns foreign investors would exit India in light of the global risk aversion and the domestic challenges.

(Dawn)

KARACHI: In the currency market on Monday, the Pakistani rupee closed almost flat at 90.74/79 to the dollar, compared with Friday’s close of 90.76/78.

The rupee has been supported by remittances, which rose 21.45 per cent to $9.73 billion in the first nine months of the 2011/12 fiscal year, compared with $8.02 billion in the same period last year.

In March, remittances totaled $1.14 billion.

Overnight rates in the money market ended at 11.90 per cent, up from Friday’s close of 11 per cent because of decreased liquidity in the market.

(Dawn)

US government assistance for AIG, which in 2008 was swept into a liquidity crisis by its exposure to credit default swaps on mortgage-backed securities, has amounted to more than $180 billion. – Reuters photo

WASHINGTON: The US Treasury is to sell $5 billion worth of shares in American International Group Inc. (AIG) in a stock offering, with the bailed-out insurer buying $2 billion.

AIG, seen as a symbol of the excesses that epitomized the global financial meltdown in 2008, was saved from almost certain bankruptcy in September that year by the US government.

The Treasury announced in a statement Sunday that it would sell 163,934,426 shares of its AIG common stock at $30.50 per share in an underwritten public offering, its third such sale since the government intervened at the company.

“The aggregate proceeds to Treasury from the common stock offering are expected to be approximately $5.0 billion,” the statement said.

“As part of Treasury’s offering, AIG agreed to purchase 65,573,770 shares at the public offering price of $30.50 per share — representing $2.0 billion of Treasury’s expected proceeds from the sale,” it added.

The offering will reduce the government’s holding in AIG from 70 per cent to 63 per cent, according to the Treasury which first trailed the sale on Friday but without giving details.

AIG shares closed at $32.83 on Friday, down 3.84 per cent.

US government assistance for AIG, which in 2008 was swept into a liquidity crisis by its exposure to credit default swaps on mortgage-backed securities, has amounted to more than $180 billion.

(Dawn)

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ISLAMABAD: In another setback to the ailing economy, the four provincial governments on Wednesday said they cannot save Rs167 billion from their budgets to finance the gap between income and spending of the federal government.

A firm ‘no’ from the four federating units will further spoil Pakistan’s case with the International Monetary Fund (IMF), which has suspended a $11.3 billion bailout programme since July 2010 due to Islamabad’s inability to deliver on key conditions, said a senior finance ministry official.

The “tough message” was given by the provincial finance secretaries in a meeting with the federal finance secretary on Tuesday.

In the federal budget 2010-11, the government had announced that it would restrict the budget deficit to 4 per cent of the size of the economy, or Rs685 billion, on the assumption that the four provinces will save Rs167 billion (1 per cent of GDP).

The failure to reform the energy sector, levy reformed general sales tax, check defence spending and non-issuance of 3G licences has already jeopardised the fiscal plan.

Officials have already told Prime Minister Yousaf Raza Gilani that, incorporating all these factors, the budget deficit may touch 7.5 per cent of GDP or Rs1.28 trillion.

The absence of the provincial  surplus may push the budget deficit even beyond 8 per cent, provided the government does not take any corrective measures, said the official who attended the meeting.

The provinces told the federal government that generation of Rs167 billion was dependent on Rs1.67 trillion revenue collection, a provincial finance secretary told The Express Tribune. He spoke candidly on the issue on assurance that his identity will not be disclosed.

“The federal government informed us that the Federal Board of Revenue may not collect more that Rs1.5 trillion, so how can the provinces save the money,” he added.

Under the 7th National Finance Commission Order, the federal government transfers 56 per cent of the FBR revenue to the provinces.

Any shortfall in collection affects the federal transfers to the provinces. Another provincial finance secretary said the provinces’ 80 per cent budget is dependent on federal transfers and 75 per cent of their spending is obligatory on account of pensions, salaries and debt-servicing.

During the first half of the current fiscal, the four provincial governments managed to save Rs75 billion. The Balochistan government saved Rs23.2 billion, Khyber-Pakhtunkhwa, Rs18 billion, Punjab, Rs14 billion and Sindh, Rs20 billion.

The provincial finance secretary said that the saving occurred due to a temporary freeze on provincial Annual Development Plans in the aftermaths of this summer’s epic floods. It has been informed that most part of this saving will be consumed in the next six months, let alone additional saving, he added.

The issue of electricity dues also figured in the meeting.

Sources told The Express Tribune that the provinces disputed the federal figures and agreed to pay only the reconciled numbers. The federal government has worked out Rs7 billion electricity dues against the Punjab government but the provincial government puts the number at Rs4 billion.

The sources said that the Sindh government was the major defaulter with Rs51 billion pending dues.

Refernce: Tribune

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ISLAMABAD: Textile exports surged by 25.79 per cent during the first half (July-December) of the current fiscal year compared to the same period last year, despite challenges like energy shortages.

Textile exports from July-December 2010 were recorded at $6.28 billion against exports worth $4.995 billion in July-December 2009, according to data released by the Federal Bureau of Statistics.

Textile exports during December alone showed impressive growth of 15.47 per cent and 42.65 per cent over November 2010 and December 2009 respectively. Textile exports in December were recorded at $1.17 billion compared to exports worth $1.02 billion in November 2010 and $823.58 million in December 2009, the figures revealed.

Among major products that contributed to the positive growth was cotton cloth whose exports increased by 30.63 per cent. Exports of raw cotton increased by 13.91 per cent, cotton yarn by 26.49 per cent, yarn by 43.11 per cent, knitwear by 24.07 per cent, bedwear by 16.01 per cent, towels by 7.23 per cent, readymade garments by 34.99 per cent, art, silk and synthetic textile by 69.68 per cent, made-up articles by 21.48 per cent and other products by 47.73 per cent.

The commodities that recorded a fall in exports included cotton (carded or combed) and tents, canvas and tarpaulin, exports of which decreased by 43.6 per cent and 46.69 per cent.

Meanwhile, exports of food group increased from $1.45 billion in July-December 2009-10 to $1.54 billion in July-December 2010-11, showing an increase of 6.18 per cent.

Exports of petroleum products and coal surged by 35.33 per cent during the period under review, growing from $409.88 million to $554.71 million.

Refernce: Tribune

KARACHI: The government has appointed Abdur Rauf Chaudhry secretary of the Ministry of Information Technology and Telecommunications on temporary basis.

During his tenure, he will make efforts to resolve the issues of Universal Services Fund (USF) and research and development fund. “With the deputation of Chaudhry, the ministry has been made functional for the first time under the current setup, now that a minister and secretary have both assumed their offices,” said telecom analyst Saleh Sikandar.

The IT ministry had previously been working without a minister for over two years, while there has been no secretary for nearly a month.

Refernce: Tribune

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LAHORE: A fruit and vegetable wholesale market is under construction at the Chaman bypass in Qila Abdullah district, which will provide an avenue to domestic and international traders for doing business with Afghanistan, Russia, central Asian states and eastern European countries, market sources say.

For the development of the project, seven acres of land has been allocated to the Chaman Chamber of Commerce and Industry (CCCI) and the Chaman International Fruit and Vegetable Marketing Society. The market is being constructed at a cost of Rs63.5 million.

Members of the marketing society told The Express Tribune that the project will help the dealers trade through proper channels. They said that two auction platforms and storage centres will be constructed which will be used by both the government and the market committee.

CCCI executive committee member Haji Rahmat Ullah said that the project has been designed to facilitate the traders who have been using other channels. This will also generate revenues as majority of the traders were not paying anything to the government in duties on import and export.

He said that Pakistani traders have no other appropriate and feasible route that could be used for trade with the central Asian states and eastern European countries, except for Khyber and Chaman routes.

He stressed that the provincial and federal governments must approve the demand of the marketing society and the CCCI which are seeking allotment of more land for the wholesale market. “A mere 23 acres more are required to make it a state-of-the-art wholesale market that will have facilities for domestic and international traders,” he added.

Experts from Pakistan Horticulture Development and Export Board said that the government must encourage efforts to promote legal trade. They said that the project must be transformed into a modern facility that could attract not only domestic dealers but also international traders for conducting business with Central Asia and eastern Europe.

Refernce: Tribune

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KARACHI: Foreign exchange reserves rose to a record $17.28 billion in the week ended January 15, up from $17.09 billion in the previous week, the central bank said on Thursday.

Reserves held by the State Bank of Pakistan (SBP) rose to $13.66 billion from $13.44 billion, while those held by commercial banks fell to $3.62 billion from $3.65 billion, said Syed Wasimuddin, chief spokesman for the central bank.

“The main reason for the increase in foreign exchange reserves is the rise in remittances received from overseas Pakistanis,” said Wasimuddin. According to official data, remittances rose 17 per cent to $5.3 billion in the first six months (July-December) of fiscal year 2010-11.

Foreign exchange reserves previously hit a record high in the week ended January 1 as the country received more than $633 million from the US for providing military and logistical support in the fight against terror.

In May last year, the government received $1.13 billion – the fifth tranche of an $11.3 billion International Monetary Fund bailout programme.

In the currency market, the rupee ended weaker at 85.73/80 to the dollar, compared with Wednesday’s close of 85.68/73 because of rising international oil prices.

In the money market, overnight rates fell to 11 per cent, compared with Wednesday’s close of between 12 and 12.50 per cent, because of increased liquidity in the interbank market. Dealers said there are scheduled outflows of Rs53 billion ($613 million) on Friday.

Refernce: Tribune

KARACHI: Stocks closed down on Wednesday in a volatile session with the index swaying between red and green at regular intervals, according to analysts.

The Karachi Stock Exchange benchmark 100-share index ended 0.64 per cent or 80.55 points lower at 12,577.61.

Local institutions opted to book profits ahead of the key monetary policy announcement on January 29, said JS Global Capital analyst Jawad Khan. Analysts expect the State Bank of Pakistan to announce another increase of 50 basis points in the key discount rate.

Fauji Fertiliser Company (FFC) and Fauji Fertiliser Bin Qasim Limited (FFBL), which remained in the limelight during last week, took a massive hammering at the hands of local institutions. FFC slipped 2.5 per cent to close at Rs150.11 while FFBL lost 2.3 per cent to end at Rs42.14.

Index heavyweight Oil and Gas Development Company closed marginally lower, however, the stock remained exceptionally unpredictable adding to the session’s volatility, added Khan.

Volumes also remained low with mid-cap stocks dominating trade. Trade volume fell to 188 million shares compared with Tuesday’s tally of 270.8 million shares.

On the contrary, Pakistan Oilfields scrip rose by more than one per cent on news of increased production in Tal block where the company is the major beneficiary. Its share price increased Rs3.54 to close at Rs337.74.

The market is expected to remain sensitive to foreign flows, but further correction cannot be ruled out specifically as rumours spread that the leverage product may see yet another delay, said Elixir Securities equity dealer Sara Shahid.

Shares of 396 companies were traded on Wednesday. At the end of the day, 140 stocks closed higher, 234 declined and 22 remained unchanged. The value of shares traded during the day was Rs8.81 billion.

Lotte Pakistan PTA, the volume leader with 45.78 million shares, accounted for 24 per cent of the total traded volume. The scrip gained Rs0.55 to finish at Rs16.19.

It was followed by FFBL with 15.76 million shares and Pakistan Telecommunication Company Limited with 12.55 million shares gaining Rs0.02 to close at Rs20.03.

Refernce: Tribune

DHAKA: Bangladeshi regulators halted trading at the plunging Dhaka Stock Exchange (DSE) on Thursday after it lost 8.6 per cent in six minutes, the fastest fall in the bourse’s history.

The market lost 599.76 points to 6,313.62 soon after trading started at 1:00 pm (0700 GMT).

It was the fourth time in 10 days that the trading has been halted.

The benchmark index rose 80 per cent in 2010 to peak on December 5 at a record 8,918.15.

It has since fallen 29.3 per cent with each new slide triggering angry street demonstrations. After trading closed on Thursday, investors attempted to stage a protest in front of DSE offices in central Dhaka.

Refernce: Tribune

KARACHI: Telenor’s Easy paisa – the service that had Rs1 billion worth of transactions in less than a month – has been selected as a nominee for the GSMA Global Mobile Awards, according to Telenor officials.

The GSM Association (GSMA) is an association of mobile operators and related companies devoted to supporting the standardising, deployment and promotion of the GSM mobile telephone system. Their awards offer organisations across the world an opportunity to showcase the latest and best mobile products, services and initiatives to the world.

The presentation of the awards takes place during the Mobile World Congress, the world’s largest and leading mobile industry event held annually in Barcelona. The three-day event is scheduled for 14 to 17th February, according to data provided by Telenor’s corporate communications and responsibility department

Easypaisa allows financial transactions including paying your utility bills, sending or receiving money within the country and receiving money from abroad.

Refernce: Tribune

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KARACHI: Negative perception about investing in domestic stocks is limiting prospect of economic growth, said IGI Investment Bank CEO Syed Javed Hassan.

Responding to questions from media representatives at the launching ceremony of the bank’s Fund Select Portal here on Thursday, Hassan urged media to play a positive role in projecting local investment opportunities. He explained that the portal will facilitate both corporate and retail investors with online access to information concerning their investment and the industry.

Hassan explained that the portal would also lower the workload on the company’s employees by allowing customers to directly access information that was previously obtained through phone calls and other forms of communications with the company.

“Multiple search parameters are available on the portal allowing the customers to search for information according to their requirements,” added the CEO.

The portal will track investment returns on a real-time basis and provide information regarding “composition of existing portfolio, return on portfolio, account statement, investment history and industry-specific information,” explained Head of Investment Advisory Asif Rashid Baloch.

“The Securities and Exchange Commission of Pakistan was not cognisant of small investors over the past two years,” said IGI Funds CEO Maheen Rehman. While acknowledging that the regulator is stepping up efforts to improve investor protection, she said that “asset management companies also have to share the responsibility of investor protection.”

She highlighted that money market funds are primarily invested in government treasury bills making them relatively risk-free investments.

“In India, mutual fund deposits form almost 70 per cent of all bank deposits,” she stressed, alluding to the potential for growth in the industry here.

Company officials said that the country’s mutual fund industry is still in nascent stages of development and stressed that investors must be educated about investments to attract their interest towards the industry.

Refernce: Tribune

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The ban on seafood imports from Pakistan by the European Union appears to be “politically motivated” as facilities and hygienic conditions at the Karachi Fish Harbour are much better as compared to the fish harbours of the neighbouring countries.

“The international community should reject the negative impression and propaganda against Pakistani seafood as it is being handled in a much safer manner as compared to some other countries exporting seafood to EU member states.”

This was stated by Abdul Ghani Jokhio, Managing Director Karachi Fisheries Harbour Authority (KFHA), while speaking to a visiting Austrian delegation comprising Axel Wech, Austrian Ambassador and Dr Wolfgang Penzias, Austrian Trade Commissioner.

Managing Director KFHA said that the EU ban on seafood from Pakistan seems little bit politically motivated because the facilities available at Karachi Fish Harbour happen to be much better as compared to the neighbouring countries.

“Our top priority is to ensure that the local and international consumers get safe seafood and for this purpose fishing boats have been modified and fishermen have been provided with plastic crates, baskets and hand pallet trucks,” he informed the delegation.

Elaborating the future plan, Jokhio said that under the master plan of Karachi Fish Harbour, they would be providing fibre glass boats, value-added processing plants, treatment plant, reverse osmosis plant, freezing plant, ice factories and flake ice plants, costing Rs.6.5 billion, within three years.

Up-gradation of infrastructure and construction of new auction halls were also part of the master plan, he added.

The delegation showed keen interest in fisheries in Pakistan and said their visit was aimed to explore possibilities of cooperation between the two countries.

Dr Wolfgang Penzias said he wants to see the Pakistani seafood as an international brand as like Pakistani mango in international market.

Dr Penzias assured full cooperation and informed that a high-level Austrian trade delegation would be visiting Pakistan in April, including businessmen engaged in fisheries sector to work out modalities in this regard.

Giving update on marine resources, Director General Marine Fisheries Department said that squid and cuttle fish etc were being exported to EU countries.

Representatives of President Pakistan Fisheries Exporters Association, Sindh Trawlers Owners & Fishermen Association and Fishermen Cooperative Society were also present on the occasion.

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LAHORE: Industrialists in Punjab on Thursday urged the government to find an early solution to the power shortage as many leading industries are on the verge of collapse.

The increasing bank loan burden due to 18 per cent mark-up is crippling the 6,600 industries in Punjab, they added.

Trade bodies have asked the government to chart a pragmatic plan to tackle the energy crisis caused by gas shortage.

All Pakistan Textile Processing Mills Association (APTPMA) Chairman Maqsood Ahmad Butt said that export orders will not be met as no industry can function with four days of gas outages.

The federal government will not be able to collect the revenue target in Punjab due to the deteriorating industrial activity, said Butt.

Pakistan Industrial and Traders Association Front (PIAF) Chairman Irfan Qaiser Sheikh said that economic stability is difficult to achieve until the government provides a comprehensive plan to meet energy requirements.

Punjab Finance Minister Tanveer Ashraf Kaira believes that the gas shortage in the province is directly related to parliamentary legislation. He said that Article 158 states that the province in which a natural gas well is situated will have priority over other parts of the country. Hence, the matter needs some detailed discussions that can lead to fair distribution of energy among provinces.

Refernce: Tribune

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KARACHI: Bears continued to dominate proceedings at the stock market on Thursday with selling pressure in most of the blue chips and other noticeable stocks.

The Karachi Stock Exchange benchmark 100-share index ended 1.32 per cent or 165.74 points lower at 12,411.8.

Downward momentum in regional markets and profit-selling by local institutions fuelled negative sentiments at the local bourse, said Crosby Securities analyst Ovais Iqbal.

Major selling pressure was seen in oil and banking stocks where the Oil and Gas Development Company Limited, Pakistan Petroleum Limited, Pakistan Oilfields, MCB Bank, Habib Bank and National Bank closed on a negative note, depicting declines of 0.6 per cent, 1.9 per cent, 1.6 per cent, 2.9 per cent, 1.2 per cent and two per cent respectively.

Trading volume declined slightly by 2.3 per cent and stood at 183.6 million shares compared with 188 million shares traded on Wednesday.

Shares of 395 companies were traded on Thursday. At the end of the day, 104 stocks closed higher, 271 declined and 20 remained unchanged. The value of shares traded during the day was Rs7.57 billion.

Lotte Pakistan PTA, the volume leader with 49.74 million shares, fell to its lower circuit breaker on news of a lower-than-expected cash payout along with thin margins in recent months. The scrip fell Rs0.94 to close at Rs15.25.

It was followed by Bank of Punjab with 12.29 million shares gaining Rs0.04 to close at Rs9.33 and Fauji Fertiliser Bin Qasim Limited with 11.97 million shares losing Rs0.17 to close at Rs41.97.

Refernce: Tribune

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ISLAMABAD: In a bid to finance the budget deficit, the petroleum ministry has allowed the Privatisation Commission to sell equity-linked bonds of Oil and Gas Development Company (OGDCL) which can raise $1 billion from the international market.

In a briefing to a National Assembly panel on Thursday, Privatisation Minister Waqar Ahmed Khan said that the petroleum minister has accepted the proposal to tap international resources by floating seven per cent shares of OGDCL. He said the equity-linked bonds will fetch comparatively cheap loans at an interest rate ranging from 4 to 4.5 per cent.

The petroleum ministry is yet to obtain the permission of OGDCL board of directors, which is a prerequisite for such transactions. Currently, the government owns a 76 per cent stake in the oil sector giant, 21 per cent shares have been floated in the Karachi Stock Exchange and the remaining were issued in global stock markets.

The government intends to float the equity-linked instrument in March but much depends on the national economic health, which is deteriorating due to delay in initiating reforms. The premium on the country’s credit has started picking up again after seeing the lows of 591 basis points in November last year.

The privatisation minister was scheduled to meet the Prime Minister Yousaf Raza Gilani on Thursday to obtain his nod approval for the equity-linked instrument. The Privatisation Commission in consultation with the OGDCL management is yet to decide whether this money will be generated to finance OGDCL projects or for the oil and gas sector in general by forming a holding company.

During a London Stock Exchange meeting, “international investors were not concerned about the war on terror as most of the questions pertained to management of public sector enterprises,” said Waqar Ahmed Khan. The eight public sector enterprises are causing a collective loss of Rs252 billion per annum.

“What guarantee does the investor have that the Supreme Court of Pakistan will not take suo motu notice of any transaction,” asked Doyna Aziz, a member of the standing committee.

The minister said if the authorities agree, the Privatisation Commission could generate up to $3 billion before June. Khan said the government was also planning to float 20 per cent shares of the Islamabad Electricity Supply Corporation in the Karachi Stock Exchange. The shares will be listed through an initial public offering, the first sale of stocks by a company to the public through the equity market.

The Privatisation Commission also gave a briefing to the Standing Committee on Privatisation. The committee, headed by Khawaja Sohail Mansoor, decided that prior to privatisation of any entity or floating of its shares in the market, the proposed transaction will be brought before the NA Standing Committee for discussion.

The committee was informed about the active programme in the current privatisation policy which relies on public-private partnership (PPP) by offloading 26 per cent shares.

The committee members also raised questions about transparency in the privatisation of key public enterprises in the past. “An internal audit was going on to determine any wrongdoings in the privatisation of Karachi Electricity Supply Company (KESC),” said Khan. The KESC, a privatised firm, is under fire due to sacking of 4,000 employees.

Refernce: Tribune

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KARACHI: The Securities and Exchange Commission of Pakistan (SECP) registered 23 companies with foreign investment in December 2010, according to an SECP press release.

Additionally, three foreign-based companies were also registered. According to details, five of the 23 companies had investment from Singaporean nationals and four had money injected by Chinese nationals. Eleven companies were registered in Karachi, while Islamabad and Lahore registered six and four companies, respectively.

The transport sector was the most prominent, with seven incorporations, followed by the trading sector, which had three.

Refernce: Tribune

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KARACHI: The federal ministry of industries and production has assured Japanese car assemblers in Pakistan that they won’t be harmed by the new entrance policy for the automobile sector through which the government intends to facilitate new players.

Federal Minister for Industries and Production Mir Hazar Khan Bijarani, talking to The Express Tribune, said that the government has prepared  a new entrance policy for the auto sector so that production of low-cost vehicles could be encouraged. He also emphasised that the interests of car assemblers already present will be protected and no such incentive will be provided to the new players which affects the interests of existing assemblers.

Bijarani was speaking on the sidelines of a ceremony held to unveil the annual report of the Export Processing Zone Authority here on Monday.

The car assemblers are already uncertain about the tariff waiver for the investment that they plan to make. These car assemblers are being pushed by the government to reduce the prices of vehicles, a reason why the government increased the age limit for imported used vehicles in December. However, the decision was withdrawn later.

On the other hand, the car manufacturers face daunting challenges which include increase in raw material costs, rupee depreciation and escalating prices of gas and electricity which are swelling the production cost. Bijarani said that the government has requested the local assemblers to reduce prices of automobiles and has also urged the new entrants to produce smaller cars at cheaper rates. Furthermore, he said that the government is in talks with Chinese and South Korean vehicle manufacturers.

Experts are of the view that with the new policy, production of smaller vehicles with engine capacity of 800cc to 1,000cc will be encouraged which might affect sales of existing market leaders in this category and hence competition will lead to a price reduction. The auto industry has rejected the perception that the increase in prices of cars is uncalled for and they substantiate it by saying that from June 2009 to December 2010 the rupee depreciated by two per cent against the yen and inflation rose 13 per cent, which fueled the price increase. Contrary to that, from June 2009 to December 2010 the prices of new vehicles have only increased by an average of seven per cent, they said.

Refernce: Tribune

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KARACHI: The size of the mutual funds industry appreciated 12 per cent in the last six months (July-December) to stand at Rs223 billion. The industry showed signs of recovery on the back of demand witnessed in the money market funds category as well as the equity market’s tremendous performance over the last three to four months, says InvestCap in a research note.

A mutual fund is a professionally managed collective investment scheme that pools money from investors and invests typically in investment securities such as stocks, bonds, short-term money market funds, commodities among others. Income is earned from dividends on stocks and interest on bonds. By owning shares in a mutual fund instead of owning individual stocks or bonds, the risk is spread out.

Equity category to shine

Despite the prevailing economic instability in the country amid higher interest rates, the equity market continues to show an upward trend, said InvestCap analyst Mazhar Sabir.

“Local investors are expected to generate more interest in the market on expectation of early launch of a leverage product alongside stable foreign inflows,” said Sabir.

“From the equity funds perspective, stock funds having invested heavily in blue chips may outperform the stock market index.”

Open-ended funds dominate

The value of open-ended funds increased by 16.2 per cent to reach Rs195 billion while closed-end funds showed a decline of 11.2 per cent to Rs28 billion.

The reason behind the two categories moving in the opposite direction was the fact that three closed-end funds converted into open-ended funds during the period under review.

The money market funds earned an average annualised return of 11.3 per cent during the first six months (July-December) of financial year 2010-11 as fund managers in the money market got better rates in short-term placements, said Sabir.

The income funds posted an average annualised return of 11.1 per cent from July to December, but the size of the funds shrank seven per cent to Rs43 billion. The category has been continuously declining for the past six months.

Refernce: Tribune

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